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Gilts and innocence

Robert Peston | 12:46 UK time, Thursday, 26 March 2009

If anyone thought that investors don't want to lend to HMG at any price (not me guv), that idea has been well and truly exploded by the handsome success today of an auction of £1.1bn of index-linked gilts.

What that shows is that - on top of growing wariness about the sheer size of the government's borrowing needs - there were some special factors contributing to yesterday's flop (see my note on all this).

However there is evidence of investors wishing to take fewer risks when lending to the British state.

Yesterday the Debt Management Office was asking for a 40-year conventional loan. That's a long time to wait for your money back.

And the maturity of that loan means it can't be dumped straight away on the Bank of England - which is buying gilts with maturities between five and 25 years as part of its anti-deflationary, quantitative easing programme.

So for both reasons, yesterday's gilt was riskier than today's offering, a 13-year loan that provides protection against the effects of rising inflation (which is why it's called an index-linked gilt, for the uninitiated).

In fact you could argue that today's success shows that investors fear the Bank of England's crusade against deflation may - before too long - see the beast of inflation rise from the pit.

We're probably going to have to wait till we see auctions of more conventional gilts before we can gauge whether the government will have difficulty borrowing the colossal sums it'll need over the next couple of years.

But those who think that yesterday's flop is a sign of an imminent fund-raising crisis can't point too much in the way of market prices by way of evidence.

In fact as Laurence Mutkin of Morgan Stanley has pointed out, the measure of the market's perception of the probability of the UK defaulting on its debts - the credit-default-swap premium - barely moved yesterday.

Comments

Page 1 of 3

  • Comment number 1.


    "the measure of the market's perception of the probability of the UK defaulting on its debts - the credit-default-swap premium - barely moved yesterday"

    Errrr.... haven't these methods (the market and the use of CDSs) proved to be a wholely unreliable measure of default risk? Or have I just been imagining the last 18 months of financial risk calamities being exposed?

  • Comment number 2.

    Yesterday's flop was a disater. I honestly don't know how you can call it anything but a disaster!

  • Comment number 3.

    Oh, and Rob, why is left to the readers of your blog who post here to write the news? Between yourself spinning facts and Robinson censoring important news stories, one starts to wonder.

  • Comment number 4.

    So now its not significant.

    Was Meddlesome on the phone last night then

  • Comment number 5.

    There's also another reason why investors won't go near the conventional gilts:

    - they don't think the interest offered is anywhere near enough what it should be, especially if they and you and we think that inflation will be upon us in due course.

    This is why index linked gilts offer a better deal.

    There's even talk in the air of mortgage interest rates going to 9%, so all those on 0% financing, enjoy it while you can; like all things including Gordon's boom time, it won't last.

  • Comment number 6.

    Robert,

    I feel that the UK is now on the brink of Global credibility and if GB and his Labour Government keep pushing further debt and further "expansion packages" then he will be signalling to the Markets that all he cares about is his re election and not the pound nor our long term Economy.

    He tslks of moral global capitalism but where are his standards of morality and actions following his words. Most if not all is rhetoric followed by very little cohesive directed strategic action. Brown has lost the faith of the Nation and he is about to lose the faith of the Global Markets. If we have another Gilt Auction failure, then God Help Us and the IMF come in.

    Daniel Hannan in just three minutes in the European Parliament dealt several crushing blows to GB and all Brown did was grin and make notes>

    I would certainly not be grinning if I was the recipient of Hannan's devasting words of truth. I also note that Hannan has now reached the heights of online media with his three minutes vidoed on the Drudge Report which reaches many millions of Americans. What price the pound by end April or early May?

    Why should I buy UK Gilts right now?

  • Comment number 7.

    Oh yes it is - oh no it isn't - so two articles effectively about no news!

    Robert please see Jon3434 #172 comments on yesterday's blog which, possibly because of the week I have had, brought a lump to my throat - you are missing the real business story - while you fiddle in the City the UK is burning!

  • Comment number 8.


    Robert

    Even a fool can see that inflation will return this year. We are an island importing food, most essential goods, oil and gas also. Our exports were mainly services, most from the Banking Sector.

    With the sterling pound down some 30% against a basket of currencies and also against the weak US Dollar, we are bound to suffer inflation, sooner rather than later. With Bank Rate at 0.5% and low mortgage payments for many, the plastic card at Supermarkets will continue and that famous weekly shopping basket will tell all. I can see 5% inflation as a minimum ( excluding houses and property) by Autumn time.

    Interest rates need to rise now, if any affect is to be seen. The very low rate at 0.5% is not helping the Real Economy at all, only the Banks.

    Savers and Pensioners are being hammered today by these out of line low interest rates, imagine what happens to them when inflation of food and heating hits 5% again, with their savings decimated?

  • Comment number 9.

    I think it is complacent to say yesterday was a blip.There are deeper reasons.

    The problem with quantitative easing is no one realy knows what they are doing. Tjose of say they do are lying, it is all a game and one that the Government could lose big time against the market.

    Remember 1992 when we tried to shadow the D-Mark - it cost the Government a fortune and the country a deeper recession than nescessary.

  • Comment number 10.

    I made the point in your previous blog that nobody in their right mind is going to buy ultra long gilts i.e. maturity date > 30 years. The reason is simple - ultimately the huge government debts being accumulated currently will be inflated away, rather than the tax increases and public spending cuts currently promised. It follows, therefore, that index linked gilts will be a good buy in a year or two when inflation picks up again.

    Give it two years, recovery in China manufactured goods, the return of the commodity boom and inflation back to around 5%. UK interest rates about 3% - result bank and building society depositors paying for the sins of the current (and previous) governments. Since the Thatcher/Regan "revolution" we have had "Thirty years of Tory scum" quod erat demonstrandum (QED)

  • Comment number 11.

    Yesterday
    But it would be equally unwise to dismiss the flop as a non-event.
    The important question is why investors' appetite for government bonds has been reduced
    Today
    If anyone thought that investors don't want to lend to HMG at any price (not me guv), that idea has been well and truly exploded by the handsome success today of an auction of £1.1bn of index-linked gilts.
    Robert
    Well I’m glad to see your hindsight is working well, please make up your mind and give us some real insight in your reporting, what do you really think ? what do you really know.
    I suggest in future you chose your words more carefully describing auctions as flops and questioning investors appetite for Gov bonds one day and then the next talking about a handsome success this shows how little you really understand or care about anything other than headlines rather than any actual substance or facts in what you report.
    Dare I say it but if it were a politician or banker doing their job as poorly as you seem to be your media friends would be baying for your blood.

