Normally I'm fairly dismissive of rumors about a major 1st world country going bankrupt, but there might actually be something to this one. It's no secret that Britain is in trouble, and has been for some time. But now a few credible sources are stepping forward to suggest that they might actually be toast.
The pound has lost 36% of its value against the greenback, and over 30% against the Euro, since 2007. Jim Rogers of Rogers Holdings came out and said today that, "It's simple. The U.K. has nothing to sell." His advice to young people in Britain? Get out now.
Just last week, Sir John Gieve, Deputy Governor of the Bank of England, indicated that the end of the recession was nowhere in sight, and that worse was likely to come. Not given to flights of fancy, these staid British bankers are dancing around the real issue: it's a good thing the sun never sets on the British empire, because they can't pay the light bill.
The Daily Times of Pakistan is even getting in on the act. They published a pretty scathing (and accurate) assessment of the state of all things British. Check it out here, if you're interested.
So my question is this: if all this chatter becomes a self-fulfilling prophecy and causes a run on the British banks, what will the impact of it be on the world market? Will we see the IMF step in, Argentina-style? A second mortgage on Buckingham Palace, perhaps? Will rival governments like the U.S. and the E.U., recently emboldened by the market's acceptance of their bank nationalization efforts, move to solve the problem with a one-world currency? Or will the Brits go out with a whimper and not a bang?