Wednesday 21 January 2009

Brown Has Reduced Us to Junk - The Markets Speak

We've looked at RBS preference shares before as an indicator of how the UK is viewed. Yesterday they provided another salutory perspective.

On Monday, the Government effectively took over RBS, swapping the 12% prefs it took
in October for ordinary shares. It's UK plc that stands behind RBS obligations now, and nothing else. RBS ordinary shares tanked, of course, but it was a holiday in the USA, so no trading there.

When markets re-opened, RBS regular dollar prefs (nominal 6.6% issue) fell more than 57%
, and now yield 35.7% ! That's a measure of international confidence in our ability to service our debt.

The Man who Sold the Gold has reduced us to the merest junk.



Jon said...

Gawd help us.

AntiCitizenOne said...

I might take a punt on those. what are the risks?

not an economist said...
This comment has been removed by the author.
not an economist said...

The investor Jim Rogers has openly said he would not now invest in sterling. See this link here:

The actual quote from Mr Rogers is:

“I would urge you to sell any sterling you might have,” said Jim Rogers, chairman of Singapore-based Rogers Holdings, in an interview with Bloomberg Television. “It’s finished. I hate to say it, but I would not put any money in the U.K.”

He also predicts imminent catastrophe for the US economy aswell, the more so if Obama's planned bailouts go ahead. On account of this he moved his entire family to Singapore a few years back.

Obviously you can dismiss him as just another bow tie wearing speculator if you wish.

not an economist said...

"The Man who Sold the Gold has reduced us to the merest junk."

At this point - if I were Gordon - I would be clenching my buttocks until they started to bleed, gripping the table with a force hitherto unheard of and just generally crapping myself. I mean - you have to admire the guy for the way he just keeps smiling and laughing and joking with interviewers like Andrew Marr last Sunday. When asked about the staggering levels of debt in this country and the govts encouragement of us to go even further into debt he just larfed, smiled and said "Ooooh Andrew you are being a tad puritanical there ...."

Sean Robbins said...

I take your point but I don't think it's entirely a fair reflection of foreign investors view of the UK Government.
The main fear seems to be the risk of RBS being fully nationalised with the private shareholders only being compensated of between 1 - 10p.

Nick Drew said...

ACO - well no financial advice from this blog, natch: but IMHO the medium-term risks are (a) default on the quarterly fixed divi payments; (b) illiquidity in the shares; (c) FX risks of something denominated in $, if you are a £-based investor

as far as I know, they've not missed a payment yet, so the upside would be that, once 'everything settles down' and investors see no serious prospect of such a default, they would go back to trading at a more normal yield. They've already shown the potential to double in price, because they were down around $5 before, then back up to $10.

Again, as far as I know liquidity has not yet been an issue.

FX is anyone's guess

To repeat: just MHO.

Nick Drew said...

NOE - Rogers is worth noting, he's a commentator many folks follow. As for Brown, though he seems pretty thick-skinned, there must surely be the possibility it gets to him eventually

though Mandelson has obviously told him to keep repeating in the mirror

it's definitely not your fault ... it's definitely not your fault

Sean - welcome. I accept the risk on the ordinary shares is as you say: but the risks on the prefs are different (see reply to ACO above) and relate to perceived likelihood of default on divi (etc), not nationalisation

and default relates back to UK plc, in today's circumstances

Trubes said...

It has been said that Alastair Darling has held a lifelong Marxist ambition to nationalise all the British Banks. All part of the 'Big Plan' to turn us into a Stalinist State.
The RBS debacle could well lose this dupliciticous, lying, thieving, arrogant Government lots of votes North of the Border...
It'd be wonderful if Brown and Darling lost their seats in the next Election...A tantalising prospect!


not an economist said...

Nick Drew:

Yes I agree. I have a lot of respect for him. And others of his ilk like Schiff and Ron Paul. My flippant comment about the bow tie was a sarcastic reference to the way these commment of Jim Rogers were dismissed on a message Forum I happened to end up on this morning.

Lola said...

Forgive my ignorance, but is an exchange of preference share to common stock a 'debt for equity swap'?

If so why not force all debt holders to swap their entitlements for common stock and hence rebuild RBS' lanace sheet?

Make the bond holders do this by threatening administration/liquidadtion.

Anonymous said...

aaaa片, 免費聊天, 咆哮小老鼠影片分享區, 金瓶梅影片, av女優王國, 78論壇, 女同聊天室, 熟女貼圖, 1069壞朋友論壇gay, 淫蕩少女總部, 日本情色派, 平水相逢, 黑澀會美眉無名, 網路小說免費看, 999東洋成人, 免費視訊聊天, 情色電影分享區, 9k躺伯虎聊天室, 傑克論壇, 日本女星杉本彩寫真, 自拍電影免費下載, a片論壇, 情色短片試看, 素人自拍寫真, 免費成人影音, 彩虹自拍, 小魔女貼影片, 自拍裸體寫真, 禿頭俱樂部, 環球av影音城, 學生色情聊天室, 視訊美女, 辣妹情色圖, 性感卡通美女圖片, 影音, 情色照片 做愛, hilive tv , 忘年之交聊天室, 制服美女, 性感辣妹, ut 女同聊天室, 淫蕩自拍, 處女貼圖貼片區, 聊天ukiss tw, 亞亞成人館, 777成人, 秋瓷炫裸體寫真, 淫蕩天使貼圖, 十八禁成人影音, 禁地論壇, 洪爺淫蕩自拍, 秘書自拍圖片,

做愛的漫畫圖片, 情色電影分享區, 做愛ㄉ影片, 丁字褲美女寫真, 色美眉, 自拍俱樂部首頁, 日本偷自拍圖片, 色情做愛影片, 情色貼圖區, 八國聯軍情色網, 免費線上a片, 淫蕩女孩自拍, 美國a片, 都都成人站, 色情自拍, 本土自拍照片, 熊貓貼圖區, 色情影片, 5278影片網, 脫星寫真圖片, 粉喵聊天室, 金瓶梅18, sex888影片分享區, 1007視訊, 雙贏論壇, 爆爆爽a片免費看, 天堂私服論壇, 情色電影下載, 成人短片, 麗的線上情色小遊戲, 情色動畫免費下載, 日本女優, 小說論壇, 777成人區, showlive影音聊天網, 聊天室尋夢園, 義大利女星寫真集, 韓國a片, 熟女人妻援交, 0204成人, 性感內衣模特兒, 影片, 情色卡通, 85cc免費影城85cc, 本土自拍照片, 成人漫畫區, 18禁, 情人節阿性,