Is the U.K. an Iceland 2? No but there are serious financing risks ahead. Also: BBC News TV and Radio Interviews.
I am in London for a few days and I was recently interviewed by BBC News TV and Radio about the state of the U.S., U.K. and global economy (links to these interviews are below in this piece). While in London I was repeatedly asked by media and financial sector folks whether the UK was an Iceland 2, i.e. whether it would end up having an insolvent government and country. The statements this week the by famed investor Jim Rogers - that the UK was essentially kaput and that investors should dump UK assets and the pound sterling - were widely reported here in the UK and caused a stir at the time when the economy was officially declared in a recession, when the pound is falling, when most UK banks look as insolvent as their US counterparts and when some people are starting to wonder whether the UK may need to go and beg the IMF for a bailout. Indeed most UK banks will be formally or informally nationalized with a significant fiscal cost of their bailout at the time when the fiscal deficit will surge because of a severe recession.
So what is the risk that the UK will be Iceland 2? Let us discuss next this issue in more detail:
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