I 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.