Bankrupt Britain Is On List with Spain, Greece, and Portugal
February 8, 2010 • 3:25PM

"Put the UK on the list" of coming sovereign debt downgrades and defaults, said former IMF chief economist Simon Johnson in a BBC interview on Sunday. As it was reported that Royal Bank of Scotland (RBS, now essentially nationalized by bailouts) would report a 2009 loss of over $10 billion this week, Johnson added the simple but essential point: The European countries on "that list" are facing sovereign debt crisis and default because of the huge layouts they made in ultimately futile actions to bail out their big international banks. That insane policy was driven by British officials through the February 2009 "G-20" conference where President Barack Obama backed the British; and now, it is dooming the British and other in "Euroland" who followed it.

Johnson said financial markets have changed dramatically in the past two months and are again very nervous, with default spreads widening over sovereign debt. "Now, Greece is an extreme example — there I think you can see that it's going to get very messy, very quickly — but ... I have to add the UK to this list," he said. He added that the so-called "G-7" Finance Ministers meeting in Canada this weekend "show[ed] no awareness at all that much of Europe is facing a serious crisis and it's not limited to Spain, Greece and Portugal.... There's a very serious crisis inside the Eurozone."

Financial press in the United States and Europe are full of forecasts of more down, down for the Euro in coming weeks.

In a notable development reported by the Guardian, the British Crown/Spanish financial conglomerate Banco Santander UK may be getting another large "transfer" of British banking assets from RBS, arranged by the Bank of England. The BoE has "ordered" RBS to sell off about 300 bank branches of its Williams & Glyns bank subsidiary in the UK. Santander is likely to add that to the British banking pieces it has already been fed: Abbey Banks, Bradford & Bingley mortgage bank, and Alliance & Leicester banks. This would give it a 10% share of UK business lending as well as 11% of mortgage lending.

This means Santander, already facing big losses on its Spanish "assets," will go down the tubes with British debt in 2010.