Wednesday, November 11, 2009

Britain's Default Position

"Which big country will default first?"

asks Martin Hutchinson on his website :

"The worst budget balance of the three deficit countries is in Britain "

The UK's estimated GDP before the depression started was £1.41 trillion. It is estimated that the governments public borrowing requirement is around £700 billion for 2009 or 47.5% of GDP. Of course as tax from income and profits drop this position is deteriorating rapidly. How can the BoE raise interest rates when the government is borrowing like a drunken sailor?

Hey Martin, do you think that instead of borrowing Brown might just print some more dosh on-the-fly?

"..the Bank of England has been slightly more irresponsible in its financing mechanisms than even the Federal Reserve, leaving interest rates above zero but funding fully one third of public spending through direct money creation."

Interesting, so the Bank of England has been printing money faster than the Federal Reserve. Jings, economist and international investor Marc Faber, in a compelling interview on Canada's BNN, has told us that the $ is going to collapse because of printing and maybe in the next few years.

part 2
part 3
part 4

Where does all this leave the £?

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