  • Comment number 12.

    There`s not doubt you are correct when you talk about the "beast of inflation"

    There is a price to be paid for all of these bailouts, spending and QE.

    Credit Crunched UK

  • Comment number 13.

    Robert,

    "the maturity of that loan means it can't be dumped straight away on the Bank of England" (via QE)

    QE was bound to have complex effects on the market. I am also of the opinion that these effects have not been well analysed by the so called 'experts'.

    As to implying anything from the HMG's Debt CDS price -I think it is too early to tell.

    Plainly, however, QE should NOT have happened as it takes us further away from any idea of a recovery (as do absurdly low interest rates.) The sooner QE ends and interest rates are back to sensible levels the better.

  • Comment number 14.

    Though Canadian, I used to follow this informative blog religiously. But Mr. Peston has re-cast himself almost exclusively as the BBC's Banking Editor.

    A recent review of comments posted on the blog reveals that many (though certainly not all) of the most interesting and informed posters have given up on it.

    Those, like GRIMUPNORTH77, who have posted comments pleading with Mr. Peston to talk about what's going on in the the real economy have my sympathy. There are so many issues that need probing and discussion, of which banking is only one.

    Cheers, and good luck!

  • Comment number 15.

    "One swallow doesn't make a summer"

    What price have the government had to agree to for this index linking?

  • Comment number 16.

    I hate to say this, but I think QE was doomed from the beginning.

    http://creditcrunchsos.blogspot.com/

    http://ethicaleconomy.blogspot.com/

  • Comment number 17.

    Robert, you mention that:

    'the measure of the market's perception of the probability of the UK defaulting on its debts - the credit-default-swap premium - barely moved yesterday'

    You present this news as if it is an indication that the markets think that the risk of UK govt default is negligible, but can you explain what the actual figure is, and whether it has been rising or falling over the last few months?

  • Comment number 18.

    i have to admit this one has me puzzled..the government is selling gilts to pension funds to raise money, the bank of england via quantitative easing is buying gilts with money they have conjured out of fresh air. So far so good......but what is the point, why doesnt the government just sell gilts directly to the BOE? Looks like more smoke and mirrors to me...please explain what i am missing....

  • Comment number 19.

    I admire your optimism, Robert, but would venture that it is cynically placed.

    It is surely realised by all, that Monetary Controls in all of their Guises, are a very perverting and subverting Game being played extremely badly with imaginary figures and shady characters. However, such is the Future Need that there are, and there will be other players leaping into the Fray ...... or should that be Frey, with a Beta Algorithm and Sticky Sweet Plan for Universal Growth, Media Led and Fed. A Great Game Games Changer which can Tailored to any Time or Place and which will Server All Equally Better.

    I Kid U Not, Amigo. And something new and exciting for you to report on, rather than the catalogue of desperate panic and despair which is chronicled everywhere.

  • Comment number 20.

    An index linked bond on sale that protects against inflationary increases due to quantititive easng and devaluation of the pound.

    Can the ordinary savers buy into something like this?

    If they didn't sell you may as well put the country into bankrupcy now.

    It will take the taxpayers forever and a day to pay for all this

  • Comment number 21.

    A successful auction of 1.1 billion of gilts.
    That's good.
    HMG has only got to do that about one thousand times to cover the bankers wreck.
    One a day for 3 years?

  • Comment number 22.

    The UK is not bankrupt, but huge assets and moneys are held by crooks and speculators and the government has not yet asserted its control over a shadow banking system, which it should do now as a matter of urgency. That's one reason why Gordon Brown is now zooming into the question of tax havens. He should have done this a long time ago. More than 10 trillion US dollars (maybe 15 trillion, nobody knows for sure) are held worldwide in tax havens and offshore accounts.
    These huge sums need to be brought back into the real economy. The G20 has to bring global transparency to the fraudulent shadow banking system.

    There is more than enough capital available globally, it just is currently hidden away and often unlawfully in the wrong hands. Without cleaning up the world of tax havens and offshore banking, as well a tighter controls on hedge funds and those financial businesses who serve anyone with money, no questions asked, it is difficult to see how a lawful banking system can be sustained. The moral hazard of fast and easy money will corrupt most bankers, unless banking is firmly regulated and bankers are subjected to law and order, just like other normal citizens.
    You can find many more facts at:
    http://globalinsights.wordpress.com/

  • Comment number 23.

    Robert

    Are you now going to report on every auction?

    Why can't you focus your attention on the things that matter to business

    For example ...

    Increases in business rates
    Increases in national insurance contributions
    Access to borrowings or lines of credit
    The impact of policy on SMEs or big companies for that matter
    The impact of policy on exchange rates and imports and exports
    Raw material prices
    Rents
    Energy costs
    Haulage

    You could ask why companies seek to find low cost countries in which to manufacture or have call centres?

    Get out of central London. Go to Birmingham. Go to any industrial estate. Talk to some of your correspondents here on this blog. Go and interview them. Ask them what would make a difference. Get on a train. Talk to the passengers. Get on a bus, do the same. Pop into some local high street shops. Go to some docks.

    Stand up and be counted.

  • Comment number 24.

    Is not te CDS rate on Gilts almost irrelevant - there is no measurable risk of actual default, while there is a substantial risk of being repaid in Sterling paper of reduced value

  • Comment number 25.

    There is a significant difference between 40 year loan stock and inflation-indexed 13 year gilts. The difference is rather the difference between a basic Ford Fiesta and a Morgan. Both useful in their context but a major difference in perceived value.

    Nice to see the markets remain focussed on the short-term. It is almost as if they knew the next eighteen years of Tory administration will see them alright. Mr. Brown should be relieved that with such inadvertent Conservative support he will get through safely to June 2010 before he has to move.

    The rest of us will just have to rely upon our relationship with The Great Anarch in the hope that He will stay His hand.

  • Comment number 26.

    You post yesterday that about a failed gilt auction and relate that it could be a very worrying sign of lack of investor confidence in the UK. 24 hours later after a successful £1.1 billion gilt auction you post and basically say that you knew there was nothing to worry about!

    What was the point of yesterday post in the first place?

    I believe that there is still plenty of bad news out there and much more than the banks want the public to know about. How about Commercial Property, or [Unsuitable/Broken URL removed by Moderator]Alt A & Option ARMmortgages to name but two.

