While certainly humorous, entertaining and very, very childish, the
recent war of words between France and Britain has the potential to
become the worst thing to ever happen to Europe. Actually, make that the
world and modern civilization. Why? Because while we sympathize with
England, and are stunned by the immature petulant response from France
and its head banker Christian Noyer to the threat of an imminent S&P downgrade of its overblown AAA rating,
the truth is that France is actually 100% correct in telling the world
to shift its attention from France and to Britain. So why is this bad.
Because as the chart below shows, if there is anything the global
financial system needs, is for the rating agencies, bond vigilantes, and
lastly, general public itself, to realize that the UK's consolidated
debt (non-financial, financial, government and household) to GDP is...
just under 1000%. That's right: the UK debt, when one adds to its more
tenable sovereign debt tranche all the other debt carried on UK books
(and thus making the transfer of private debt to the public balance
sheet impossible), is nearly ten times greater than the country's GDP.
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