Osbourne proposes 100 year gilts

Discussion in 'Economics' started by DesktopCommando, Mar 14, 2012.

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  1. Another desperate extension of the socialist credit-card culture. Borrow now, inflate/devalue away, leave the problem of an utterly bankrupt nation to someone else's children.....

    How about doing something more economically sustainable and slash the size of the State instead?
     
  2. Alsacien

    Alsacien LE Moderator

    Moved from FA thread
     
  3. Alsacien

    Alsacien LE Moderator

    The UK already has about 2.7 billion pounds of perpetual gilts which never mature, mostly from WW1.
    Some commercial entities in the US have issued 100 year bonds, and Mexico did an issue last year IIRC.
    I don't think the maturity matters as much as the amount, the OBR will publish data next week on the projected increase in debt servicing costs over the next 5 years.
     
  4. Wordsmith

    Wordsmith LE Book Reviewer

    Osborne seems to be using this for a bit of financial engineering to temporarily reduce the interest payments on our national debt.

    This is kicking the tin can down the road (albeit for understandable reasons). The risk in all this is that some future chancellor [hi, Ed Balls - you prick] will start to use this as a mechanism to shuffle debt off into the future without addressing the root of the problem - excessive government spending.

    You don't need a crystal ball to see this will start as a short term solution to current problems and end up as another bit of financial stupidity for future generations to sort out.

    Wordsmith
     
  5. Credit-card culture for grown ups!
     
    • Like Like x 1
  6. Buying into Mr Gideon's alleged 100 year Gilts, would be like pouring good cash into Euro Bonds. It's just another ponzi scam to raise cash.
     
  7. Bit extreme!

    It actually isn't a bad idea.
     
  8. 100 years is too long to be much use to pension funds for their Asset Liability Matching (your pension), on the other hand it would help Gilt/Swaps traders extend their curves... It would be interesting to see how a quant interpolates the 50/100 year Gilt.
     
  9. If you can sale 100 year bonds at a reasonable interest rate then why not?

    Its the short term debt that is the killer.
     
  10. The last time that the BoE issued 100 year bonds it was to pay for World War One. This time it is to pay for 13 years of Labour government