UK economy Disaster - Business Insider

UK economy Disaster - Business Insider

The AAA credit rating was important. While it will be unlikely that it will decline further, if it does, UK bonds for pristine collateral in the swaps markets will be limited. The governments in this bind have 4 choices:

1. Continue with austerity and hope things turn around.

2. Do more QE type money printing and let it all go to the wealthy in commodity speculation.

3. Pass regulation that would require regulation of speculation so that the banks would invest more in the nation.

4. Just give money to the people, as the money in the financial system is not helping main street. Eventually that kills an economy.

I would like to see a little of 3 and 4, before 2 is attempted again.

Keynesian stimulus only really works in an atmosphere of regulation of speculation. Deregulation is something that has existed in the UK for a long time. They never had Swaps rules, or Glass-Steagall, and that caused Thatcherism to allow all kinds of bad speculation and lending, and it came to the US in the form of interest rate swaps contracts where the banks took the low and floating side of the bet. And it came to the US in the form of the very destructive housing bubble last decade.  


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