    Credit Crunched UK

  • Comment number 27.

    Robert can we have a real world blog rather than another city based one?

    I would suggest the death of the motor industry in the West Midlands. The government won't lend money to Jaguar Land Rover and won't do anything to stop the slow lingering death at LDV.

    http://www.birminghampost.net/birmingham-business/birmingham-business-news/automotive-business/2009/03/26/short-term-financing-up-to-tata-government-says-65233-23234961/

    At LDV as the employees aren't being paid but haven't been made redundant they can't claim on mortgage insurance policies so many not only look like losing their jobs but also their houses.

    http://www.birminghampost.net/birmingham-business/birmingham-business-news/automotive-business/2009/03/26/ldv-staff-caught-in-mortgage-trap-65233-23234745/

    People at Honda in Swindon will have the same problem when they go down to 30% pay before their factory re opens, if it does re open.

    Out in the real world long established manufacturers and companies are going under every week and yet nothing from you on the subject.

    Are you the Business editor or the City editor?

  • Comment number 28.

    Other than to keep the story, on the credit crunch, running I don't rate this item ranks as being news worthy.

    I strongly suspect that the people from the Treasury who are coordinating this project are not only long term stratagists and planners but also prudent financial managers. These people will have built into their plans a number of contingencies or eventualities and that will include under subscribed as well as over subscribed situations.

    They will also understand that with so many similar auctions taking place more or less simultaneously that the markets will become flooded with gilts and bonds. Then as investors start to suffer from aution fatigue their appetite for gilts and bonds is likely to wane. Until such time as they could properly digest what was on offer and which of the auctions represented the best deal over the medium as well as the longer term.

    As more and more money is invested in government gilts and bonds then the financial and regulatory bodies will have a much better understanding of the ammount of money in circulation and better control over that money. It should also help them to better identify any phoney or suspect money that is sloshing about in the system.

  • Comment number 29.

    Which index are these gilts linked to ?
    RPI, CPI, BOE base rate ?
    and can the index be fiddled with during the lifetime (sweeping in/out of asset prices/comodities ice cream etc.)

  • Comment number 30.

    As a lloyds bank shareholder(spare the violins please) I have been trying to purchase my entitlement of shares at 38.43 pence as stated in the letter. I have now been told that this is a typo and nobody knows the price. The 15.6 billion pounds worth of government B shares was also at this price. Was this also a typo? Is the whole deal in jeopardy because the typist has gone missing or is the deal being re-negotiated?

  • Comment number 31.

    Hello, hello? Anyone out there - where have the moderators all gone? 1 hour 45 minutes and counting.................

    Disgracefully slow.

  • Comment number 32.

    Yesterday's flop can indeed be unique if all bonds issued in future will be index-linked, i.e. inflation-protected. Remember, the UK's debt-to-GDP ratio will explode and inflation will be very helpful to a government to lower the ratio. A little bit of history: you needed 13.2 Swiss francs to buy a pound in 1950 when the debt-to-gdp ratio hit over 150%, compared to 1.63 today. The market's verdict on the UK's economic stewardship since the second world war in a nutshell (it also makes Soros look slighly less clever).

    The upside from today's auction might be that investors are only willing to buy index-linkers, preventing the government from preventing the Bank of England to become hawkish when it starts to matter again (please note the 2 times 'preventing' are in this sentence on purpose).

  • Comment number 33.

    I can't reply to Mr Peston's blog because it's a nonsense that it takes over 90 minutes to make a blog post live!!

    This is actually the news for the day because it's getting worse as the weeks go by. Another agenda in the BBC?

    There's some heavy censoring going on here I believe. Let's face it the 'News' often misses the point, perhaps the Labour Stasi don't want the blogs to reflect that???

    How many people posted a link to YouTube for the MEP giving Brown a kicking yesterday???

    http://www.youtube.com/watch?v=94lW6Y4tBXs

    Within 24 hours that clip had over 250k views and over 2k comments..... think about this, it's a politician on YouTube....NOW AT 712k VIEWS in 48 HOURS!!!!!!!!!!!!! ....

    ....it's a politician
    ....YouTube
    ....712k views
    ....48 hours....

    Madonna naked on YouTube wouldn't get thay many hits

    ... not on the BBC at all that day...

    ...think!!!....


  • Comment number 34.

    Why is it taking 2hrs to moderate comments. I'm beggining to worry. Are these being taken down and filed in some sort of database elsewhere? Under the Freedom of information act maybe we should ask the BBC whether any pertinent personal information is being sent to third parties. Including I.P. etc. Any comment Mr. Moderator? I'll check back next week, you should have gotten your digit out by then.

  • Comment number 35.

    Oh and Robert, you still haven't mentioned anything about the little financial tidbits flying about. You know the sort of thing (I'm feeling like a broken record myself now:

    Option ARM Alt-A loans

    The inevitable fall of the Dollar as the global reserve currency.

    The continuing decline of the Pound and how realisticaly it would be a wise man in government that put money into BUSINESSES, that, and this is crazy talk I know, MAKE THINGS. Not into failed banking 'giants'.

    The fact the bond market value and yield are suffering a almost unnoticable, but definately there, decline.

    The fact that 2 Million unemployed is a joke, try 3 Million at least.

    Oh and did you see that MEP rip GB a new one the other day. I hear it's very popular on a thing called 'you-tube'. Only a matter of time before that site gets roasted.

    Sorry I sound so sarcy, I'm just sick of the non-coverage of important events.

  • Comment number 36.

    Robert Peston tells us that "the trigger of the closing down of wholesale markets was the horrifying realisation by financial institutions in every country that hundreds of billions of dollars lent to US homeowners in the form of low quality subprime loans – and repackaged into putatively high quality investments as collateralised debt obligations – were going bad". I can't get my head round this - wouldn't help if we related the figures to us as individuals. Thus with a US population of about 300m, does this mean that every individual, on average, has a loan of at least one million dollars ?

  • Comment number 37.

    I suspect the optismism was before you saw the Irish growth rate or the US economy figures.

    For those that haven't. Ireland first at a 7.5% shrinkage in the final quarter of 2008. Then the marginally better American figures at a 6.3% shrinkage.

  • Comment number 38.

    Robert,
    Hold your horses - the index-linked issuance is only 13.66% of the DMO's programme and are attractive to inflation-junky funds. Longs are 20.8%,medium are 22.6% and shorts are 42.9% of the programme. The QE flip-side in secondary markets is that BoE have just bought 12.992 billion 5-25 year residual lengths.

