SurgeonGeneral
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Posts posted by SurgeonGeneral
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The US bond fund PIMCO has warned that Britain risks a vicious circle of rising debt costs as global investors demand a penalty fee on gilts to protect against inflation.
Bill Gross, the fund's chief and emminence grise of bond vigilantes, said the UK was on its list of "must avoid" countries along with Greece and others in eurozone's Club Med (Paris: FR0000121568 - news) .
The flood of British debt is likely to "lead to inflationary conditions and a depreciating currency", lowering the return on bonds. "If that view becomes consensus, then at some point the UK may fail to attain escape velocity from its debt trap," he wrote in his April monthly note.
Mr Gross said the UK is not yet in crisis but gilts are sitting on a "bed of nitroglycerine" and must be handled delicately. Spreads on 10-year gilts have crept up to 14 basis points above those of Spain, itself in some difficulty.
Professor Carmen Reinhart, an expert on sovereign defaults at Maryland University and author of This Time is Different: Eight Centuries of Financial Folly , said Britain's trump card is a debt maturity of over fourteen years, much higher than the US or the big eurozone states. This greatly reduces roll-over risk or the danger of a "sudden death" crisis in the event of a shock.
"What we found in our research is that countries nearing default start to rely on ever shorter debt maturities and issue more bonds in foreign currencies. The UK has done neither," she said.
"Britain may need a scare to force the politicians to act, just like the Canadians in the early 1990s when they started to trade like an emerging market. The lesson in these cases is that the sooner it happens the better. The risk for America is that their status as holder of the world's reserve currency will let them delay," she said.
However, there are risks that Britain will have trouble finding creditors to finance a deficit of 12pc of GDP now that the Bank of England has halted quantitative easing. The Bank has soaked up £200bn of gilts, more than the Treasury's total debt issuance over the last year.
Link:
http://uk.finance.yahoo.com/news/pimco-fears-uk-debt-trap-tele-604390495b1a.html?x=0
Another turn of the screw.....
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Labour Govt basically saying you need 250K to buy your first house in the UK.
Next move 50 and 100 year mortgages?
Nick
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I'm in.
Because I absolutely refuse to put even a penny of commission, into the pockets of the hubristic, arrogant, smarmy, under-educated lying tw@t Estate Agents, who foul the very air in Farnham by their continued existence.
No way, no how.
Before I buy back in, I want 75% of them bankrupt and utterly humiliated, for their behaviour in the last twenty years.
Yes, that means you "Lodgey," and "Wadey," and absolutely and especially YOU "Fearny" - and your boys - for pocketing a fortune, through collaborating with developers to totally wreck the town that tolerated you, and made you rich.
It also includes all the fake upper class tw@ts at Saville's, and the flowery idiots at Burns and Webber, who write utter bullsh!t about thoroughly average houses. (Check this sh!t out - http://www.rightmove...y-14843031.html - all those words and you've never seen a dump like it!!!)
There, that just about covers it. When all the above comes to pass, I'll finally spend some cash with whoever is left - hopefully "Blaggers," who's a surprisingly decent bloke for an EA....
Agreed.Laughable bubblebulshit.
Been on strike for 3 years.
Nick
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That is a good question.
A few months ago the gap between Tories and Labour was wider. Reached 14%? Not sure. It was narrower after Piers Morgan interview, and the "recovereh"...
May widen now due to questions of integriteh....
Are you challenging their authoriteh on the recovereh?
Due you doubt their integriteh?
Nick
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But not to especially high levels. Yet.
well, I'd love to hope so to - but I'm not as certain as you are.
With the UK government buying 100% of Gilts (via BoE), it is a given there were no market takers at the rate offered.
While I know this is the purpose of QE, adjustment upwards seems inevitable.If CPI is what 3% and rising would you lend these clowns any money at less than 6.5 or 7%?
Sh*t I wouldn't.
Nick
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Depends whether you believe that the effect of QE is going to be to force inflation. So far, it doesn't seem to have brought about the dire consequences of a hyperinflatonary holocaust that some on here predicted.
Turning it off may just leave us in a kind of boring metastable state that could last years. If nothing rocks the boat then inflation may sit at a few % for many years, growth may be minimal and there'd be no driver to increase IRs.
