Trouble In The UK

Excerpts from Bloomberg:
U.K. Risks ‘Greek-Style’ Crisis, Conservatives Say (Update1)
By Craig Stirling
Jan. 31 (Bloomberg) -- George Osborne, finance spokesman for Britain’s opposition Conservatives, said the U.K. risks a “Greek-style budget crisis,” as opinion polls showed his party may struggle to win sufficient electoral support to control the pace of debt-cutting measures.
Britain, with the largest debts, the largest borrowing of any major economy in the world, has to deal with this problem,” Osborne told the British Broadcasting Corp.’s Sunday AM show today. “If we don’t, we risk a Greek-style budget crisis that will put interest rates up.”
With the election due by June, four polls published this weekend showed the Conservatives with less than a 10 percentage- point lead over Prime Minister Gordon Brown’s ruling Labour Party. Analysts including Anthony Wells, a pollster at YouGov, say that’s the margin needed to be certain of a Parliamentary majority. Osborne’s call to prioritize budget cuts adds to the squabble between the parties in a campaign where the deficit has taken center stage.

The budget deficit, expected by the Treasury to reach a postwar high of 12.6 percent of gross domestic product in the fiscal year through March, may remain the battleground as the election approaches. Osborne, Chancellor of the Exchequer Alistair Darling and Liberal Democrat Treasury spokesman Vince Cable may clash on the economy in a televised debate, the Sunday Times reported today.
‘Albatross of Debt’
Osborne said today that Britain faces an “albatross of debt” and called for “early action.”
“That means a credible plan to deal with Britain’s budget deficit so we can keep interest rates lower for longer,” Osborne said. “That’s the absolute key part of having a stronger recovery.” He said that fiscal tightening must be coordinated with the Bank of England’s monetary policy.


Deleveraging has come to the UK. 
The sovereign debt is incredibly high at 73% of GDP (not including unfunded liabilities).
And the UK no longer has the privilege of having the Pound Sterling as reserve currency since WW2.
Britain is the country to watch in my view.  Once the currency crisis starts here we expect the stock market to collapse.
We anticipate the US dollar will be the temporary safe haven when this occurs.
Then, at some future date, the US dollar itself will be under pressure as American deficits and debts continue their record grow rates.
Precious metals remain the safe haven.
With a stronger US dollar temporarily, gold and silver may pull back significantly to present an excellent buying opportunity to convert fiat currency into something that is a long term store of value.


  1. PW, do you believe that there will be a currency crisis in England before a euro crisis and a yen crisis and why?

  2. In my opinion, a currency crisis is likely in the UK soon. The level of socialism that exists in the UK combined with a weakening banking sector threatens to create a silent bank run, in my view. Could Japan have a crisis first? Its possible, but between tangible problems and intangible ones, my estimate is a UK currency collapse will be the trigger in the next crisis.


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