Is Brown's debt binge worrying the lenders?

Tom Burroughes

Well said Fraser. There is nothing very complicated about these CDS instruments. They are essentially tradable insurance policies on debt default risk, like tradable fire or shipping insurance.

CDS prices are in some ways the most useful barometers we have of risk in the markets today.

THX1138

Not going to happen. Asia & Arabia will continue to buy UK, European & US debt otherwise how do we buy the stuff they make or pump out of the ground. What else are they going to do with their petro dollars & savings?

There is no sign of a buyers strike yet of US Government debt.

Foreigners bought a net US$20.7bn worth of US Treasury bonds in September, the latest data available, and have bought a net US$307bn in the first nine months of this year. Likewise, foreign official holdings of US Treasury securities have increased by US$244bn or 18% since mid-July to US$1.61tn on 12 November, according to the Federal Reserve data.

Your being far to pesimisstic the markets are not interested in your petty party political sniping, just will it work. The FTSE is up over 5% so obviously someone thinks it's good news.

Bruce Robertson

THX1138: O Rly?: 10Y UK CDS now 100/115, up 15bps on the day.

THX1138

Bruce but do you really think that Asia & Arabia is going to stop lending to us? As I said what else are they going to with their cash? Yep it might cost a bit more but it ain't going to stop.

The markets liked what Darling had to say FTSE up 10% on the day and and that's what counts not the narrow political point scoring on the Speccie blogs.

Simon Stephenson

THX1138

Excuse me for asking, but isn't judging the efficacy of the PBR by today's movement of the FTSE100 rather the narrow approach, while asking the question whether the UK will remain a credible investment opportunity for overseas wealth would seem, by comparison, to be somewhat broader?

Do you know, people who disagree with you ARE capable of asking pertinent questions. Questions to which the answers DO matter, irrespective of political viewpoint.

Dismissal of every awkward query as party politics betrays a realisation of the intellectual weakness of ones own position. Maybe the time's come to accept that the right answer may not be your answer.

THX1138

Simon- As is judging it by the movement in todays CDS prices, of course I except that today's rise in the FTSE does mean that much in the long term but it does mean that Darlings statement was judged good news today by the markets to deny that is churlish and just childish point scoring.

In the real world I run a small B@B marketing business & my clients are feeling the pain therefore so am I and I'm actually beyond caring about political ideology I just bloody well hope it works.

I get the feeling that some on this blog hope that Brown/Darling get a bloody nose on this one. Stop it. This is real & real people are really hurting.

Herbert Thornton

I don't understand why it's being assumed that other countries are going to keep on lending money to Britain.

Suppose, for example, that they think it likely that the British pound in 2012 will be worth only one quarter of what it is worth today?

I should have thought that the lenders would conclude that their money was better invested in their own countries - e.g. either in business or in infrastructure?

THX1138

Herbert- Those countries that lend to us also export to us in huge quantities either commodities like oil or manufactured goods like DVD players. If they want to us to keep buying their stuff they will keep lending us the money to do it and we had better hope they do.

Simon Stephenson

THX1138

I'm not sure that people are HOPING that Brown/Darling get a bloody nose. I think, perhaps they are expecting it. And the reason they are expecting it is that Labour policies are based on the presumption that passion makes reason unnecessary.

This is the crux of the matter. We get Labour governments because too many of our population have not developed from the mindset that two plus two can be made to equal anything you want, as long as you want it badly enough.

I know that all people have powerful emotions, and I know that many find it difficult to accept that mature decision-making is based on reason and polished by emotion - not the other way round.

The most important thing that needs to come out of this crisis is the recognition that a population that doesn't grow up has no future.

Herbert Thornton

THX1138 -

Your reply makes me think of a shop where (say) a man goes to buy all his weekly groceries.. He has very little money & can't afford them but the shopkeeper hands him five hundred pounds and says - "Never mind. I'll lend it to you. You just use this." The same happens every week, year after year.

So the man goes on getting his needed groceries, and every week, peels off a few pounds from the wad of five hundred, & hands them back to the grocer as interest on the loans.

How to describe that situation? Will "George Brown economics" do?