    Wouldnt the credit default premium have been stabilsed by Mervyn King's caution? Over to the politicians.

  • Comment number 39.

    We don't need more fiscal stimulus, we probably don't need quantitive easing, what we do need is time for the current actions to have an effect. Unfortunately time is somehing the current administation don't have, we have yet again politiscised monetary policy(it was an illusion anyway).

    Although it was fraudulent American mortgage brokers that were the catalyst for this crisis it could be argued that the UK were the global leaders in creating the de-regulated financial system at the root of the problems. And this perceived financial success was promoted and championed by our previous chancellor Brown. Don't follow his lead this time he got it wrong the first time around and he sure has got it wrong now.

  • Comment number 40.

    As hinted above, the important point is that purchasers of this gilt have a reasonable expectation of being able to dump it back on the treasury if they don't like the way things are going in the next few months? If I bought something I did not altogether trust, I might be reassured by a money-back guarantee! On inflation, I agree with points above.

    On a personal note, I have been glad recently that my ISAs have offered a fixed rate, but when most of them mature later this year I will only re-fix for a year. I expect much higher rates in 2010 - assuming the banks/ building societies are still in business.

    House prices could go like Iceland, ceasing to fall in nominal terms but falling sharply in real terms. Then again, when it comes to finance, I fear we are all losing our grip on what's real :-(

  • Comment number 41.

    Here's a question for you Robert:

    Over the last 42 years, say, how much money worldwide has been sucked up by the narcotics trade? Where has all this money gone, who earns the interest on it, who buys assets with it?

    It's as good a place to start as any to get to the root cause of all our financial problems.

  • Comment number 42.

    Since you (Peston) are clearly in some sort of denial about what constitutes a successful issuance please read and inwardly digest the following. I did not even have to seek it out, it was emailed to me by Professional Pensions this very afternoon. Since it appears to be some time since you have connected with the real world, the following contains FACTS, INFORMATION, and THE OPINION OF SOMEONE QUALIFIED AND EXPERIENCED TO KNOW WHAT HE IS TALKING ABOUT. Please take note and start writing with conviction about BUSINESS issues that matter to your readers.

    "A £1.1bn government auction of 13-year 1.875% index-linked treasury gilts has been oversubscribed by 2.72 times.

    The auction received total bids of £2.99bn - far exceeding the £1.1bn the Debt Management Office, the government agency responsible for the auction, had offered.

    This follows the DMO's £1.75bn auction of 40-year 4.25% gilts yesterday which only raised £1.63bn - 7% below the amount the agency hoped to raise.

    This was the first time a government gilt auction had failed since September 2002.

    In a statement, the DMO said the highest bid accepted was £96.15, representing a yield of 4.46%, and the lowest accepted price was £93, representing a yield of 4.63%.

    Barings Asset Management head of fixed income Alan Wilde said that, while this was unusual, it was not overly concerning.

    He said: "I do not buy the idea that because the auction was not fully covered that gilt market investors are running scared of governments' credit-worthiness and their ability to finance."

    Wilde believed there were more technical reasons for the auction's failure.

    He said the fact it was near the end of the year for many organisations could have reduced participation from some of the natural pension fund and insurance buyers.

    And he said the Bank of England's policy of buying up gilts with maturities of less than twenty years could have also had an impact - as the market had been hoarding these securities in the hope the Bank would buy them off them for more money in the future.

    Wilde explained: "I don't see it as a disaster in itself that the auction was uncovered. This happens quite regularly in other markets, such as Germany. Procedurally, it is unusual for the DMO not to allocate 100% to the bids but I don't really see it as a long-term negative."

  • Comment number 43.

    I would love if the moderators would be so kind as to let me know why they are all of a sudden blocking any post I submit that contains a link when there doesn't seem to be a problem for anyone else???

  • Comment number 44.

    QE is about exchanging shorter term expensive government debt for cheaper long term debt whose real value can be eroded over time and for now helps the cash flow in the short run. In fact through QE a premium will be paid to sort out short term issues and get a more easy payment plan. Maintaining the ratios in the buying & selling organisations means none of this cash will get out into the business sector in a hurry and the old pals act will sort this out in the background.

    I've just had the quietest two days of trading I can remember and it concentrates the mind. My cash flow is appaling and a cause for concern. Still I bailed me out again. No hope from the bank. Most of their job savings will be in the lending unit I expect as it is redundant.

    I think I've built a good business over the past 4 years but due to circumstances beyond my control I am marginalised by my customers who can no longer afford me.

    I am loathe to let go the product of 80 hour weeks, or to drop quality, or to deviate from my core strengths but I am sorely challenged on a daily basis, I'm in the food industry with a deli full of European produce, bless me, look at those prices! But I feel I must be at my best for each next customer and in the current climate this costs waste.

    I would say to my colleagues in business, economise and simplify where you can, keep skill, keep quality, duck and dive, maintain your network, remember what you set out to do in the first place, retreat into your cash flow generators, make accommodations with those who count, keep communicating and you will get through.

  • Comment number 45.

    * 172 Yesterday

    Also GrimupNorth......... Mr Peston You really, really should get out and interview British People on this Blog or those around the Country. I was in business, started a company from a Log Cabi in my garden and sold out having 17 staff last year. I am one of the very lucky ones but Mr *172 was not. Real people, real small businessmean and Bloggers are the ones you should talk to if you are serious about being the BBC BUSINESS EDITOR You need to talk in the real World a bit more, in fact a lot more.... There are tens of thousands who have not only lost faith in this system, the politicans and bankers, they have now lost hope. That is a terrible charge which G Brown should be forced to face. Instead of banging out your BLOG over breakfast at home, speak to some of us directly.

  • Comment number 46.

    I don't know what inflation is, but I know I don't like it.


    p.s is hyperinflation better : - 0

  • Comment number 47.

    These blogs are becoming less relevant by the day.
    Not only do we need a new government that might actualy have Britains interests at heart not some self seeking global saviour as we presently have, but we also need a less self seeking public news broadcasting organisation too.

  • Comment number 48.