OTOH if the £ tanks for whatever reason IRs may be raised. Or not.
I certainly don't think that a catastrophic (for the indebted) rise in IRs is a given in the next few years - unfortunately. From a selfish POV I'd benefit enormously.
Core inflation is rising in the UK, and only the UK vs USA/Euro.
Our IRs are going up, deffo.
Nick
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Well we've discussed the science repeatedly in the OT and the conclusions were very clear, the only thing basic is the known GHG property of CO2. Whether they can be applied to the complex global climate is an unknown and leaves the hypothesis unproven.Single variables rarely go through complex equations and end up unmodified. Given the stable nature of earth in general that has allowed sophisticated lifeforms to evolve, there are some defensive mechanisms the earth has to keep itself inhabitable. Sadly it seems science would rather ignore the complexity, and this is why we keep getting busted seasonal forecasts from the MetO for example, and an unforecast 15 years of no global warming.
We know that GHG concentrations do not correlate with global temperatures on any timescale, and science is still trying to figure that out.
Top post.
The climate is a coupled non-linear dynamical system and as such cannot be predicted.
Nick
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He may well be right. I think the way to start is an immediate cap on public salaries - say 50,000. Anyone earning more than that, well that's what you are going to get from now.
I think it would send the right messages:
- Do you think we would do this if we weren't up a certain well-known creek?
- Those at the top of the wage-scale are being hit first, as is fair...
After that, start looking at further wage-cuts in the public sector. I'd be happy to see some non-jobs binned, but I'd personally leave that until last...
Great idea.
And when all the surgeons emigrate and in two years you find you need your colon removing, some dickhead will have a go at it for you..
I assume you mean pointless admin and advisers.
Why not just sack them?
Nick
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Britain's other trump card is a (relatively) non-unionised workforce which is both more supine and less regulated than it was in past crises. This doesnt show up in any of the commonly quoted statistics about debt, deficits etc but could turn out to be more important.
Hence no possibility of inflation.
Nick
(ie wage increases... before I start WW3)
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non facias malum ut inde fiat bonum.
No salt but vinegar on the chips.
I believe, Eric.
Nick
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Still probably better for her to go bankrupt clear the decks and start again.
I am sure he wont let her and the kids sleep on the street/starve.
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A very good post. The loss of an AAA rating is the nightmare you suggest....
I think this is the nightmare acceleration event most of us on here worry about.
Nick
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Nice to hear a bit of good news. Good luck!
HEY! I THOUGHT WE HAD A RULE ON HERE!
NO GOOD NEWS ALLOWED!!!
Nick
ps well done...
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Gold is just another commodity that rides the market as Buffett decribe in his pendulum analogy. It has never recovered from the 1980 sell-off when it reached almost $2800 an ounce (inflation adjusted). There are better hedges against sterling than gold--how about Honeywell shares bought last year at $29 in US dollars and now at $40? Slightly outpaced gold? Factored against sterling it was a good bet. Don't hold too long though.
Gold will do what gold always does--rise and fall, and when it falls it goes quickly.
What might be the trigger? Frustration that it is not moon bound and still stuck well below $1500 (let along $2800)? Recession and depression looming which points to deflation? Everyone getting on the bandwagon believing its a one -way bet (the far end of the Buffett pendulum and a major sell signal)?
IMO, gold has had its run and now its time to sell.
GOLD 26/02/10
02/26/2010
09:12
911.80
912.80
-115.20
-14.47%*
_______
*just kidding
you had me there chap!
Nick
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It could also be a sexual position - but I doubt you would want raspberry sauce and chocolate sprinkles then!
More accurately described as Roseberry Juice.
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Edit: Post not posted because I fear for my family - its pretty clear what is going on here.
I want to start a church of Pte Frazer. A man before his time - a visionary.
for us thickos... what is going on.
hyperinflationary collapse?
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Monetary collapse 100% Guaranteed.
Stop quantitative easing...the stock and bond market will fall. (It's started again)
If they increase...there will be a currency crisis.
