Who Are The Uber-rich Parties Who Lend Money To The U K

[loginandtonic]

Who are these people who take large chunks of Sovereign debt? They are not spending £1000 a time, they are taking probably tens/hundreds of millions or even more each of UK debt.

I would dearly like to know what sort of people they are that they have that to spend/invest in UK debt, or what institutions they are abroad lending this to the UK.

Would their due dilligence when loaning so much be pretty solid these days, mindful of every factor, before parting with so much mega wad instead of buying something more solid (won't say that word).

If the UK were that likely to go banana republic or seriously in the Zim direction, why would they buy our debt? or am i missing something obvious?

Don't misunderstand me, QE is a very hazardous idea, they're using it to stop deflation, and it seems to be going pronty printy and more printy printy just as many here forecast. However, would those parties take our debt if it looked as if our triple A was about to be replaced with a sticky banana logo?

Before you say it, i assume some of these investors didnt foresee the banking crash - but surely they are sharpened up now with so much of their own money at stake? or do they think they can make a profit and get out before the SHTF in which case anyone guess at some time-scales..?

Neither a borrower nor lender be

Edited August 7, 2009 by loginandtonic

[Bloo Loo]

Who are these people who take large chunks of Sovereign debt? They are not spending �1000 a time, they are taking probably tens/hundreds of millions or even more each of UK debt.

I would dearly like to know what sort of people they are that they have that to spend/invest in UK debt, or what institutions they are abroad lending this to the UK.

Would their due dilligence when loaning so much be pretty solid these days, mindful of every factor, before parting with so much mega wad instead of buying something more solid (won't say that word).

If the UK were that likely to go banana republic or seriously in the Zim direction, why would they buy our debt? or am i missing something obvious?

Don't misunderstand me, QE is a very hazardous idea, they're using it to stop deflation, and it seems to be going pronty printy and more printy printy just as many here forecast. However, would those parties take our debt if it looked as if our triple A was about to be replaced with a sticky banana logo?

Before you say it, i assume some of these investors didnt foresee the banking crash - but surely they are sharpened up now with so much of their own money at stake? or do they think they can make a profit and get out before the SHTF in which case anyone guess at some time-scales..?

there is some evidence that in the US, the primary bidders are just buying and selling them to the Fed in a few days, skimming their premium of course.

[loginandtonic]

there is some evidence that in the US, the primary bidders are just buying and selling them to the Fed in a few days, skimming their premium of course.

sorry to be a thicko - do you mean buying our debt + then selling it to the US or buying the US's debt and selling it back to the US? sounds like you meant the latter. so its a game of pass the parcel with musical chairs with no one holding for too long?

Edited August 7, 2009 by loginandtonic

[Bloo Loo]

sorry to be a thicko - do you mean buying our debt + then selling it to the US or buying the US's debt and selling it back to the US? sounds like you meant the latter. so its a game of pass the parcel with musical chairs with no one holding for too long?

no, there was some noises along these lines for the US Sales.

Government auction some bonds.

people dont want them so much so the excess are bought by the preferred buyers (Goldmans maybe...I dunno).

the preferred buyers dont really want them so a few days later the fed buys them back with QE.

just a rumour, of course, couldnt possibly happen in real life, and the treasury wouldnt let it happen in the UK.. course not.

[plb]

no, there was some noises along these lines for the US Sales.

Government auction some bonds.

people dont want them so much so the excess are bought by the preferred buyers (Goldmans maybe...I dunno).

the preferred buyers dont really want them so a few days later the fed buys them back with QE.

just a rumour, of course, couldnt possibly happen in real life, and the treasury wouldnt let it happen in the UK.. course not.

An Unpleasant Surprise Hurts BOE Credibility (Wall St Journal)

Predictability used to be regarded as the cornerstone of successful central banking. Yet the Bank of England has thrown the rule book out the window. Just one month after it surprised the market by deciding not to extend its program of quantitative easing, it has delivered a bigger surprise: by deciding to pump another £50 billion ($85 billion) into the economy. At most, economists had expected another £25 billion.

This will fuel doubts over the BOE's motives. It sits oddly with data suggesting a strengthening recovery and with the BOE's recent statements that it is focused on the quantity of assets purchased, not the price. Yet Thursday's explanatory statement stressing the continued high cost of credit, combined with the BOE's decision to extend the range of gilts it will buy to include three-year bonds, suggests it is focused on prices. Three-year gilts have a direct bearing on mortgage rates, which remain high.

It isn't clear that buying more gilts, the name for U.K. government bonds, is the answer. Longer term, it could raise inflation expectations, causing yields to rise. The suspicion is that the BOE's real agenda is to print money to buy government debt. After the latest expansion of quantitative easing, the U.K. Debt Management Office will effectively have to find buyers for just £45 billion of gilts, the lowest amount since 2002-03.

No doubt this is anathema to BOE governor Mervyn King. He knows that a surge in yields remains a big risk to a recovery. So the BOE is forced to tie itself in intellectual knots trying to justify its policy decisions, despite the risk to its reputation for predictability -- and its credibility.

Of course not!

[Neverland]

Who are these people who take large chunks of Sovereign debt? They are not spending ?1000 a time, they are taking probably tens/hundreds of millions or even more each of UK debt.

