Here is the futures price chart for the generic Gilt. All that is stopping that chart going further south faster is that the Bank of England is printing money (though printing isn’t the way it done nowadays, the Bank just changes amounts in the electronic ledger). Some of that money is recycled into mopping up gilts. It won’t work for ever.
Gordon has convinced fellow members of the IMF to sell the fund’s gold reserves, this visibly holds down the gold price as the relative value of paper money is destroyed. There will be an awful day of reckoning.
The gilt market will revolt sooner or later. Darling’s fantasy forecasts will be rejected by those of us in the reality-based financial markets. The numbers are horrific. Bloomberg’s Andrew MacAskill has totted up the cost of the bailout as £1.4 trillion. That is over 100% of GDP.
That has worked so well for Britain. Not.
UPDATE : Guido didn’t see C4 News but a co-conspirator over on HPC reports Mandelson on the subject of IMF bailouts as telling Jon Snow
PM : “We won’t be at the top of the queue”
JS : “You didn’t say we won’t be in the queue”
PM : “I don’t think we will be in the queue”
Honestly he didn’t want to say that last bit. He was more or less forced to. Very sheepish and quiet whan he said it. All this after Mandelson spent a good minute talking about how the stigma of going to the IMF was being reduced and it wouldn’t be embarrassing to go to them now. He even used examples of other countries, Mexico, that were considering using the special drawdown facility. We are being primed. Pure and simple. Just as we were for low interest rates and QE.
Apparently Mandelson said “We are destigmatising going to the IMF”. Anyone got the video?
A governor of the Bank of England has never had an audience with the Queen before. King had just told a stunned Westminster that there is no more money for another fiscal splurge. Perhaps Her Majesty is worried that the currency adorned by her face is being recklessly devalued. If she next calls in the generals for an audience our unelected, unmandated Prime Minister should really get worried…
Derek Wanless – Gordon Brown’s most trusted banker – who chaired Northern Rock’s audit and risk committees, also has a multi-million pound pension paid for by the taxpayer. Vince Cable railed at the “collapse of Northern Rock; a product of greed and reckless gambling by overpaid executives”.
It was Wanless who failed in his responsibility to rein in that reckless gambling.
The government’s holding company, UK Financial Investments Ltd, is the majority shareholder in both RBS and Northern Rock. Based on the pensions data below, the taxpaying public as shareholders are funding a £14 million plus pension for Wanless. Does Brown think his friend Derek Wanless should be so rewarded given his catastrophic failure in his responsibility to exercise oversight of the risk?
Graphic credit : Paul Waugh
*Based on standard 20 x multiple.
“This is a global problem. It needs global solutions. There is a global banking collapse that we are dealing with. If we could have the same standards and the same rules that we are about to apply in the USA and in Britain to apply to other countries around the world, the same standards of disclosure and accountability and remuneration, I think the confidence in the banking system will be restored.”
For some reason he didn’t say the phrase about the problem “which started in America”. He did however ignore the questioner* who asked him would he apologise.
*Guido is sometimes harsh on Nick Robinson, but that was a blinder, Gordon looked winded as if punched in the solar plexus. We can but dream….
Canada, alone in the industrialised world, has not faced a single bank failure, has no need for a bailout or government intervention in the financial markets. According to the World Economic Forum, Canada’s banking sector is best placed to weather the global financial turbulence (which apparently began in America).Gordon Brown’s Britain is ranked 44th.
