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Brown Forced Into Record £65bn Gilts Spree

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Brown forced into record £65bn gilts spree

Gordon Brown, the chancellor, is on course to issue a record £65bn of gilts next year, smashing the previous record set by Norman Lamont 12 years ago after the Conservatives lost control of the public finances.

Gilts are bonds that the British Government issues in order to borrow money. According to two of the leading players in the market, Barclays Capital and Merrill Lynch, the deteriorating state of the public finances will force Brown to sell at least £65bn of bonds in 2006/07.

Merrill Lynch predicts that the figure could be as high as £70bn. The forecasts are an embarrassment to the chancellor ahead of the Pre-Budget Report on December 5.

This is known as having your cake and eating it, for a while at least, it allows you to recruit as many directors of open spaces, hertage wardens etc as you like whilst avoiding obvious tax rises, the question is whether he can maintain this magic rope trick until 2008?

After almost a decade now is usually the time when chancellors (or complete governments) gracefully do a runner leaving all the accumulated baggage for other people to deal with, that's if they aren't already long gone. After this length of time Brown is becoming his own worse enemy, his deficits are fast catching up with him.

Such an issuance is not good news for those looking for lower interest rates.

Edited by BuyingBear

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This is known as having your cake and eating it, for a while at least, it allows you to recruit as many directors of open spaces, hertage wardens etc as you like whilst avoiding obvious tax rises, the question is whether he can maintain this magic rope trick until 2008?

After almost a decade now is usually the time when chancellors (or complete governments) gracefully do a runner leaving all the accumulated baggage for other people to deal with, that's if they aren't already long gone. After this length of time Brown is becoming his own worse enemy, his deficits are fast catching up with him.

Such an issuance is not good news for those looking for lower interest rates.

The trouble with selling Gilts is that it forces up interest rates.

I guess when your faced with raising taxes, cutting spending, or increasing borrowing, borrowing is probably the politically least damaging.

But the markets will start to price in higher rates.

The fireworks are really starting to begin...

Edited by BandWagon

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The government borrowing money = INFLATION.

Prepare for the pound to lose more....... Got to inflate all that debt away!

People with £'s in savings accounts and equities - suckers!

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Govt borrowing money doesn't equal inflation, check out Japan.... but yes, long term IR's should start going up.

What it can do is "crowd out" private investment. If you were a bank, with mortgage margins thin, and defaults rising, why not lend to HM treasury instead...? Much cheaper too.

Equities don't do too badly in inflation, if the firm is a good one and has pricing power (and why would you buy shares in bad companies without pricing power....?)

Gilts and cash does badly. Unless they are I/L. Interestingly, I read recently that IL gilts (and TIPS) have outperformed rest of govt bond market handsomely over last 10-15 years... number of explanations why.

Playing one handed golf Brown is. Much concentration he needs, easy game not.

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Equities don't do too badly in inflation, if the firm is a good one and has pricing power (and why would you buy shares in bad companies without pricing power....?)

Because they're cheap? :)

Government spending can cause inflation if it's competiting with the private sector for limited resources, in the North many public jobs have good settlements that some private companies can't match, especially when it comes to pensions.

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Here we go again, higher taxes, inflation, higher interest rates, higher unemployment. . . . .

It seems that Brown's "economic miracle" is fading fast and now someone has to pay for the free ride (HPC and MEW) of the past 10 years.

Time to emigrate I am afraid.

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the question is whether he can maintain this magic rope trick until 2008?

Another potiential question may be will the media and big bussiness choose to tell the public to keep brown in 2008?

Check this quote from a Palast article that speaks of a circle of important politicions in bed with cooperations

"Labour's super-majority in Parliament means the only countervailing force is the media and business community," he said. "So when the economy turns soft, as it naturally must, we will make certain they stay with us. If we have business and media, the people will come along."

http://www.gregpalast.com/detail.cfm?artid=73&row=1

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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