    I think Bob's consecutive postings about gilts, saying contrary things, may just be a clever-ironic example of the sad short-termism that grips the markets/our economy/the human condition

    Sorry just joking

    What I really think is that Bob has been left sat at home like a spare bachelor at an Irish country dance, while Paul Mason gets to tour Eastern Europe, Stephanie goes to the int'l bankers power breakfast in Docklands and some others get to go on Brown's farewell tour to South America and watch Mandy in action

    Bad luck Bob, but as others on here constantly say, why not get out of the Westminster and City bubble and go talk to some of the 'common people' so that you could say something about the pressures on business, the impact of unemployment etc

    Of course we all suspect that Bob doesn't read these posts (unlike Paul Mason who even replies to individual posts sometimes!) but perhaps he has a reader who could pass on the message that Grimupnorth and Jon3434 etc are saying something quite important

    For all of you into short-term stuff and unimpressed by 40-year or even 13-year investment opportunities, here's a hot tip:

    invest in Central London glaziers, plywood sales outlets and whatever over-paid Met police on unlimited overtime like to buy; but do it quick - April 1st and 2nd and the G20 is now less than a week away

    BTW, for those interested, there's a very good new section in the NY Times business pages today about the ongoing issue of 'What to do with a problem called Wall Street'; all equally applicable to the UK; here's the link

    http://dealbook.blogs.nytimes.com/category/special-section-spring-2009/?hp

  • Comment number 49.

    Yesterday's gilts failure means very little in itself, but is an ominous portent of things to come.
    The colossal amount of gilt sales required over the next decade means that they can only be sold with a very good yield. This will have a massive deflationary effect on the economy.
    There is really only one alternative-let inflation rip to reduce the value of the debt.
    However, this will mean removing the BoE's remit to keep inflation under control.
    This puts us in a bit of a bind,doesn't it?

  • Comment number 50.

    This only proves that inflation is the real worry, and the markets know this.
    Robert, while GB is on his Magical Mysery Tour why dont you get out and about and look into some of the heartfelt issues coming from the likes of GRIMUPNORTH77 or jon3434.
    UK SME's are almost out of orders, and out of cash.

  • Comment number 51.

    #31. Eddixon

    The moderators for this board should be more concerned with getting the comments on in a timely fashion. Unfortunately they are more interested in blocking people from passing along valid information that doesn't violate any of the rules of this board!

  • Comment number 52.

    Here are a few topics which you should have a look at Robert:

    Commercial Real Estate
    Credit Card Debt
    and the next wave of bad mortgages

  • Comment number 53.

    #20 Virtualsilverlady
    To answer your question about ordinary savers buying something like this, I’ll give you the straight answer you won’t get from Mr Peston, yes you can, you can buy a verity of gilts or you could look at the NSandI index linked bonds currently paying something like 1% over RPI for 3 or 5 years.
    As for the debate about the 13 year inflation rate vs a 40 year interest rate you might as well compare apples to oranges, the two bonds appeal to two very different types of investor, so all those trying to read too much into the different levels of demand will almost certainly come to the wrong conclusions.

  • Comment number 54.

    I thought the BBC and the media in general were a democratic and independent body of thought and fact when reporting newsworthy items.
    Why then is there not one mention in any news bulletins of Conservative MEP Daniel Hannan's attack on Gordon Brown's governance which he expressed at the EU Parliament yesterday.
    Why has it been left to American tv networks to run this story when it concerns our country more than theirs??

  • Comment number 55.

    #183 moorland woman - yesterdays blog - thank you for the information - I guess I have learned something today but its not good!

    So as a country we are currently not supporting manufacturing, our farmers (by allowing the supermarkets to dominate and price fix - they are diversifying away from food production - fact) and also you tell me my last great hope of tourism.

    Still at least the bankers are okay...................

  • Comment number 56.

    there seems to be a sudden burst of moderating going on here; strange

    but even stranger, I just wanted to point out to interested posters that if you look at the Stephanomics blog (which is usually pretty good BTW) you'll see that ALL OF THE COMMENTS HAVE DISAPPEARED; not just from her most recent post but all of them

    I'm not a conspiracy theorist so assume that the moderators have pushed the wrong button; unless of course it's someone at MI5 who chose CUT instead of COPY........

  • Comment number 57.

    That's another £1.1 billion that's not available for the private sector to borrow.

  • Comment number 58.

    So the goverment is now short of a bob or two.
    Not to worry Mr Brown&Co can do a bit of Q E and prints some more cash or ask the tax payers for a loan.....oh he has done that already!!

    So what next??

  • Comment number 59.

    I have to agree with a lot of the sentiments posted on here today. As a small business owner I know that business is very tough at the moment. There is never any attention given to the plight of SMEs in this current climate. So much for small business being the backbone and driver of the real economy - or atleast as far as the BBC is conserned!

  • Comment number 60.

    HAVE JUST HEARD HANNAN AGAIN

    WOW !!!!

    DOES HE CHEW UP AND SPIT OUT GORDON BROWN BIG TIME.. RECORD NUMBER OF VIEWING NOW ON YOU TUBE. 3 MINUTES IS ALL IT TOOK TO DECIMATE OUR SO CALLED PRIME MINISTER. PATHOLOGICALLY INCAPABLE OF SAYING THAT HE IS SORRY. HISTORY WILL MAKE YOU VERY SORRY GORDON THAT YOU UNDERESTIMATED THE INTELLIGENCE OF THE BRITISH ELECTORATE ONCE TOO OFTEN

  • Comment number 61.

    Robert you've got your monetary economics quite wrong for once.

    As you know, the yield curve on Bonds slopes upwards over time. So that short-term rates are usually lower than longer term, because there's a greater risk of higher inflation over time. No one can predict monetary conditions forty years ahead, so long-term investors want the borrower to reflect that risk in higher rates.

    So, when the 40 year bonds were put up for sale as a test-market, it was not certain whether that many would be bought. Indexed Bonds are quite different. They provide assurance that the inflation risks will be covered by the borrower. So they're much more popular with long-term investors.

    That leaves the much better question of why HM Treasury wanted to test-market 40-year Bonds at all? Maybe they can tell you why? My guess is that it was because Life Assurers and Annuity providers keep asking for them! But not at any yield. They want the yield to reflect the longevity of the Bond. I'm glad this little experiment failed 'cause it demonstrates that the classic yield curve is still working as the text-books say it should.

    HM Treasury should stick to the 5 to 25 year range for its Bond issues. That'll keep our interest costs to a low level. And well below the levels we had to pay out in the mid 1990s when government debt servicing reached over 5% of GDP. The prospect is that, even with huge borrowings, government debt interest will still fall below 3.5% of GDP in 2011-12.

  • Comment number 62.

