Saturday, 28 February 2009

The banking crisis is over, the fiscal crisis is about to begin

The UK government wants to borrow ₤120 billion during fiscal year 2009-10. That means the government needs to flog ₤10 billion worth of new government bonds every single month. It is a tall order. As this borrowing binge gathers momentum, it will be hard to keep interest rates low on government bonds.

However, the deficit is not the only financial problem facing the government. Brown and Darling offered virtually unlimited backing to the largely insolvent UK banking behemoths. Public sector debt levels are now rising dramatically. In the short run, this has prevented a full blown banking crisis. In the long run, it has put the financial viability of the government in doubt.

The banking crisis may be over; a new crisis is about to hit us; a fiscal crisis, where the government has difficulty financing its deficit and covering the growing losses of the now nationalized banking sector.

10 comments:

Anonymous said...

"The UK government wants to borrow ₤120 billion during fiscal year 2009-10. That means the government needs to flog ₤100 million worth of new government bonds every single month."

Apologies if I'm missing something here, but shouldn't that be £10 billion every month (120/12), so about £330m every single day?

Alice Cook said...
This comment has been removed by the author.
Alice Cook said...

What would I do without my old friend Anonymous, who finds and corrects all my typos.

Thanks for spotting that.

Alice

Anonymous said...

Now it reads £10 million instead of £10 billion :)

dearieme said...

yep, Brown has nationalised the need to repudiate debt. Bloody brilliant! I hope that it kills the Labour Party off. Let's get back to Whigs vs Tories.

Alice Cook said...

Anonymous, I've just corrected it a second time. I think I am getting there.

alice

Anonymous said...

Now think of the US having to raise new money of $1.75 trillion or $145.8 billion a month. And of course these amounts do not reflect any maturing debt that has to be rolled over in addition.

Now think of every country that is trying to spend its way out of this mess by borrowed money and there is going to be a lot of crowding out in the debt markets.

Very scary...

Rick said...

I think the change will come when corporate debt looks safer than government debt. That already looks like it has happened with McDonald's bonds and UK bonds as the risk of default was lower for McDonald's.

After Alice's Burger king experience last week, maybe this is where she is investing all her money.

Claire said...

Interesting article.
Thanks for posting ;-)

look said...

成人電影,情色,本土自拍, 寄情築園小遊戲, AV女優,成人電影,情色,本土自拍, A片下載, 日本A片, 麗的色遊戲, 色色網, ,嘟嘟情人色網, 色情網站, 成人網站, 正妹牆, 正妹百人斬, aio,伊莉, 伊莉討論區, 成人遊戲, 成人影城,
ut聊天室, 免費A片, AV女優, 美女視訊, 情色交友, 免費AV, 色情網站, 辣妹視訊, 美女交友, 色情影片 成人影片, 成人網站, A片,H漫, 18成人, 成人圖片, 成人漫畫, 情色網, 日本A片, 愛情公寓, 情色, 舊情人, 情色貼圖, 情色文學, 情色交友, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 色情遊戲, 情色視訊, 情色電影, aio交友愛情館, 色情a片, 一夜情, 辣妹視訊, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊, 視訊美女, 美女視訊, 視訊交友, 視訊聊天, 免費視訊聊天室, 情人視訊網影音視訊聊天室, 視訊交友90739, 成人影片, 成人交友, 本土自拍, 免費A片下載,

美女交友, 嘟嘟成人網, 成人貼圖, 成人電影, A片, 豆豆聊天室, 聊天室, UT聊天室, 尋夢園聊天室, 男同志聊天室, UT男同志聊天室, 聊天室尋夢園, 080聊天室, 080苗栗人聊天室, 6K聊天室, 女同志聊天室, 小高聊天室, 情色論壇, 色情網站, 成人網站, 成人論壇, 免費A片, 上班族聊天室, 成人聊天室, 成人小說, 微風成人區, 色美媚部落格, 成人文章, 成人圖片區, 免費成人影片, 成人論壇, 情色聊天室,


性愛,
成人交友, 嘟嘟成人網, 成人電影, 成人, 成人貼圖, 成人小說, 成人文章, 成人圖片區, 免費成人影片, 成人遊戲, 微風成人, 愛情公寓, 情色, 情色貼圖, 情色文學, 做愛, 色情聊天室, 色情小說, 一葉情貼圖片區, 情色小說, 色情, 寄情築園小遊戲, 色情遊戲情色視訊, 情色電影, aio交友愛情館, 言情小說, 愛情小說, 色情A片, 情色論壇, 色情影片, 視訊聊天室, 免費視訊聊天, 免費視訊, 視訊美女, 視訊交友, 視訊聊天, 免費視訊聊天室, a片下載, aV, av片, A漫, av dvd, av成人網, 聊天室, 成人論壇, 本土自拍, 自拍, A片,成人電影,情色,本土自拍,