The Last Ditch by Tom Paine

City alarm as Treasury fails to sell Government gilts – Telegraph.

It was always likely that the UK government's bond issues to fund its "stimulus" packages would fail. Those with money to invest have choices. Financing politicians' desperate attempts to restore the economic la la land of the last decade for the duration of an election campaign is not an obvious one. I guess Gordon Brown might be forgiven for having hoped otherwise, given other investment choices made in the last decade. However, the people who made those bad choices had some, albeit misguided, hope of a return on their investment.

Sadly, though the government's credit has limits, its capacity to print money does not. But banknotes (technically promissory notes) are also, in a broad sense, a kind of bond backed by the government's credit. "Credit" comes from the same root as "credible", namely credere, "to believe." If we don't believe the promise to pay implied by the the issue of a banknote (and in the case of a Bank of England note, actually written on it), then its value inevitably declines.

This government is playing with economic fire. If it doesn't soon reign in its spending plans to restore confidence in its credit, it will make a bonfire of our children's patrimony.