Saturday, February 23, 2013

Long Overdue British Rating Cut

With falling productivity and rising budget- and current account deficits, a cut of Britain's AAA-rating was long overdue. Not because formal default is likely, that is in fact extremely unlikely given the fact that U.K. debt is denominated in pounds and because of the Bank of England's printing press. But because those same printing presses will be used to try to inflate away the real value of that debt, making losses for those dumb enough to buy such bonds certain.