Sunday, 1 March 2009

Who will buy Gordons Gilts or BO's Treasuries?

Economic reality will out. Its not over till the fat lady sings but when you tighten her corsets in one area she just pops out somewhere else!

In today's Sunday DT Business Liam Halligan points out the risk of a 'buyers strike' when Darling Brown tries to sell £50bn, £100bn, who knows how much gilts to the bond market. Johnny Foreigner wont want them given the precipitate decline in Sterling. Pension funds and insurance companies are not exactly flush with cash so who will buy these gilts? Why the Bank of England of course! How will it get the money? Why it will print it at of course so lots of overtime coming up for Essex man and woman at Debden the Bank's printing works! And where will the fat lady pop out? Well Sterling will sink more, inflation will rise and Robert Mugabe will become HMT's latest economic guru replacing the disgraced Myners.

The UK already has a third world health service, a third world education system so why not a third world Zimbabwe type economy! The Tony & Gordon Cappuccino years are now exposed for what they always were, not economic growth but economic disaster. The tide has gone out and the nude swimmers are exposed for all the world to see.

BO across the pond also has a similar problem in persuading the Chinese to buy Treasuries to keep the BO show on the road. Notice how Chinese human rights are no longer of any importance to Mrs Clinton. I guess in her word she mis-spoke when she used to bang on about Chinese human rights abuse. My view is the Chinese will buy up natural resource companies, miners like RTZ and oil companies not worthless US paper. This will be backed up by a Chinese diplomatic strategy to turn some of the countries with this natural wealth into Chines client states e.g. Sudan. The Chinese are long term thinkers. Their time horizon is over a hundred or more years. Our quick fix politicians cannot understand this just as they cannot understand how radical Muslim preachers can turn decent civilised people into religious zealots in a very short time.

Saturday's DT ran a full page spread entitled "Breaking point for the eurozone". This dealt mainly with how the Irish economic miracle rapidly became the Irish economic disaster as the other side of Euro membership bites. A 'celebrated' Irish economist, David McWilliams is quoted as saying, "The entire Irish episode will be studied for years to come as an example of how not to do things". Irish unemployment is heading for 10% and Irish workers are pouring into, Yes you have guessed it, the UK seeking work. Well at least they cannot blame the Brits for their troubles this time, all home made in Ireland.

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