Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
Proprietary System Shows Stock Market Rally Could Extend Higher - 23rd Jul 18
The Global Cannabis Market Is Set To Explode - 23rd Jul 18
The Death of the US Real Estate Dream - 22nd Jul 18
China is Now Officially at War With the US and Japan - 22nd Jul 18
You Buy the Fear in Gold - 22nd Jul 18
Trumponomics Stock Market 2018 - The Manchurian President (1/2) - 21st Jul 18
The Death of Japan's Real Estate Dream - 21st Jul 18
SMIGGLE Amazing Mega Shopping Haul, Pencil Cases, Smigglets and Giant Back Packs! - 21st Jul 18
Cayton Bay Beach Caravan Park Holiday - What's it Like? - 21st Jul 18
Gold Stocks Investment Wanes - 20th Jul 18
Diversifying Your Stock Investing Strategies is Smart Investing - 20th Jul 18
Custom Global Stock Market Indexes May Be Sounding Alarms - 20th Jul 18
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Gordon Brown Bankrupting Britain as Tax Payer Liabilities Soar- Update

Politics / UK Economy Feb 24, 2009 - 01:53 PM GMT

By: Nadeem_Walayat

Politics Best Financial Markets Analysis ArticleThis analysis presents the current status of Britain's path towards bankruptcy which I first pointed out in April 2008 which followed the Bank of England's initial offering of a £50 billion slush fund to the banks that would never be repaid and marked the tip of the bank bailout ice-berg.


NEW Tax Payer Liabilities

  • £400 billion for the purchase of Toxic Assets
  • £100 billion for the Bank of England to print money.
  • £10 billion for the Northern Rock Black hole

This is on top of the £700 billion already committed which takes the total now to approximately £1,200 trillion, set this again official Public sector net debt of about £700 billion then this gives one a scale of the magnitude of the exploding tax payer liabilities that risk the bankruptcy of Britain which would play itself out in the form of government debt default and a currency crash, as warned of in Novembers analysis - Bankrupt Britain Trending Towards Hyper-Inflation?

The below graph illustrated that tax payer liabilities are expected to bust above £3.5 trillion by the end of 2012, however recent events put Britain AHEAD of schedule, especially if as the mainstream media and economists are also now starting to realise that the British banks are sitting on liabilities of £5 trillion and that if they are all nationalised both publicly such as Northern Rock or through the backdoor such as RBS, HBOS / Lloyds, then the markets will discount this liability by selling out of the currency and marking the UK bonds down as at a greater risk of default. Both of these market reactions has the effect of increasing the costs of servicing the debt as the value of the debt rises in terms of foreign currencies and bond holders demand higher rates of interest to hold British debt i.e. higher interest rates even if only on the longer end, as short-term have been slashed to prevent a deflationary spiral that continue to target a trend towards zero.

Therefore the updated UK liabilities graph is as follows which brings forward loans to the banks scheduled for 2011 to this year, as well as increasing the total by 2010 to £1.1 trillion from the original £750 billion as follows :

The size of the liabilities as a percentage of GDP also rises in the face of forecast GDP contraction of 6.3% ( UK Recession Watch- Britain's Great Depression?). Total PSND is expected to rise to 100% of GDP, however this abysmally fails to report the true extent of tax payer liabilities which cannot be hidden from the financial markets and in that respect total liabilities are expected to soar during 2009 from 150% of GDP to 250% of GDP with budget deficits continuing to lift debt levels to above 300% of GDP by the end of 2010, this is set against the November 08 estimate of total liabilities by the end of 2010 of 250% of GDP.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article. Republished articles must include attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Andy
25 Feb 09, 03:44
PFI

Hi Nadeem,

I was wondering why you don't include payments committed to the private finance initiative (PFI). Work from several papers has demonstrated that if this was brought onto the books (as it would have been if the state had paid for the good/service/building etc) there is a (several hundred billion) increase in tax payer liabilities.

Keep up the good work,

Andy


Nadeem_Walayat
25 Feb 09, 04:02
PFI

Thanks for your input Andy, I will definetly investigate PFI implications for tax payer liabilities, someone that works in the civil service had already brought it to my attention.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules