Wednesday, March 14, 2012

UK Looking for Total Saps with Money

The UK chancellor aims to launch an “Osborne bond”—a 100-year debt issue or even a perpetual gilt that never matures—to take advantage of the country’s historically low interest rates, FT reports.

George Osborne will say in next week’s Budget that he wants to “lock in” the benefits of Britain’s low borrowing costs, which he says reflect market confidence in his fiscal plans.

Benchmark gilts, which have to be repaid after 10 years, yield 2.17 percent while the longest dated conventional bond, which matures in 2060, trades at 3.22 percent.

The most liquid perpetual bond, known as the “war bond”, was issued in 1932 to pay for the costs of the first world war and has a yield of 3.8 percent.

With central banks around the world printing money on a super aggressive basis, the last thing you want to own is a long-term bond, even one 10, 20 or 30 years out. Buyers of 100 year UK bonds are really ripe targets for my fog making machine, which I demonstrate only in San Francisco.

1 comment:

  1. I laugh every time you mention your fog making machine. Very good writing, Bob!