Reykjavik-on-Thames?
[link] Friday, November 14th, 2008I know nothing about economics and so tended to regard my suspicions about the possibility of national bankruptcy as the fears of an uninformed mind. But Willem Buiter is a highly-informed mind, and he has a long, thoughtful blog post today on the FT site in which he discusses the possibility of a UK default.
The key question is, can the government meet all these fiscal commitments, whether firm or flaccid, unconditional or contingent and explicit or implicit ? Does it have the resources, now and in the future, to issue the additional debt required to meet the growing volume of up-front obligations it has taken on?
It’s a long, closely-argued, data-laden piece, and his answer, roughly stated, is that it depends on a lot of factors. But the interesting thing is that a serious academic economist is treating a question hitherto dismissed (e.g. by Charles Goodhart) as ‘inconceivable’ as, well, conceivable.
