Wednesday, 5 January 2011

Johnny Foreigner has gilt edged indigestion

This is my conclusion from today's DT article stating sales of new gilt issuance in November to Foreigners are well down at £3.3 bn with the shortfall being made up by UK bank purchases of £10bn, the biggest since last January and of course boosted by Wee George's money creation programme. Over the first eight months of last year as a whole Johnny F bought £50.6bn gilts out of a total of £107.8bn sold so the news he is losing his appetite is bad form the Coalition. It was the first sign of the Greek crisis when foreign demand for their paper dried up!

Put this against last year's flight of capital from the Eurozone and it becomes even more worrying. Also expected gilt interest payments of £44bn in 2011-12 are expected to increase to £63bn in 2015-16 slightly more than the latest VAT increase will bring in to HMT assuming the economy holds up. In order to keep gilt yields and eventually mortgage rates low banks will have to be fed more new money to buy gilts. Conventional Gilts do no look attractive to pension funds with RPI inflation now at 4% plus. Its all looking very much like a Greek tragedy.

Meanwhile back at the big house in Westminster the the usual Tory suspects unhappy bunnies are being joined by many of the new intake who are pissed off at having to back LibDem inanities and nonentities as Heffer points out in his piece today. The PIGS will be wanting more of our dosh and the Irish have already got their Euro mitts into our pockets up to the elbows. Its not just the NHS and Overseas Aid budget that is ring fenced. Not only are UK contributions to the EU ring fenced but they are unlimited!

Milliband II has an open goal. A UK government that supports foreign workers and penalised our own!

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