Just How Bad Is It?
According to Iain Martin in the London Telegraph, Britain is on the edge of bankruptcy. All that could save it now, he says, is if somehow President Obama, by sheer force of personality, can restore confidence and energy in markets worldwide. Alas, however, Martin is not sanguine about the chances:"Obama is talented, but he is not a magician."
So, two questions. First, is Britain really that close to bankruptcy? Second, if so, what does that mean for the rest of the world--and for us in particular?
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James Otteson - 1/27/2009
Thanks very much, Mark.
Mark Brady - 1/25/2009
This weekend's Financial Times carries an in-depth analysis Recession Britain -- All washed up that addresses your questions.
Mark Brady - 1/23/2009
"So, two questions. First, is Britain really that close to bankruptcy? Second, if so, what does that mean for the rest of the world--and for us in particular?"
As an ex-patriate British economist who subscribes to the Financial Times and daily reads other London newspapers on the web, I follow events in Britain very closely. No, Britain is not that close to bankruptcy. Or even close to bankruptcy. Yes, the situation is grim but I'm not clear it's any grimmer than the prospect facing many other developed national economies with fiat currencies. Which is, of course, pretty grim. That said, the UK is no more on the edge of bankruptcy than the U.S.
If you want to read more about potential defaults on sovereign debt, I recommend Wolfgang Münchau's article in Monday's Financial Times. There he discusses default by one or more Eurozone countries, not the UK.
It’s pretty clear that Iain Martin is a Tory (i.e., Conservative party) supporter with an agenda. And his hackneyed invocation of Neville Chamberlain does not inspire confidence in his analysis. One final thought: the satirical magazine Private Eye calls the Daily Telegraph the Torygraph for good reason.
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