It's The Stupid Economy

[unixronin]

So as widely reported, the US Government is planning to monetize debt to the tune of as much as a trillion dollars, funding it with bills still wet from the printing press.  The UK apparently has the same idea.

Except, it’s not working.

Brown’s government aims to sell a record 146.4 billion pounds of debt this fiscal year and as much as 147.9 billion pounds in 2010 as he tries to pull Europe’s second-largest economy out of its worst recession since 1980.

There’s just one problem.  Investors aren’t biting.  They bid on only £1.63 billion of the first £1.75 billion offering.  That doesn’t bode well for future offerings.

The DMO said as recently as December there was a possibility of a failed auction.  “We are in a very different world than we were six months or a year ago,” Robert Stheeman, chief executive officer for the agency, said in an interview.

No!  Really?

The UK Treasury has apparently authorized the Bank of England to print up to £150 billion to buy up debt.  Germany plans to sell €346 billion of bonds, while US bond issues will approach $2.5 trillion.

One wonders how many buyers there will be.  But I really have to wonder about this part:  When you issue bonds to secure funding, then print money to buy them from yourself with, have you actually accomplished anything at all in the real world except to dilute the money supply and end up with a larger slice of the diluted pie?  Or is that considered sufficient?

Comments

[hrrunka]

Brown is, of course, one of the main architects of this current crisis, so it's ironic (almost poetic) that he should also be seen to be one of the most prominent folks failing to fix it...