    All this comment about currency rates, inflation, government borrowing just shows that nobody can predict what the general effect of anything is. The GB pound is predicted to fall because of various factors like over-borrowing, money supply expansion, (resultant) inflation etc. The same is predicted for the US dollar. Japan is in crisis due to a disruption in exports, likewise Germany. China is also suffering from a drop in exports. The Euro Zone is full of bad news.

    Seems to me that everybody's currency has a reason to fall through the floor. Therefore predicting which currency will do what is impossible. I keep two currencies and forget about the rest.

    I think, though, that poor old Gordon is making a fool of himself by suggesting to everybody that they should spend (and borrow) their way out of the recession when, paradoxically, he let the UK spend (and borrow) itself into a position where it can't spend its way out again (if you get my meaning). Although he thinks it can if he can make everybody believe him.

    Recently Keynesian economics has come out into the open again. Fair enough, I like the theory but surely it only works if you have the capacity to indulge in deficits - the UK and the US don't have much of that capacity and at some point there will be a major shift in investor perception which will cause a gilt issue to fail big time.

  • Comment number 63.

    somali_pirate_SP500:

    I agree there is something strange going on with the moderating over the past few days. Maybe they`re trying to keep our voice to a minimum as they fear "The Summer of Rage" which the police are preparing for.

  • Comment number 64.


    jolo13 wrote at 01:33

    "i have to admit this one has me puzzled..the government is selling gilts
    to pension funds to raise money, the bank of england via quantitative easing is buying gilts with money they have conjured out of fresh air. So far so good......but what is the point, why doesnt the government just sell gilts directly to the BOE?"

    Answer is easy - so that the pension fund can buy more gilts with the money they got from selling the gilts. And the people in the pension have a job and feel that they are useful.

  • Comment number 65.

    "The UK is not bankrupt, but huge assets and moneys are held by crooks and speculators and the government has not yet asserted its control over a shadow banking system, which it should do now as a matter of urgency." ..... #22 invisiblehandadvisor

    10/10, invisiblehandadvisor, and it is mirrored in every economy and to think that it is going to allow little grey men in little grey suits dictate rules for them to follow is laughable. "You know, and we know, and you know that we know that it’s nonsense!"

    And you do realise that that is the System now. Honest Criminal Free Enterprise Rules and Reigns rather than Dishonest Politically Correct Orders of the Non-Productive Pen Pushing Sector.

    Get used to It, for they are not enemies, they are human too.:-) The old crowd who would deny you your pleasures whilst they gorge on the funds of your labour are that, are they not, even as they say they work for you, many have never worked a day in their life.

  • Comment number 66.

    I have just watched Hannan on youtube....WOW
    It was great...
    Poor old Gordon that must have hurt...

  • Comment number 67.

    I have long had my doubts about RP's impartiality, and to a certain extent, his grip on reality. I have been unemployed for nearly a year now and it is hard-not just financially, but emotionally. You reach a certain age and you have to think I have heard it and seen it all before, and we never learn-the rich keep getting richer and the poor poorer. It is the economic system we live under stupid-plain and simple. Just as aside, I know that RP may have the academic credentials to be the BBc's Business editor, but I seriously doubt that he has the life experiences. In my more 'conspiracy theory' moments I wonder whether his extremely irritating radio delivery is deliberate as I end up never listening to what he has to say, and turning the radio off.
    Have just read 172 on yesterday's blog and my heart goes out to you-please don't give up caring, or those at the top will really have won.

  • Comment number 68.

    New member? The format is new-not me!!!

  • Comment number 69.

    62. fanofbrian:
    Good points, but I think there are two snags with Keynesian approaches right now.
    First, Keyesian interpretation assumes cycles, sometimes up, sometimes down. That's the historical pattern, sure; but hadn't you heard that the economic cycle had been abolished, by St Gordon of Dunfermline?
    Second, Keynes assumed that we would borrow in a downturn, and would be able to do so because we had saved in the good times. It doesn't work on the basis of "borrow in the good times, borrow even more in the bad".
    It's fortunate, then, that St Gordon abolished the economic cycle!

  • Comment number 70.

    Robert,

    Do you think of the money has been given to the Danes to take this British Company, and keep the Scottish Jobs?

    http://news.bbc.co.uk/1/hi/scotland/glasgow_and_west/7965266.stm

    £9.6 million for 100 Scottish jobs, and the promise of 200 more

    Maybe if Brown had invested in renewable energy then this company might not have gone to the wall

  • Comment number 71.

    I hope & wish that all these quantative easing measures fail, especially the 25 & 40 year gilts which creates debt for generations not yet born, just so that the failures of todays executive government mismanagment can be eased.

    We don't just need a revolution of thought to deal with these problems, we need a straight forward revolution to remove those who have overseen this catastrophy & who refuse to utter even a hint of an apology or a concession that they got it wrong.

    The way I am feeling about this government makes me question my hereditory history & maybe I am related to ancient Normans.

    When I think of this Labour government I have just one thought.

    Viva La Guillotine!

  • Comment number 72.

    Yesterday was a disaster today was the norm..... when we start to see normal business as a handsome success, we know we are in trouble!

  • Comment number 73.

    So is the credit crunch really caused by the US and UK needing to fund their fiscal deficits, and therefore there will be less money for the private sector?

  • Comment number 74.

    Daniel Hannan puts it well ...

    Odd, isn't it, that the Daniel Hannan speech in Brussels on Tuesday is only now getting a mention on the BBC. I haven't heard any opposition front bench speakers (including Cameron) make such an effective address so succinctly and powerfully. He's wasted in Brussels - come home at once Mr. H; your country needs you here.

    Have a look: http://www.youtube.com/watch?v=94lW6Y4tBXs

  • Comment number 75.

    #66 lostchange

    Thank you very much for your posting at 5.14pm.
    I followed your action and listened to the Hannan video.
    First time I've ever used YouTube but it was a very enlightening experience.
    Irrespective of one's personal political beliefs (I'm an ambivalent myself)one has to admire the mans public speaking skills. Coruscating demolition of GBs performance with the UK economy.
    It appears that over 783,000 people have viewed the video to date - that must make him the most effective political communicator in decades.
    "Caulking the hull and trimming the sails" - great stuff.
    However, what struck me after viewing it was that this speech was made in the European parliament whereas Westminster is where these comments should be being made.
    And I don't just mean from one particular side of the house.

  • Comment number 76.

