Wednesday, 25 March 2009
Is the British Government.......
When a government needs money it sells things called “Gilts” or “gilt-edged securities” which pay a fixed income over a fixed term. Returns are usually low but they are seen as one of the safest forms of investment because they are issued by the British government, which has never (so far) reneged on a debt.
However, Gordon Brown’s government today failed to find enough buyers for £1.75 billion pounds of bonds as debt investors refused to back Gordon Brown’s plan to stem the worst economic crisis in three decades by spending his way out of trouble.
Labour wanted to sell a record £146.4 billion pounds of debt this fiscal year and as much as £147.9 billion pounds in 2010. According to the International Monetary Fund (IMF) Britain will have a deficit of 11 percent of GDP in 2010, the highest in the Group of 20. Brown’s whole strategy is based on borrowing and if he can’t get anyone to buy his debt it means the prospect of going cap in hand to the IMF is getting closer.
Going to the IMF effectively means admitting the UK is bankrupt.
Anyone care to place a bet now on Gordon Brown getting the Nobel Prize for economics?