100 days: invisible and unthanked, possibly

The coalition’s greatest achievement in its first 100 days may be invisible and unthanked. Although we will never know for sure, it is perfectly possible that they rescued the nation form a Greek style sovereign debt crisis.

Had that happened – and there are plenty in the Bank of England who think it might have – it would have meant more bank failures, a run on sterling, soaring interest rates and general chaos. It might never have of course, but if someone said you had a 1 per cent chance of facing financial misery, you too might be tempted to do something to avert it.

We will suffer form the cuts, but maybe not quite as baldy as might have suffered from a second financial crisis and credit crunch.

(Photo: Getty Images)

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• trotters1957

  Silly, silly point.
  If you took into account the chances of being run over by a bus, hit by lightening or some such other unlikely event you’d never leave your house.

  So the bank of england said it so it must be true.

  Have you been paid to write this, if you have you should give your fee to the local hospital they will need it more than you.

• JohnBEllis

  Trotters (below) has a point – if you took account of every conceivable hazardous possibility or risk, you’d never venture anything.

  But back in early May, when the bond markets turned on Greece in panic and the UK’s level of indebtedness was being uneasily assessed, compared and debated, the scoffers’ and sceptics’ most oft-repeated argument was “We’re BRITAIN – that’s never going to happen to US ….” Not the most solid of rebuttals.

  Somehow their scoffing and scepticism didn’t convince me then, and it still doesn’t. More importantly and quite unambiguously, it spooked the politicians over the weekend following the general election. I’m pretty sure that, without it, there wouldn’t have been a coalition, because neither of the two participating parties would have been up for it.

  And the consequences, had we been “Greeced”, would have made the cuts that we now await look trivial and gentle.

• http://bob-idle.livejournal.com/ bob idle

  it is perfectly possible that they rescued the nation form a Greek style sovereign debt crisis.

  How???

• trotters1957

  But it didn’t happen, did it?

  British government bonds are still highly desirable for investors who find interest rates around the world at rock bottom literally.

  Greece is a third world country outside its major conurbations, this was scaremongering of the most obvious kind, backed up by the men who are most culpable in this the Central Bankers.

• JohnBEllis

  Indeed it didn’t happen. But you’re obviously less risk-averse than I would be if you would have been happy to take the risk. It’s precisely because I agree with your verdict on bankers and money-markets that my instinct would be to play safe. It would be better not to be vulnerable to them, but we were, and are.

• trotters1957

  John, You say I am more risk-averse, I say you are more gullible!

  I don’t trust anything the “markets” or the central banks tell us.

  The same ratings agencies are now saying that the cuts are putting growth at risk and could lead to a double-dip.

  Governments should make their own decisions based on the facts not the shenannigins of the markets.

  Can I recommend a book ” Debt and delusion” by Peter Warburton written in 1999. He predicts the crisis we have been through and points the finger at Reagan, Thatcher and the central banks because of deregulation of worldwide banking in the 80’s and 90’s.

  Its a sickening read.

• JohnBEllis

  I don’t know the book, but will see if I can get hold of it. Even to a non-expert relative ignoramus like me, the brief summary of the author’s findings which you offer sounds credible enough.

  But, for good or ill, this is the system we’ve got, and we’re in debt, as I understand it, to the extent that one in every four pounds generated for the public finances in the UK goes on debt and interest repayment.

  I lived for some years close to what was unkindly called a “sink” housing estate around which loan sharks routinely cruised. It was a bit late for those who got into their clutches to wish, when the large guys appeared at their door, that they hadn’t done so.

  Most loan sharks operate on the fringes of domestic law, and, if they cross the line, their right to repayment is open to legal challenge – at least for those who have the guts, or the utter desperation, to risk doing so.

  But the international loan sharks, as far as I can see, have the power that counts in the contemporary world on their side, and their corporate fingers round the throats of indebted nations. Well enough to argue for a different system, and for a return to better regulatory systems of international banking. Bring it on!

  But, for the immediate present, we are where we are, and it seems that the UK needs to continue to borrow. And to do that, it needs to convince the markets that it can, and will, repay.

  Which seems to me to mean that the UK, in a position of weakness, has to play the game the bond markets’ way if rates of interest on loans aren’t going to jack up to terrifying proportions, with consequences to follow which could, in social impact, be far worse than anything that the present projected cuts are likely to impose.

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