    The New York Times has reported a famous Dunfermline Scot as saying, 'Let me speak a plain business man. Wall Street is not America, and even in New York there are other places than Wall Street. Gambling is not business; it is a parasite feeding on values and creating none. It is time for us business men to rise and decline to recognise the men who make money and render no value for it by manufacturing something or giving something in exchange. I have never made a dollar by gambling in stocks.' Unsurprisingly, this was not Gordon Brown, but Andrew Carnegie, speaking in 1907. Unlike Brown, who is taking a vast fortune from the people, Carnegie gave his own vast fortune (earned by real manufacturing) back to the people. Pity that Brown isn't on a 'Par' with Carnegie.

  • Comment number 77.

    #62 "Recently Keynesian economics has come out into the open again. Fair enough, I like the theory but surely it only works if you have the capacity to indulge in deficits...

    I'm a fan of the Keynesians, but Keynes' original theory was flawed (the Keynesians themselves admit) because it did not address imbalances in the market. They are worse now. The market is rigged towards big players who can protect their income streams: Government, big supermarkets, anyone deemed "too big to fail". The real pain falls on the rest. Globalisation was also not part of the Keynesian model.

    The collapse in the City means that there is less money in the British economy, and one (formerly) major income generating sector is now a huge drain of the rest of society, especially the socialised private debt of the banks. We have to have a strategy to ensure we import less - and that means the P word. Either that, or the falling value of the pound will do it for us, but indiscriminately.

    We cannot plan every aspect of our economy, but we can have a strategy to encourage the productive, and discourage the parasitic. So, for example, some big supermarkets are not productive, but they squeeze their suppliers who are. They need to be regulated and/or broken up when they get too big. Some wages and prices need to be controlled, as they were in WWII, otherwise the imbalances in the market get worse. This is heresy to free marketeers, but the market has never been truly free. The game has always been rigged towards the big players. Imbalances of power should be recognised and redressed.

    THEN look at the purchasing power in the economy versus the goods and services available. There may well be a case for printing money - but it should be targeted towards encouraging the productive. And at some future date, to control inflation, money might need to be destroyed via taxation.

    Also, the goals need to change. We do not need to "restore growth" - at least not perpetual growth, because it is unsustainable. We need to be able to provide for our reasonable needs in a sustainable manner.

    Sorry for the length of this post.

  • Comment number 78.

    I see the Stock Market rising - the FTSE approaching 4,000.

    It looks like the bad times are behind us.

    But somehow I don't think so!

    When I go to a restaurant and enjoy a meal I find that at the end someone turns up with a bill to be paid. I do wonder if the Stock Exchange has forgotten that the bill has not yet been totted up - much less has it already been paid.

    Grim times ahead, I believe.

  • Comment number 79.

    #36.
    Excellent point made re how a 300 million population has run up so much debt.I understand how a little knowledge is a dangerous thing (hence having not contributed to this fascinating blog for 2 months despite spending an average of 2hrs a day on it).So i'll admit now that i don't know the answer, but my own experience of the City back in 2001 as a salesman makes me very suspicious nevertheless.I sold subscriptions to an online magazine on behalf of a company trying to compete with the likes of Reuters and Bloomberg.They concentrated on the CDS,Securitization market (i had no idea what they were at the time)and it's little wonder.Each subscription was thousands of pounds.My company ran the Oscars every year for this market.The costs and rewards were staggering.Trophies were awarded at top London hotels for such spurious things as Credit default swap of the year etc etc.Even before i sold anything I was being wined and dined at great expense.Where did the money come from? I suspect that for 10yrs the bundles of mortgages from the US were sold,swapped,unpacked, then sold again in even greater vehicles whilst all the time commissions were paid, awards given and the vast service industry that grew around it was renumerated too. Whilst the original homeowners in the US were defaulting, no money was coming in whilst all the time people were getting rich in Wall ST and the City.Sorry for being so stupid.I'm now a carpenter (struggling).

  • Comment number 80.

    #73

    Dear Mr Barricades

    I believe its one aspect, yes

    If you look at how US debt was racking up and how american interest rates rose through 2006 and 2007 and the impact this was having on LIBOR and the effect this was having on ARM mortgages that reverted to LIBOR plus at the end of the fixed term and the number of these that were being written in 2002/2003 and the fact that in the US you can just hand in the keys and walk away......

    yrs

    mrsbloggs13c2

  • Comment number 81.

    Robert,

    As a bit of an expert on economics - and especially on banks, your input would be welcome in trying to find an ethical one. Why not post your ideas on Jericoa's place as well? At least people wouldn't have to wait hours before their comments get through. You must admit that it's virtually impossible to have a discussion with such a time delay.

    John Bray in Spain.

  • Comment number 82.

    CUT out THE MIDDLE MAN!!


    GORDY OUT!

    VOTE FOR DANIEL HANNAN. HE IS A STAR!

  • Comment number 83.

    Instead of trying to mortgage the future of our young people this government should be acting more positively in underminng the real problem in society.

    Drugs!

    The US have at last realised that by ignoring this problem and allowing criminals to build up untold wealth of billions of dollars they no longer run things. The criminals do.

    Could this be the real cause of the credit crunch?

    Criminals using this wealth to undermine democracies and capitalism?

    If this is the case then we do have laws to claw back this huge wealth

    Isn't this what the G20 meeting should really be discussing?

  • Comment number 84.

    75,

    well said!

  • Comment number 85.

    PESTO??????????

    WHAT ABOUT THE DAILY TALLY OF JOB LOSSES WE NOW NEVER HEAR ABOUT???

    THE LDV VAN SAGA?

    WATERFORD HAVE A BUYER PERHAPS??

    WE ARE ALL BORED WITH MERVS ANTICS AND THE GUILTS SORRY GILTS,HE SHOULD

    HAVE RESIGNED LONG AGO ALONG WITH GORDY ETC . . .



    THERES STILL NO CREDIT INSURANCE BANKS ARE FORCLOSING ALL OVER ETC ETC.

  • Comment number 86.

    HANNAN!

    THIS IS YOUR MOMENT!

    YOUR COUNTRY NEEDS YOU!!!!!!!!!!!!


    GORDY PACK YOUR BAGS GIVE UP THE KEYS DARE SAY YOURE WELL PLACED TO WEATHER THE STORM ELSEWHERE WITH NO MORE BOOM & BUST MATE.

  • Comment number 87.

    GORDY GO CLEAN CARS WITH SUGARS MOB YOU WILL BE WELL IN WITH THAT LOT!

