THE DAY AFTER SCOTS VOTE NO, UK BORROWING COSTS FLATLINE, BUT POUND SURGES. WHY?
As I have a daily update account on sovereign ratings with Standard & Poors, it doesn’t take them long to give me any revisions. It took them exactly 27 minutes after the opening of business to email me with this:
Confirmed by the body copy beneath as follows:
Now to some of you, this may seem quite anodyne: after all, the Scots voted ‘No’, and so everything is AOK and much better than it would’ve been, right?
No, wrong….according to S&P, the UK’s ability to raise money has not been improved one jot by having its access to Scottish oil retained as collateral against borrowing.
So then: where is that threat to the UK’s borrowing credentials we were told was real and present last night? Hold it up to the light of day, nowhere in sight.
OK, now let’s look at this in another dimension of just how crooked the markets are. As the UK’s ability to borrow (and thus the calculation of our real net worth) is unaffected by the Scottish vote, why do I read this afternoon as follows:
It goes like this: our credit-worthiness is unchanged, but our currency is surging in value. Fine, I was that man at 3pm CET selling Sterling into euros to reduce my restoration costs here in the eurozone. But the markets can’t have it both ways: if our fisco-economic situation is static after the vote, why is our ability to borrow unchanged, but the value of our fiat paper higher? And please, save me the ‘technicals’ on this, because it’s just horsesh*t: if the technicals were really still in play around the World, we’d have wound the currency mileometer back to zero two years ago, and forgiven debt on a global scale.
It’s called directionalising for profit. But it’s a dysfunctional profit, not an earned profit.
IABATO my friends, IABATO: It’s all bollocks and that’s official.
The Slog 