I would dearly like to know what sort of people they are that they have that to spend/invest in UK debt, or what institutions they are abroad lending this to the UK.

Would their due dilligence when loaning so much be pretty solid these days, mindful of every factor, before parting with so much mega wad instead of buying something more solid (won't say that word).

If the UK were that likely to go banana republic or seriously in the Zim direction, why would they buy our debt? or am i missing something obvious?

Don't misunderstand me, QE is a very hazardous idea, they're using it to stop deflation, and it seems to be going pronty printy and more printy printy just as many here forecast. However, would those parties take our debt if it looked as if our triple A was about to be replaced with a sticky banana logo?

Before you say it, i assume some of these investors didnt foresee the banking crash - but surely they are sharpened up now with so much of their own money at stake? or do they think they can make a profit and get out before the SHTF in which case anyone guess at some time-scales..?

Well the BoE owns about 20% of the outstanding stock according to the FT today

Other big chunks are owned by UK pension funds and insurance companies, plus the major UK banks

I'd be fascinated to know how much is held by overseas investors if anyone knows?

[loginandtonic]

no, there was some noises along these lines for the US Sales.

thx

Well the BoE owns about 20% of the outstanding stock according to the FT today

Other big chunks are owned by UK pension funds and insurance companies, plus the major UK banks

I'd be fascinated to know how much is held by overseas investors if anyone knows?

so the boe has "bought" uk govt debt with the photocopier, a right old charade, 20% of it. its so ludicrous if the british people generally understood this they would first laugh then start to ask important questions about where this silliness is going to end. thats why, as i said a few days ago, i am pretty scared. these 'banking' adults have in effect set up a toy sweetie shop like children and are pretending to buy and sell things to each other with pretend money marked MK Games. if thats not scary i dont know what is. lord i hope i'm wrong i really do.

Edited August 7, 2009 by loginandtonic

[Neverland]

thx

so the boe has "bought" uk govt debt with the photocopier, a right old charade, 20% of it. its so ludicrous if the british people generally understood this they would first laugh then start to ask important questions about where this silliness is going to end. thats why, as i said a few days ago, i am pretty scared. these 'banking' adults have in effect set up a toy sweetie shop like children and are pretending to buy and sell things to each other with pretend money marked MK Games. if thats not scary i dont know what is. lord i hope i'm wrong i really do.

Well, so far its done no harm.... so far

Whether its done any good is impossible to prove...

It does create some inflationary risk down the line, but really scares me is what that means about what the BoE thinks about the outlook for the Uk economy

Still that must be good for HPC

[cashinmattress]

Don't ask such silly questions!

Here's who's buying the debt, in case you've been in a coma for the past year:

[three pint princess]

What is more interesting is where is the money going to end up from the sale of Gilts

by the people who own them to the Asset Purchase Facility who are funded by the BOE.

They get cash in Sterling and should in theory buy something else with it which puts money

into the economy at high speed.

I'd be fascinated to know how much is held by overseas investors if anyone knows?

As of 31 March

about 36.4% Overseas 36.35%

http://www.dmo.gov.uk/index.aspx?page=publ...arterly_Reviews

Insurance and Pension 35.76%

Overseas 36.35%

Other Financial Institutions 17.6%

Households 1.23%

Building Societies 1.34%

Local Authorities and Public Corporations 0.23%

Banks 7.49%**

**Could refer to clients of Banks or general Government screwing around with assets ?

Edited August 7, 2009 by three pint princess

[Neverland]

What is more interesting is where is the money going to end up from the sale of Gilts

by the people who own them to the Asset Purchase Facility who are funded by the BOE.

They get cash in Sterling and should in theory buy something else with it which puts money

into the economy at high speed.

As of 31 March

about 36.4% Overseas 36.35%

http://www.dmo.gov.uk/index.aspx?page=publ...arterly_Reviews

Insurance and Pension 35.76%

Overseas 36.35%

Other Financial Institutions 17.6%

Households 1.23%

Building Societies 1.34%

Local Authorities and Public Corporations 0.23%

Banks 7.49%**

**Could refer to clients of Banks or general Government screwing around with assets ?

Thanks

I think they've mainly been buying higher yielding corporate bonds with it, no?

Some has also gone into new bank lending, some has probably gone into the stock market (just like China's increased bank lending) I would have thought too...

Personally, looking at this I wonder if the BoE needs to find more foreigners to buy gilts given the amount we have to issue to fund our spending deficit (sp?)

Maybe I'll try and find the figues later...

[Bloo Loo]

thx

so the boe has "bought" uk govt debt with the photocopier, a right old charade, 20% of it. its so ludicrous if the british people generally understood this they would first laugh then start to ask important questions about where this silliness is going to end. thats why, as i said a few days ago, i am pretty scared. these 'banking' adults have in effect set up a toy sweetie shop like children and are pretending to buy and sell things to each other with pretend money marked MK Games. if thats not scary i dont know what is. lord i hope i'm wrong i really do.

course, the government will still be paying interest to the BoE, with which it can repay its losses for the bank bailouts.

bankers get the bailouts, we pay for the cost, then they take bonuses.

nice work if you can get it.