    NO WONDER ONE LEFT BEFORE IT STARTED,HE LEFT YOU A PLACE FOR A NOVICE?

  • Comment number 88.

    You could not make it up!

    He now wants to waste another £69billion.

  • Comment number 89.

    OVER TWO HOURS OF NO MODERATION ON PESTOS POINTLESS BLOG

  • Comment number 90.

    #76 stellarbluesky

    Spot on.

    I often make use of the facilities that Andrew Carnegie provided at the first public library he endowed in England.

    A fabulous building at the heart of my home town that recently benefitted from a major injection of local authority funding.

    I cannot see the other son of Dunfermline being similarly celebrated for his largess in another 102 years.

  • Comment number 91.

    CHINESE JUSTICE FOR OUR ERRANT ESTABLISHMENT??

  • Comment number 92.

    To the Moderatoers


    THIS IS THE EIGHTH TIME I'VE ASKED YOU TO STOP TREATING ME AS A NEW MEMBER I BEGAN AT MID DAY TODAY. ITS A WASTE OF MY TIME AND YOURS. I CAN' T SEND A COMMENT UNTIL YOU STOP SENDING YOUR MESSAGE TO NEW MEMBERS NOTE. I HOPE THAT BY TOMORROW YOU'VE SORTED IT OUT.

  • Comment number 93.

    I AM NOT A NEW MEMBER

  • Comment number 94.

    #67. helenhey wrote:

    "I have long had my doubts about RP's impartiality, and to a certain extent, his grip on reality. I know that RP may have the academic credentials to be the BBc's Business editor, but I seriously doubt that he has the life experiences. In my more 'conspiracy theory' moments I wonder whether his extremely irritating radio delivery is deliberate as I end up never listening to what he has to say, and turning the radio off."

    Mr Peston is a business journalist whose job is to report the news, not to interpret it through his own "life experiences".

    And has it not occurred to you that he is bravely battling with a speech impediment, which must be a dreadfully frightening thing to have to deal with especially when broadcasting live. Maybe you, too, could benefit from a little more "life experience". Who knows, a little more empathy might even make you more attractive to potential employers.

  • Comment number 95.

    #76 Stellarbluesky "The New York Times has reported a famous Dunfermline Scot as saying, 'Let me speak a plain business man. Wall Street is not America, and even in New York there are other places than Wall Street. Gambling is not business; it is a parasite feeding on values and creating none. It is time for us business men to rise and decline to recognise the men who make money and render no value for it by manufacturing something or giving something in exchange.' "

    Andrew Carnegie was a hard business man, but a very great man in many ways, as the Wikipedia article upon him indicates: http://en.wikipedia.org/wiki/Andrew_Carnegie. He was no narrow nationalist either. All over the English speaking world, there are beautiful buildings, "Carnegie Libraries" which his bequests paid for. I have two reasons to be grateful for this. My parents first courted in the Carnegie Library in Cleator Moor in Cumberland. I got a significant part of my education from the one in Middlesbrough - as did my father and other members of his family. It was dad who introduced me to the library habit.

    Of course, some libraries were built on prime sites which local authority Philistines (the "Ones whose parents weren't married"!) now want to flog off to their mates, I mean developers - in the name of "modernising" services. But I believe Carnegie tied up the legalities to make this really difficult - at least in the case I'm aware of.

    Carnegie had a very interesting attitude towards inheritance too: He based his philosophy on the observation that the heirs of large fortunes frequently squandered them. He did not believe that people should inherit enough to be parasites. This is one of the main reasons he gave most of his fortune away.

  • Comment number 96.

    Here's a deal: I'll do one night a week as a volunteer moderator, in exchange for a free licence fee. How about it Auntie Beeb?

  • Comment number 97.

    "All new members are pre-moderated initially."

    And all known members of the awkward squad are pre-moderated permanently? I suppose that must be anyone who cares enough to post?

  • Comment number 98.


    Robert

    How about one of your frank assessments "politically speaking" as to the impact and power of the three minute speech by D Hannan direct to GB at the European Parliament?

    You have been very quiet so far, yet many of us find this man very interesting, not so much as to who he may be, ( I do not know) but what he is saying. You are losing your audience as you continue to play the party spin lines of blaming Fred the Shred, Wall Street, Globalization etc etc whilst ignoring the ELEPHANT IN THE ROOM - THE FAILURE- GORDON BROWN!!!!!! Surely it is time to question whether Brown is now a busted flush and the G20 meeting might be his nemisis?

    Sterling is falling still in New York tonight. Darling is saying we may not need a stimulus? Time for the Plotters to strike maybe?

  • Comment number 99.

    Okay, whatever ...

    Here's the thing, we the people of this country are being taken for one enormous ride. Time is for us to gather, in peace, and call for change.

    No more of this .. endless discussion about nothing. Too much money spent .. time to stop and let these so called banks go to the wall and let future generations have a (sort) of life.

    Let's arrange a huge public outcry against the powers that be .. a gathering at .... the thames .. magna carta ? Lets reclaim our rights and reclaim our country back.

    Like minded people can follow me on twitter = markiemarque - I am not a jumped up leader, but .. for gods sake we need to do something.

    markiemarque

  • Comment number 100.

    Re Daniel Hannan - it was a very effective performance. Some of what he said I agree with, but other parts of his seech were neither entirely honest, nor economically accurate.

    I'm absolutely sure that New Labour didn't want to nationalise the banks - they just fell for their special pleading that the rules of capitalism shouldn't apply to them - as did the Bush administration with AIG and the various bailouts.

    Also, Hannon's statement "you cannot spend your way out of recession" is simply not true. Throughout history, it is well documented that recession/stagnation has been solved by a greater money supply - whether that was digging it out of the ground, spoils of war, debasing the denarius, state sponsored piracy, or printing it. It was Government spending which ended the great depression - the sad thing is that it took a world war to enable the most effective measures.

    Why is Britain the worst placed of the "major economies"? (I agree with Hannon that it is.) It is because we embraced the excesses of laissez -faire casino capitalism, with a far less balanced economy than that of the US. We have neither sufficient raw materials, nor agricultural/industrial productive capacity. It would be much easier for the US to be self sufficient than we would in these overcrowded islands.

    We shouldn't be importing people from the third world to look after our elderly in homes, but we should be paying those who do this job at least as much as bankclerks. The fact that we don't shows that money is more important to us than our parents and grandparents.

 

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