Britain and France May Have to Seek IMF Bailout \ stacker news ~econ

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Britain and France May Have to Seek IMF Bailout

408 sats \ 18 comments \ @spiderman 27 Aug econ

Woke up to the amazing headlines of both Britain and France teetering towards seeking IMF Bailouts.

Got me thinking,

Why would Britain need to seek bailout when it is monetarily sovereign and can print pounds with impunity? Are the debts it owes denominated in Euro or USD (which it may not have enough of)?
And as for France, are the debts denominated in Euro? Then is it a matter of it convincing the ECB to print more? Or can France use this get out of Eurozone and become monetary sovereign again?

Because they cannot literally print money to repay the bonds, they can only borrow more (thus creating inflation). And they've been doing this long enough, so that interest payments are now a huge portion of the budget. I don't know what the plan is, but they must default and start over.

0 sats \ 4 replies \ @spiderman OP 27 Aug

Because they cannot literally print money to repay the bonds

France cannot print money unilaterally, but how about the UK? Are their debts denominated in pound or Euro/USD?

7 sats \ 3 replies \ @SwapMarket 27 Aug

You don't understand how "print money works". It is always borrowing from the market by issuing more bonds to repay old ones plus interest. Like a ponzi scheme.

0 sats \ 2 replies \ @spiderman OP 27 Aug

I understand printing money as...well...,printing money. Literally. Putting inks (picture of the queen) on pieces of paper.

Here, you can see the change in base money (not deposits, but count of the papers with the queen's face) over the last decade, and the rise is hard to miss. I cannot imagine anyone else but the UK government doing the printing here, as otherwise it would amount to counterfeiting.

7 sats \ 0 replies \ @SwapMarket 27 Aug

Sure, that's what they show on TV. This is a small fraction of money in circulation and definitely not how the government repays its bonds. Most funds only exist electronically as numbers on computer screens.

0 sats \ 0 replies \ @Solomonsatoshi 27 Aug

The core problem is decades of trade and fiscal deficits. You dare not explore why that is the case. Printing money is simply the coping mechanism delaying the impact of constantly worsening competitiveness with the rest of the world- primarily over the last 3 decades, China.

0 sats \ 0 replies \ @Solomonsatoshi 27 Aug

'Trump’s strategy with the Fed, as with tariffs, is like boiling a frog: moving gradually enough to lull markets into thinking nothing of macroeconomic significance has happened. When he announced steep tariffs in early April, markets revolted, so he walked them back. Then, piece by piece, he restored most of them, and markets took it in stride.

Similarly, when he mused about firing Powell last month, markets were roiled. So instead of trying to remove Powell, Trump has looked for a way to accomplish the same thing. If he replaces Cook, he will have appointed four of the Fed’s seven governors.

“We’ll have a majority very shortly. Once we have a majority, housing is gonna swing and it’s gonna be great,” Trump said Tuesday.' Greg Ip WSJ

The wests leadership right to the top is corrupt and blatantly misusing fiat monetary leverage to inflate asset prices and create false wealth to compensate for its lack of real productive wealth creation capacity. This is how empires decline.

0 sats \ 10 replies \ @Solomonsatoshi 27 Aug

Britain and France (and the EU) are monetarily and militarily subservient tribute states to the global hegemony of the USA. The wests collective viability is receding as China increasingly dominates the global productive economy and strategic supply chains and trade in both manufactured goods and commodities. The neoliberal financialisation that the west has indulged in, misusing fiat debt capital allocation primarily toward non productive speculation has led to the decline of the wests economic power and viability and the rise of China.

100 sats \ 9 replies \ @spiderman OP 27 Aug

China is no less guilty of Fiat debt fuelled bubble, for that matter. Why do you think they had to ban Bitcoin when almost none of the western countries had to be that drastic?

So I doubt if what you call as the rise of China is even possible financially speaking.

0 sats \ 8 replies \ @Solomonsatoshi 27 Aug

In China the government direct capital toward productive industry and infrastructure. That is how you use fiat money to grow an economy. In the west fiat debt issuance is used to inflate asset prices and create an illusion of wealth- that is how you fuck up your productive base. China now produces almost all manufactured goods at a lower price and more competitively than any western competitor can. China enjoys annual trade surpluses of a trillion dollars. They enjoy trade surpluses with most other nations - while the US, EU and Britain have had trade deficits and fiscal deficits for decades and are mired in debt because they have misused and squandered fiat debt issuance on parasitic non productive asset price speculation. Infrastructure in the west is crumbling while China is building massive modern and highly competitive infrastructure both internally and globally. China does have a problem with its limited options for citizens to invest private capital- the over reliance upon housing as a private investment caused a bubble but the biggest losers in that were greedy western hedge funds who took a massive hit. https://www.fnlondon.com/articles/blackrock-vanguard-shareholdings-in-evergrande-plummet-by-more-than-250m-20210928

0 sats \ 5 replies \ @spiderman OP 27 Aug

In China the government direct capital toward productive industry and infrastructure.

So thought the central planners of the USSR, until they collapsed, so yeah, we will see. In the UK also the government thinks the most productive thing with capital is to provide populist welfare.

So it seems the government bubble that is bursting, and it's a good thing. Regardless, this post is not about China, so beat that drum elsewhere.

0 sats \ 4 replies \ @Solomonsatoshi 27 Aug

The USSR was attacked by the Jewish Banker funded European imperialists from the time it was formed. It eventually succumbed after 70 years of continued trade embargoes and proxy wars. The USSR was not economically sophisticated only ever having about 10% of global GDP- China is quite a different contestant. China is applying an economic model that uses fiat monetary leverage to build its economic strength vs a west that has misused its extraordinary privilege and historical legacy advantage over resource hegemony and control over international institutions and protocols. I am responding to your post expanding the context of the dialogue- as is my right in any fair and open contest of ideas- the most fundamental element to any free market. Your wish to censor and limit the scope of the dialogue hints at the reality that free trade never really exists but is usually only claimed in duplicity.

0 sats \ 3 replies \ @spiderman OP 27 Aug

You are not really expanding the context, you ate merely trying to hijack the context to push your irrelevant agenda. That's why I was requesting you to go away. The rest, depends on your self respect.

0 sats \ 2 replies \ @Solomonsatoshi 27 Aug

Rubbish- I am directly addressing the crisis that Britain, France and the western world faces in being confronted by a China that has beaten them at their own game- capitalism. What is more I have addressed why this is happening- that you want to hold your hands over your ears and ignore my arguments is typical of the arrogance and denial that infects the west. It is not my problem that you cannot refute the points I raise and that are entirely relevant to your horror on finding that France and the UK face economic crisis. Your inability to engage in a fair and reasonable contest of ideas speaks for itself.

0 sats \ 1 reply \ @spiderman OP 28 Aug

As I said, it depends on your self respect. I cannot teach you that. If you want to say something to the general public, you can write your own blog posts, but instead you have to come here to hijack it.

Self respect cannot be taught.

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0 sats \ 1 reply \ @anon 27 Aug

In China the government direct capital toward productive industry and infrastructure.

Maybe. They've spent enormous amounts of capital on white elephant projects that'll never accomplish anything, such as their real estate bubble. That's not productive.

0 sats \ 0 replies \ @Solomonsatoshi 27 Aug

The real estate bubble was a misallocation but the vast majority of fiat capital allocation has resulted in the most extraordinary economic development in human history. China now dominates global trade in manufactured goods, commodities and infrastructure construction. China enjoys Trillion dollar trade surpluses while the west suffers chronic trade deficits.