All mixed in with the war on so called 'terror' and scaremongering. :angry:
I agree. The noose is tightening and , I suspect, they'll print or borrow covertly knowing they won't be around to pick up the tab. IIRC, Labour borrowed 1 billion in 78-79 which the country never knew about.
Thatcher revealed this acouple of years after taking office. God we need her now...
Interesting to see Volcker with Obama yesterday. I think Obamama has tumbled Geithner and Bernanke.... and interest rates could be set at more realistic levels quite unexpectedly.
Good. Any f#ckwit that borrows at 3-5% ( variable) and doesn't build in plenty of redundancy deserves everything they get.
Nick
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It adds up over a year, got to save where poss. Excuse me while I go and sit round my candle and get ready with the next candle to light it from the first candle (saves a match!).
x
Great stuff!
Nick
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Log on to IGindex
Look at FTSE price. Type in amount e.g. £1 per point click on sell. Then if 5 days later the price has fallen by 200 points, click on buy and collect £200. If however its gone up by 200 points the wave goodbye to £200
It can be for any duration you fancy.
I use IG for 3-4 week positions using the sort of technical analysis so widely rubbished on this site and have turned my £5k account into a £7k account over 18 months or so. Not that much but I'm a higher rate tax payer so its almost like doubling prior to tax. I'm correct 70% of the time. So a good understanding of stop losses and the fact that a £1 position may be the equivalent of £15,000 worth of whatever it is, is vital.
Watch out, they say that 90% of people lose. I must just be lucky. (so far). As with all investments, you've never gained until you cash it all in and walk away into the sunset.
Thanks
Nick
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It’s the completion target of the inverse H&S created from Oct 08 through to Mid July 09 when it broke up and more importantly, the move from Mid Nov 09 to Mid Dec 09, you will never see a more text book triangle, triangles are hugely important for analysis, they are without fail always penultimate consolidatory patterns, they warn that only one more move in the direction of the trend is left (in this case up) before a correction of that entire move (in this case at a minimum a correction of the move up from 4000 to current price). It may go 20 or 30 points over 5575 but that’s pretty immaterial, once it hits that it is a good extremely high probability short to hold for a month or two.
Its also in the tea leaves left in my cup
How do I get a short?
Got an IG index account, but never used it as not interested in daily gambling.
Nick
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Availability of 2 litres milk for £1 at Poundland most days, 2.2 litres at Lidl £1.09.
That said, Asda are best value on most items, at the moment. Having said that, found waterproofing spray for clothes/shoes at £2.40 in Sainsbury's, seems to be £4 to £6 everywhere else for only a slightly bigger can.
The Last Tightwad!
Nx
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I don't see why. the rate paid on reserves just needs to be whatever rate is sufficient to keep most of them out of circulation. Obviously the stronger the economy is growing the higher that rate needs to be.
No, there is no rollover risk, because the bank reserves once there never go away. The risk is only that the rate that must be paid on them could increase when the economy grows strongly. The government is no borrowing and spending those reserves. The reserves in the CB term deposit account just sit there - because the aim is to keep them our of circulation. The term deposit represents a neuralisation of past expenditure by the govt, not borrowing really.
Plus, one bank or another can get rid of reserves but they just end up at another bank. The stock of reserves is not depleted by any action except taxation.
Should the government want to spend more it could then just spend, which creates new bank reserves. The new reserves created this way can be neutralised assuming banks are willing to take up further term deposits. If they are not then the rate paid on them would have to be raised.
So really there is no need for the government to raise short or long term debt at all. All is required is that the reserves be managed to create the appropriate level of liquidity by paying interest on them. Then long term bonds can be issued in order to hit a long term interest rate target, rather than to raise money.
I've long thought you are either a genius, or one of the best bullshitters in the history of the world.
No clearer.
If this were such a good idea, why hasn't it been done before then?
Nick
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i bet you wonder why you bothered. You could have carried on saving for a few years, plus better pay from job progression and bigger deposit would have got you a really good sized place in a nice part of brum for less than double that between 98-00 at a more agreeable interest rate.
Plus, they would have done a lot better than 100% appreciation after 15 years.
top post.
clever.....
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my poor precious......
Where Have The Bears Gone?
in House prices and the economy
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Great stuff!
Well done. An example to us all.
Nick