Could England Be Headed For A Sudden Stop?

Seeking Alpha ^ | 11-21-2009 | Rolfe Winkler

[blam]

Could England Be Headed For A Sudden Stop?

Rolfe Winkler
November 21, 2009

Britain may finally be emerging from recession, but many analysts warn that it is a false dawn. In fact, they argue, the economy here is so ravaged by growing debts and ruined banks that it could well be following in the steps of Japan’s lost decade of the 1990s.

I still don’t understand why we refer to Japan’s “lost decade,” as singular. The country is now moving into its third consecutive lost decade.The Nikkei is still at 1984 levels.

But back to the UK: the NYT piece quotes the latest research from Variant Perception (no link). I got it in my inbox earlier this week, and it’s a fascinating (though not pleasant) read. Notably, they talk about the outside possibility of a “sudden stop” event.
As mentioned in this space before, a “sudden stop” is what happens to emerging economies when they lose access to capital markets. Confidence is lost in the government’s ability to pay back debt and everyone races to get out of the system. See Argentina.

The problem is acute for indebted emerging markets because they don’t borrow in a currency they can print. So, the argument goes, you can’t have a sudden stop in Britain, or the US, because we print the currency in which our debt is payable.

I’ll let the VP guys take it from here:

The structural problems in the domestic economy, and difficulties in other economies across the globe, will impede the prospects for sustainable growth in the UK. Debt will continue to grow, and the creditworthiness of the country will continue to weaken. Investors will be more and more reluctant to meet the borrowing needs of the UK.

If the situation continues to deteriorate there is a non-negligible possibility the UK could face a ‘sudden stop’ in capital inflows. A debt crisis would precipitate a currency crisis. This would not be especially unusual for the UK: during the postwar period, there has been one on average every 15 years. These have happened like clockwork.

[snip]

[Gondring]

Into the abyss we all go...

[spyone]

Thanks Blam

[alloysteel]

The world sinks into another prolonged depression, that may just end up making the decade of the 1930’s look like a rainy afternoon at the park. This time, it could mean a march into a new Dark Age. The revolutionary forces won’t be to enthrone socialism, but to undermine it and remove its scourge from the earth.

This could take a while. After all, from the Fall of Rome in 476, to the dawn of the Rennaissance in about 1450, spanned ten centuries.

And the Muslims are much more aggressive and numerous now.

[blam]

Greece Tests The Limit Of Sovereign Debt As It Grinds Towards Slump

[FromLori]

The leaders there have a plan they lied about it of course but then today there was an article it was true.

They are dooming their own people in the process. Like I said to another in the post that was on earlier today I remember when I was young and the big push was to limit children here and in the UK, etc. Over and over again they said stop having children.

Even when I was a little older in the 1970’s they acted like anyone who had more then 1 or 2 children were the scourge of the earth. Then Americans and Britt’s did so and now they want to fill the countries with immigrants.

Of course they lied to their people.

ack Straw and Tony Blair ‘dishonestly’ concealed a plan to allow in more immigrants and make Britain more multi-cultural because they feared a public backlash if it was made public, it has been claimed.

The allegation was made after a former Labour adviser said the Government opened up UK borders partly to humiliate Right-wing opponents of immigration.

Andrew Neather, who worked for Mr Straw when he was Home Secretary, and as a speech writer for Mr Blair, claimed a secret Government report in 2000 called for mass immigration to change Britain’s cultural make-up forever.

http://www.dailymail.co.uk/news/article-1222769/Dishonest-Blair-Straw-accused-secret-plan-multicultural-UK.html

[blam]

"I remember when I was young and the big push was to limit children here and in the UK, etc. Over and over again they said stop having children."

Yup, me too.

My wife (bless her soul) and I had only one child. (and, we were praised then). Now, I read that the Muslims will over-run the whole world.

[wally_bert]

I do not discount the chance and neither look forward or want it. Thank the liberals, traitors, collectivists, feel goods, and other habitual offenders.

[mamelukesabre]

The financial sector is increasingly dead weight on western economies. Not only do we have too many lawyers dragging us down, it appears we have too many bankers and stock traders as well.

[FromLori]

The Bank of England’s ballooning toxic assets The chart below from Cumberland Advisors offers a visual depiction of the balance sheet of the Bank of England. Notice that “other assets” (ie: toxic assets) now make up most the Bank of England’s assets. Like the Federal Reserve, the Bank of England is running out of room on its balance sheet. The only way it can keep buying UK debt (and funding the UK budget deficit) over the next year is by significantly increasing the size of its balance sheet (printing a lot of money). Conclusion: Everything is reaching the breaking point as we approach the end of 2009. I would like to repeat the advice I gave a eight months ago when I wrote about Britain monetizing its national debt. The pound and the dollar are dead. I urge anyone who owns dollars or pounds to buy physical gold, euros, Swiss francs, or anything else for that matter. The dollar and the pound are about to become the two worst performing asset classes on the planet. http://www.marketskeptics.com/2009/11/britain-risks-debt-spiral.html

[sten]

no worries... it was reported this weekend that Americans bought 7 billion bullets in the last 12 months.

that should be enough. if not, we can reload

[sbMKE]

The figure is 12 billion bullets. 7 billion bullets is a “normal” year. Seems like folks are either planning on going hunter gatherer or something else is on their minds.

http://www.washingtonpost.com/wp-dyn/content/article/2009/11/02/AR2009110202712.html

[Vince Ferrer]

This could take a while. After all, from the Fall of Rome in 476, to the dawn of the Rennaissance in about 1450, spanned ten centuries. And the Muslims are much more aggressive and numerous now.

And Islam spread at that time by offering debt forgiveness.

[blam]

[FromLori]

Thanks much easier to see.

[blam]

"Thanks much easier to see."

Easier, lol. These old eyes couldn't see any of the writing on the right side.

[Pining_4_TX]

It’s funny you should mention this. I have read that momentous shifts in civilization tend to happen about every 500 years. I think that is part of the book, The Sovereign Individual, which is an interesting take on history and what the future might hold.

[hennie pennie]

Yes, I remember that -- anyone who didn't follow the recommendations of the book THE POPULATION BOMB was considered to be a moron, unfit for reproduction. Then in the late 70s, any such NON-believer was instantly onsidered to be some type of weird fringe aryan white supremists neo-nazi. Or something similar.

I wonder what ever happened to the author(s) of that book? Did they have children?