How long until the plug is pulled?
David Blackburn 5:53pm
Moody’s AAA sovereign monitor was published today, and whilst the UK’s AAA status remains ‘resilient’ the situation is far from rosy. The report states:
‘The UK economy entered the crisis in a vulnerable position, owing to the (overly) large size of its banking sector and the high level of household indebtedness. Both continue to weigh on economic performance. Net bank lending to the UK business sector has continued to contract through Q3 2009, and repairs to household balance sheets (i.e. the rising savings ratio) may weigh on demand for some time to come.The depth of the crisis has been mirrored by the ongoing deterioration of public finances (with gross debt/GDP having risen from 44% at the end of 2007 to an estimated 69% at the end of 2009). It also raises considerable challenges going forward, as the downward adjustment of potential output during the crisis will result in a recurrent shortfall in tax revenues, which, if not compensated by a parallel adjustment in expenditure, would leave the government with a permanent deficit.’
First into recession because of Brown’s profligacy, Britain’s recovery is stunted by continued spending and the government’s inability to address the credit freeze. Moody’s assert that Britain’s AAA status will be endangered unless fiscal retrenchment is implemented soon, something that global bond markets are relying upon too. Moody’s assert:
‘While assumed capacity for fiscal adjustment currently supports the maintenance of the Aaa rating of the UK government, this assumption will have to be validated by actions in the not-too-distant future to continue to provide support for the rating.’
Britain cannot sustain this level of debt. We near an Ireland-style downgrading followed by an era of ruinously expensive borrowing. Labour’s political and economic strategy dictates that fiscal adjustments will not be undertaken until 2011. Tomorrow’s Pre Budget Report will contain time saving measures, in the form of further cheap, low yield gilts and perhaps more Quantitative Easing, to allow the government to execute its strategy, borrow cheaply and prepare for future retrenchment. Will the markets wait that long?
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A J Scott
December 8th, 2009 6:03pm Report this commentGreat God, we are full speed about to hit the buffers and this lunatic Government still won't wake up and at least try to stop the train, let alone admit they have lost control. We really are doomed.
saddleworth
December 8th, 2009 6:10pm Report this commentThe only surprise is that it has taken this long. The message won't reach Planet Brown, but will it be heard but the Conservative Party? Sooner or later some one has got to try to win the next election wth straight talking on an issue where there are no alternatives.
Moraymint
December 8th, 2009 6:52pm Report this commentIf I ran my business like this - for primarily political rather than hard-nosed financial reasons - then, first and soon, my business would go bankrupt .. and then I personally would be ruined because my bank makes virtually no distinction between my limited liability company and me. The bank takes from me personal guarantees and security over my home. If my business fails, then so do I. It's as simple as that.
I have to risk everything for the rewards of managing my business to make a surplus - and to pay taxes for Brown to pour down the drain.
Brown, Darling, Balls, Straw, Harman and all of the other Marxist nutters that purport to run this country risk nothing themselves. They play their petty political games and so, with each passing day, ramp up the likelihood that the citizens of the UK will pay a shockingly heavy price indeed for their treasonable behaviour.
When the full effects of the global financial crisis (which have been merely delayed for now by our politico-banking mafia) hit home next year, the British people simply will not know what's hit them.
Do you think our politicians will take any of the pain? Are they sharing our risks, or simply working ever harder to save and serve themselves, do you think?
Norman Dee
December 8th, 2009 6:54pm Report this commentThe problem Mr. Scott is that no one is driving the train, the're all in the first class dining car desperately trying to empty the fridge before the crash comes, and Brown, he's the one with the funny hat serving the drinks.
Chris W
December 8th, 2009 7:23pm Report this commentAs well as being the one in the funny hat serving the drinks, Brown and the soviet have realised there is no hope of winning the election, and are therefore making things as bad as possible for the next government. Losing the treble A rating, thus putting up the cost of the debt servicing is all of a piece with the current activity. Call me Dave 'n George must be wetting themselves that they are being handed a poison chalice. Oh, and by the way, we will need to bring the troops home - to fight off the public service unions - just like the 80's isn't it!
In2minds
December 8th, 2009 8:14pm Report this commentChris W @ 7.23pm says of Nulabour - “are therefore making things as bad as possible for the next government”.
But over on his blog dear old Martin Bright has said that Nulabour are “moderate”; so, to laugh or cry?
J H Holloway
December 8th, 2009 8:19pm Report this commentIf the student Marxists don't show enough willing with cost-cutting in the PBR, will the markets respond by dumping the UK in the sh*te before the end of play tomorrow?
After all the talk of political reaction and polls, maybe it will the global money men that sink Broon and Co.
Perhaps Dave and George should just sit back and let Moodys do the talking.
Tankus
December 8th, 2009 8:43pm Report this commentBrown is using almost exclusively using quantitative easing to buy the gilts.
QE has to stop , what happens then.?
Enron accounting at its finest
Peter
December 8th, 2009 9:32pm Report this commentIt's illegal for us to run our businesses or charity when insolvent, but not for a government to carry on a business while insolvent then leave us all to pick up the pieces. Bastards.
Ivy Eileen
December 8th, 2009 9:48pm Report this commentsaddleworth @ 6.10 p.m. -
Brown won't take any notice. He's too superior for that. Whatever the position of the Tories, the message needs to reach the general public, but it seems after 12 years of a music hall combination of "Charlie Rice" Blair and "smoke and mirrors" Brown we prefer to stick our heads in the sand and ignore painful reality. When will the penny drop ?
2trueblue
December 8th, 2009 10:31pm Report this commentWhen the funny money stops, then we will find out where the train is going. I son't think I want to know. I am strategically buying what I am going to need over the next 6 mths. because when we have to get things going again inflation will kick in big time.
This government have no morals, no care and no intelligence. They are a callow bunch of people.
Watt Tyler
December 9th, 2009 1:08am Report this commentWhy don't we vote for a main party that will take us out of the EU saving us billions at the stroke of a pen?
Oh I forgot, we don't have one.
(Incidentily, see the Independent for "moderate" Tories (Kenneth Clark apparently the chief idiot) rallying around David Cameron, and urging him to take on Global Warming Sceptics. O--Kaaay.
http://www.independent.co.uk/news/uk/politics/tory-moderates-attack-climate-change-sceptics-1836556.html
)
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