The beginning of the end?

Michael m

As I have said, the Conservatives new slogan should be

BROWN'S BANKRUPTED BRITAIN

Roger Thornhill

Not the best of times for Brown to go asking Mervyn to crack the whip over the Primary Market.

Flea, meet Ear.

Hawkeye

Nothing on the Bolshevik Broadcasting Corporation yet - I wonder if they are waiting for clearance from their masters at No 10?

They did not report Daniel Hannan's pasting of Brown either (or if they did it was so obscure it could not be found)

Wily Trout

So what was so bad in 2002, the last time it happened?

Sally Chatterjee

The DMO is offering 2049 debt at just 4.25%. Few will bite at that price. In other words, interest rates have to rise to finance the debt. This implies rates rise across the board sooner rather than later. Indeed, in time for the next election.

Mike, Brighton

Don't wait for the Biased Broadcasting Corporation to report this as they won't.

This is the beginning of the end for Brown and the Labour Party.

Kiffa

I saw an advert for a book yesterday: Gordon Brown is a Moron (available from Amazon)!

Has anyone read it yet?

Duncan

Fraser,

I suspect this auction 'failed' (let's remember take up was 93%)for two reasons. One, the Governor's comments yesterday and two, the fact it was 40 year auction. The DMO did successfully issue £1.6bn of 40 year debt with a coupon of 4.5%. Not bad.

And after a brief flurry of excitied sell off this morning, 10 year gilts are yielding 3.37%.

Sorry to disappoint. We're not going to the IMF.

http://duncanseconomicblog.wordpress.com/

TomTom

Germany had trouble selling a tranche of Bunds a few weeks back. There is indigestion and frankly it is hard to manipulate yields by buying Gilts and then selling them to investors fearful of a Bond Bubble

Ken

@Kiffa - don't bother - author is a nutter selfpublisher from way back. Knows a good title when he sees one though.

JGS

It would be interesting to have an answer to Willy Trout's question: "So what was so bad in 2002, the last time it happened?"

Frank Goddard

So Mr.Obama,in his hour long speech yesterday said,"we have to have a monetary stimulus,(Tory Idea)of Save and Invest!!So why is the world genius on economics (Gormless Brown)still going around the world,on tax payers money,pontificating to other Nations about his Flaccid Fiscal droop???
PLEASE, will someone get the men in white coats when he returns,and get this country to an ELECTION.
Frank G...English pensioner.

Tiberius

Kiffa: it's going to be my summer holiday read this year. And here is a quote from the author, Vernon Coleman:

"I wish I hadn't had to write this book. I wish everything in it was wrong; a figment of my imagination. Sadly, everything in this book is true. Much of it is almost unbelievable. But it's all accurate. In "Gordon is a Moron", I show precisely how Gordon Brown's ill-conceived policies have destroyed Britain".

TrevorsDen

Trout - well we are still here - but last time (apparantly) it was for indexed gilts -- or was it for non indexed gilts?

Either way a different gilt.

Will Brown develop a gilt complex ... at last?

teledu

All that gilt sirs is not sold.

Ivy Eileen

@ Kiffa - ignore Ken, get the book. Bought it over 6 months ago and have posted recommendations many times.

Chapter by chapter (each a topic), it reveals Brown as being an utter disaster for this country.

oldrightie

Wily Trout
March 25th, 2009 2:06pm

So what was so bad in 2002, the last time it happened?
------------------------
The Chancellor, guess who, left the Conservative's lovely young girl behind. You know, Prudence.

Lloyd

A bit off-subject but too good to ignore. The BBC has done a 'survey' - not a poll mind - and found a representative sample not only able to opine knowlegeably on global fiscal stimuli and global monetary regulation - but also to agree wholeheartedly with Saviour of the World McBroon.

Here;
http://news.bbc.co.uk/1/hi/business/7962290.stm

As the dungheap implodes the Beeb bias just gets more blatant.

Denis Cooper

I guess that with a little tweaking, and better co-ordination with the DMO, it will still be possible for the Bank of England to rig the gilts market for some time to come.

Not forever, and not for unlimited borrowing, but for some time and for a lot more borrowing.

RobertD

There is no immediate crisis. UK bonds can still be sold. The question is at what price. Clearly 4.5% is not enough to get pepole to take on 40 years of risk. The Irish have just found that 5.2% is barely enough for 11 year Euro denominated bonds.

This is basically blowing a hole in the near zero BofE rate as an economic stimulus. In the real world where people actually lend money to each other (and to governments) interest rates are much higher, and will need to go higher still as there is increasing competition of a diminishing amount of real money. Providing new funny money through QE to drive down rates will actually have the opposite effect of getting buyers to seek higher risk premiums.

Eventually its going to end in tears

Denis Cooper

It's not inevitable that it will end in tears.

The government could still change its mind, and decide that instead of insuring the "toxic assets" held by the banks, at massive risk to the taxpayer, it will set up a "Resolution Company" to buy them, getting them off the banks' balance sheets and replacing them with cash.

Once bank lending had been unfrozen, existing and new companies could borrow capital, the rise in unemployment could be slowed, halted and then reversed, and then it would be possible to start redeploying workers from state-funded work to purely private sector work, reducing public expenditure and so the budget deficit without causing further economic harm by making millions of workers unemployed.

As in the US, the problem would be the prices to pay for the "toxic assets", but potentially that could be solved by agreeing provisional, rather than final, prices now, and then correcting for valuation errors later.

Ie, if the assets bought from a bank turned out to be worth more than the provisional valuation, the bank would get the surplus, minus administrative costs, while if the assets turned out to be worth less than the provisional valuation the bank would pay back the shortfall, plus administrative costs, over a period of say ten years.

That would be a good use for new money created by the Bank of England, and eventually it would all be repaid.

hadrian

Another, related episode worth commenting on is the attack with menaces on Fred the Shred's home in leafy Morningside in Edinburgh. In the Metro this morning I notice some anthrolpology lecturer in London who's evidently responsible for Anti-G20 summit demontrations tried to pass the thing off half in jest but warning there will be effiges of bankers to be strung up on lamposts by his band of righteously indignant protestors because prople are so furious.
Now I don't know about you but I smell a strong whiff of Leftist anti-Capitalist rabble rousing here. Typical mob rule from the Left- scapegoat a group (as the National Socialists did the Jews), issue blood curdling threats, spill a bit of blood. It all has horrible echoes that should alarm us.
Funny how the often pacifist Left get so blood thirstily self righteous, and even forget their customary opposition to all forms of capital punishment when the object of their wrath is 'capitalist'. Media and government have much to answer for in incubating these nutters. Personally I find academic hacks 'teaching' subjects of dubious pedigree or value and being vastly overpaid for the cushy privilege and abusing their position to stir up pointless confrontations as annoying as any sleekit bankers.

As for Broon's current woes the simple truth is he like so many of us is in complete denial about the hrash reality of a new austerity we are all going to have to get used to. Boom has well and truly bust.Bust is about the only thing that's well and truly booming!