Wednesday, Nov 26, 2008
Yikes!
Telegraph: Fears mount that Government will default on bonds
The cost of insuring against the British Government defaulting on its gilts in the next five years surged to 100 basis points above libor at one stage yesterday, before closing at 88.2 basis points.
In comparison, insuring against leading banks failing to pay back their debt now stands at 58.8 basis points for BNP, 65.2 for Commerzbank and 68.6 for Credit Agricole. In the UK, Lloyds TSB is priced at 95 basis points and 99.2 for HSBC.
Posted by flintster1994 @ 05:50 PM (554 views) Add Comment
5 Comments
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1. stillthinking said...
I am of the opinion that this is inevitable. The UK will either default or print money, which is why I am so interested in the details of our agreement with Europe. I am sure we have signed up to non-printing.
The coverage of debt issued by the UK is falling. Also, most of the debt bought reaches maturity quite quickly, not much more than 8 years.
I think that people are concerned because they don't know what is happening, which is fair enough. People are wary of high inflation in the near future.
In conclusion, people are wary of default or inflation through printing. So one of the two is going to happen. Idiot New Labour can't pursue their borrowing solution and are leading us to collapse.
2. drewster said...
This is insane. The government can't default on Sterling bonds because they can always just print more. Why would anybody take out such an insurance policy? It's like insuring against the risk that the sun won't rise tomorrow.
There is a remote possibility that they *choose* to default on Sterling bonds, but that would be economic and political suicide. Nobody would ever lend to the UK government again.
3. planning4acrash said...
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4. matt_the_hat said...
Can you go short and long on these things, cos I'm going to approach the Fed for a loan - I want to go $100000000000 short on UK default and $100000000000 long on Loyds default at the 100 basis points - no brainer LTCM would have loved this - techiman can these type of deals be done
5. stillthinking said...
They lent to Argentina again. They lent to Russia again. (They being the banks).