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UK Gilt sales FAIL! US declares “quite open” for IMF SDRs!

March 26, 2009

OK – HUGE news here… The old Quantitative Easing that the Bank of England and the UK Treasury was trying is beginning to show some cracks. As predicted, no one wants anymore of our debt… This does not bode well. I wonder if the BoE will have to fall back to what the US is doing, and buy the UK gilts themselves. Watch out below! Here comes the pound in freefall!

Here’s the Daily Telegraph’s take on this little bombshell. Get ready for a bumpy summer in the UK everyone!

George Osborne, the shadow Chancellor, said: “The failed gilt auction, the first for many years, should be of real concern to everyone.

‘‘It is too early to say, but the risk is that at some point the Government will not be able to fund its huge debts.”

Gilts are issued by the Treasury to fund Government borrowing. Investors receive an annual rate of interest from the Government after buying gilts from the Treasury.

Think this doesn’t affect you? Here‘s an interesting take on the stated headline – ‘Deflation is here!’. Don’t believe it! Read this article to understand how this will impact you in the near future.

Some foods have almost doubled in price since this time last year, figures from The Telegraph’s Real Cost of Living Index (RCLI) show. Cucumber portions, for example, have risen by 88pc, while staples such as mince beef (up by 48pc) and Basmati rice (43pc higher) have also become much more expensive.

Other foodstuffs to have risen sharply in price include strawberry jam (up by 34pc), baked beans (32pc), Golden Delicious apples (29pc) and bolognese sauce (27pc), according to the index.

In news from the US Here’s one take on the US situation from good ole Ambrose Evans-Pritchard – here. In a nutshell –

US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is “quite open” to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.

He of course back-pedalled like crazy when the Dollar dropped 0.5% within minutes!

And he seems to be in disagreement with Obama on this one:

The comments by Timothy Geithner about China’s proposals for overhauling the global monetary system that sent the dollar tumbling on Wednesday marked the second time recently that he and President Barack Obama had directly contradicted each other.

On the road this evening to another hotel – no idea what internet connection will be like! Hopefully i’ll be able to at least update the blog 😦

Peace, Love, Understanding
Mike

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