The Telegraph are again quoting Mervyn King, Bank or England Governor, today. here He gave the last decade its moniker of "NICE", and now he has allocated a new one for this decade -- "SOBER". (I won't expand what these stand for, if you're interested it's all in the linked article.)
I figure on this the day that George Osborne will unveil later his "draconian budget cuts", I ought to step up and remind everyone that these cuts that will be announced, will not cut the national debt. No, that will continue to increase. The cuts will not even be sufficient to get rid of the budget deficit, we will still be spending more on public services expenditure each year than the government will collect in taxes.
The missing cash to pay the bills? Well, we'll just have to continue to print the missing money to pay those bills won't we (aka "Quantitative Easing"). I wonder who, if anyone, will buy all the UK government gilt bonds that will need to be issued to buy this money from the Bank of England when it is printed up? I wonder if buyers will show up in sufficient quantity that prices will remain bid up to the sky, and interest rates will accordingly remain this ridiculously low.
The most-read post on this blog -- still picked up several times a week via Google searches, mostly by people at financial institutions going on their IP addresses -- is one referring to Stuart Cheek of BGC Partners, back in May 2009 (here). The question remains unanswered, what will happen to the UK economy if we were to lose our AAA credit rating? But I wonder how much longer can pass before we find out... George better really take the UK's breath away with the cuts later today, or UK gilts and the Pound will likely take a beating from international investors.