This is big news and exposes the depth of the debt crisis. UK banks, still in existence thanks to UK taxpayer largesse and now facing a new round of bad debts as the UK property market implodes, have found a new carry trade lending back to the government the funds the government lent to them and pocketing the interest rate difference. What’s more, they are just about the only purchasers of UK bonds left. How long can the bankrupt bail-out the bankrupt?
7th June, 2011
Banks bought 91pc of the £39.8bn of net issuance of new gilts with purchases totalling £36.1bn, compared to the £11.4bn of UK debt bought in the preceding six months.