Britain moves closer to losing prized AAA credit rating :: Standard & Poor

England owns the American Federal Reserve money-printing machine amongst other things. But I'll take their word for it and shed a tear for the poor banker of the world. I guess now Upper Volta and Zimbabwe will have consider lending their money to other Global Banking Empires. :)

Maybe I'm in a parallel universe or something, but Reuters and Bloomberg are showing the Pound at around US$1.5873, and hitting US$1.59 in the last few minutes.

This the first time I've noticed the Pound at that level since last November.

Chris

'nomer.23' wrote thus:

Does it?

That's kind of you.

Indeed.

Not only, but as the world's largest owner of (mostly stolen gold) it sets the gold prices. Get the lords to share the trillions and stop wingeing about Brown (their loyal bolshevik servant).

It went down, then everyone realised that the agency marking the UK down was the same agency that had marked all the toxic loans as AAA and their track record isn't what you'd call stunning...

Yes, CDSs are nominally for insuring debt, though it's clear a lot of people weren't actually doing that with them.

I don't have data. I'm not sure where to look, to be honest. I'd guess German bank CDSs are cheaper than UK banks, but only because they got cheaper than dollar CDSs some time in February. If you find current rates it would be good...

just in case this assists

i think the interest rate difference is ~.4% at present.... such interests rate differences would tend to reflect risk perception...

regards

'nomer.23' wrote thus:

Do you have any evidence of these claims?

'abelard' wrote thus:

Exactly! I recall a month or three back DC mentioned that this rate for UK sovereign debt had risen above Germany's, which I take to mean that investors (or insurers) place a higher risk on it.

I think we're talking about two different things here - government bonds (gilts), and CDSs.

The first are issued by states, and the second are bets on bond performance contracted by banks, hedge funds or insurers like AIG.

The figures for government bonds are here:

The relevant table is "Ten Year Government Bond Spreads."

Incidentally, the spread against eurobonds is low at the moment (0.15%). It rose to 0.35% yesterday, but generally it's fallen over recent weeks, which suggests lower risk *relative to eurobonds*. It was around 0.5% at the start of the year.

As for CDSs... There are hundreds of CDS products around. If you want to find out rates you'd have to identify who issues them and what they're selling for at the moment. For example German real estate bank Hypo has the WuerttHyp F-1, based on French commercial property:

It's worth noting that they're private contracts rather than government bonds.

They're connected to bonds issued by governments or businesses or other organisations, but neither party has to own the bond. They're a bet about how well a particular bond is going to perform.

So it doesn't make sense to look at them as a guide to national economic conditions, except insofar as the underlying bond's performance might be affected by general economic conditions.

as long as 'individual' deleveraging occurs during the debauchment of the currency... then why would you necessarily insist that the situation after the individual adjustments would leave 'the economy' unchanged or 'unimproved' in some sense? even if the whole economy was (after the event) producing less than previous to what you're calling 'a bubble'...ie, the uk ends up (as is my view it probably will) with a real lowering of living standards...

glory knows if that is clear enough for you!

regards

AFAIK that has already happened. The only reason it has not been visible is because of the credit people used to take their three hols a year, or the money they made from the property boom. For those of us on baseline income, it has become harder and harder - I honestly feel that I was 'better off' on Income Support back in the early 90's. At least I could pay for my gas and electricity.

i'm expecting more...

regards