FT.com / Capital Markets - Investors flock to Greek bond issue.
OK, the return is higher than that due on German bonds. But Greece has sold a third of its annual funding requirement with the issue four times over-bid.
Greece is in much worse state than the UK.
Shall we stop all the nonsense that the UK may face a funding crisis as a consequence?
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“OK, the return is higher than that due on German bonds.”
You are kidding, no? The yield on a Greek 5 year government bond is 300bp higher than the German equivalent. Higher yields normally imply a higher expectation of a devaluation, but since the German and Greek bonds are both in Euros, the extra 15% paid by the Greeks reflects a higher market expectation of loss through default/deferment. If expectation of loss on the German is effectively nil, the market is telling the Greeks it expects to lose 15% of its investment (not necessarily a 15% chance of a total wipeout but a larger percentage chance of a partial loss).
Its now looking even worse for the Greek bonds this week and there’s a growing belief that the UK’s credit rating is about to be devalued, raising the cost of sterling borrowing and adding significantly to the cost of servicing a mortgage.
And the Government is claiming that the UK is now officially out of recession…..does anyone truly believe that ?
Richard – I think your claim that Britain isn’t facing a funding crisis may prove to be a tad premature.
But there is no reason for a crisis
None at all
But Fitch are generating one for the benefit of the Tories
I do not think their comments just before Cameron spoke at Davos were coincidental
It is quite ludicrous to think the UK cannot pay its debt
And you know it
I think that a budget deficit of >12% of GDP for 2010 qualifies as a fairly good cause of concern about an impending crisis.
Add to that the UK central bank has essentially underwritten last year’s budget deficit (also >12%) and will have to offload these bonds at some point, which will add to the supply.
Greece is a far more serious basket case than the UK, but the signs are everywhere.
Rubbish
I and others have shown time and again the capacity to service the debt and clear the deficit exists in the UK
Sure we have to tax the rich a lot more
What’s better, default or you paying a lot more tax Edouard?
Dream on Richard.
It’s been tried before, it won’t work.
Start living in the real world and realise the UK is completely shafted.
Peter
The reality is quite the opposite
What is readily apparent is that the UK is being shafted by the wealthiest for their own gain
And some of us are determined to stop that happening
Which can be done
Richard
@Richard Murphy
Could I ask you point out where to find your proposals to address the deficit. And please do not send me in the direction of the Compass report; it has already been conclusively dismissed as fiscal fantasy.
I will never pay a lot more taxes here (>$4 million in 10 years is enough) and you know it. And a significant share of the 5% or so of the working working population that contribute >50% of all income tax will do the same thing I will do: up the sticks.
eg
how? as Peter says, it has bee tried before and has not worked.
what are you suggesting can be done differently?
Fiscal fact
It would work
The fact is you don’t want it to
Please feel free to leave very soon
I for one would be happy to see you and many more like you go
And I also know you won’t
Which is precisely why the Compass measures would work
And why I know I’m right and you’re just bluffing
Richard,
Continue fooling yourself. People like myself have limited or no attachment to this country, we are self-employed or with very mobile jobs and there are plenty of American-oriented schools in places other than London.
It is very easy (sometimes even tempting) to leave, it is not bluff.
The income tax receipts are so concentrated on a small high-earning population that it will not take many departures for receipts to collapse.
It is not the likes of myself who are hurting at your delusion. You should this.
Coming back to Peter’s point, what will you differently this time that has not already been tried, and has failed?
eg
Richard
I don’t think its at all ludicrous to say that the UK cannot pay its debt. Taxing individuals and corporates at 70&%-plus just won’t work in this highly mobile era. Individuals most certainly will go at that level (even though I don’t think so many will go at the 50% level), and entrepreneuers simply won’t bother to take all the risks of being in business in the UK if the rewards are hammered by excessive taxes. Besides, the UK barely manufactures anything these days and with a reduced financial services sector the one area which has historically been generating large tax revenues (until 2007/8 at least) will be contributing far less.
The UK looks in a dire state and the signs aren’t good. Moreover, does anybody genuinely believe that the economy has turned as the Government were telling us last week ? Nobody trusts this Labour government, and so isn’t exactly the sort of propoganda to be fed to the electorate just before a general election at which Labour are staring defeat in the face ?
Look at the debt levels per capita, look at the lack of manufacturing activity and look at the impact of increased borrowing costs on that mountain of debt. The UK will be very lucky to service its debt and stop the capital debt expanding, let alone reduce the debt levels.
Richard, I suggest that you have a look at the following. It’s from Robert Peston’s blog on the BBC. Very interesting reading…. ❗
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/02/tories_withdraw_support_from_t_1.html