Gordon Brown retreats on spending as market sounds warning

[CHIMO]

Source: The Guardian

Gordon Brown last night backed away from plans for a recession-busting spending spree in next month's budget, after City investors delivered a stern message about the health of the public finances by shunning a sale of government debts for the first time since 2002.

In New York to canvass support for a deal at next week's G20 London summit on a worldwide economic rescue package, the prime minister said he had no plans to add to the £20bn fiscal stimulus announced by Alistair Darling last autumn, saying there were other "effective and quicker ways" of kick-starting demand.

Back in London, investors sent shockwaves through financial markets by shunning a £1.75bn auction of government IOUs - gilts - amid mounting fears about the Treasury's ability to pay for its bank bailouts and fill the hole left by collapsing tax revenues. "This is a bit of a shot across the government's bows," said Jonathan Loynes, of Capital Economics.

The prime minister's enthusiasm for an international economic agreement on tackling recession had been widely interpreted as an attempt to win political cover for a renewed spending spree at home, but he played that idea down yesterday.


Read more: http://www.guardian.co.uk/politics/2009/mar/26/gordon-brown-bonds-fiscal-stimulus

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It's the golden rule.

Governance or subsidy?

[Laelth]

1. That's rather big news.

The article mentions that the U.S. had a weak sale of T-bills on the same day.

:dem:

-Laelth

[CHIMO]

2. Look At Gold

It was going up when the market was going down. And going down when the market was going up.

In the last few days the gold stocks have stopped in a dead band.

There seems to be a divergence occurring.