Friday, 22 May 2009

This could be nasty

I wonder if Brown is shitting himself?

Working respectively for the ratings agencies Standard & Poor’s, Moody’s and Fitch, this trio have the job of deciding whether the UK can pay back the hundreds of millions of pounds Brown’s government is borrowing every day through the gilts market in order to keep afloat. One day soon, it may be their job to declare that it can’t. ‘Britain should lose its triple-A rating,’ said Stuart Thomson, a bond fund manager at Ignis Asset Management, which has £70 billion under its control. ‘If the ratings agencies were being honest, they would downgrade the UK.’

So what?

Ratings matter, for two reasons. They impact on how much you pay to borrow. Every notch you drop down the scale, the price of borrowing rises to reflect the perceived increase in risk that investors are taking on. Perhaps more importantly, ratings also determine who can own your debt. Gilts are often owned by pension funds or foreign central banks, which classify them as part of their reserves. Both are often only allowed to buy Triple-A paper. Lose that status, and your best customers can suddenly no longer touch your bonds.

Sounds bad.

Japan was downgraded by Fitch in September 1998: at the time, the Japanese government was struggling with a huge volume of problem loans in its banking system, and a third consecutive quarter of negative growth (sounds familiar, eh?). Moody’s and S&P followed suit.

I wonder if the manic mincing madman has the IMF's number on speed dial on his latest Nokia? But why should we care, anyway?

It’s true that all three agencies are woven into the City’s fabric, and depend on it for their income. Nor do the problems stop there. ‘The political problem is really in the US,’ said Marc Ostwald, a strategist at Monument Securities. ‘Any move to cut the UK rating, or even to put it under review, immediately begs the question of why they aren’t doing the same thing for the US. It is following very similar policies to the UK.’ Indeed so. But cut the rating on US Treasury bills, and the world financial system would be right back hanging over the brink of the abyss.

This is all due to letting that fucking madman and his badger-browed sock puppet get on with the jobbie. Our political class of uselessly supine opposition and economically illiterate government are equally to blame for this.

We really are so fucking fucked.


Dungeekin said...

Have no fear, Citizen.

The Saviour Of The World is shortly to announce his new National Plan, to lead Britain out of recession and into a Glorious Socialist Future.

Stop laughing.


RobW said...

Problem is it's exactly the same in the US. Both of our freedom loving countries have been usurped by statist fraudsters.

Pogo said...

Two things... One, why do we bother to ive any credence whatosever to these twats? They're amongst the group who were rating Lehman Bros as "AAA" only moments before it went totally tits-up.

And two, Knowing the cool, rational way that the markets react to bad news, what's to stop the cunts taking a massive short position in Sterling, announcing doom gloom and despondency, then decamping with a couple of billion dollars to a life of idle hedonism after the wheels fall off the Pound?

Let's face it, it's all a big confidence-trick and none of the cunts really know what they're talking about, they just dress it up in jargon so that "the little people" don't understand.

Damo Mackerel said...

We truly are up the creek.

The bond market itself is becoming one big bubble.

What will happen when that bubble bursts?

Britian is the second biggest debtor country in the World. Ireland is first.

Chalcedon said...

Standard and Poor rated Lehman's AAA up to the day it crashed and burned. Do they really know anything? Iceland was rated AAA but it was blindingly obvious a nation of 250,000 couldn't match the debt.