The UK Daily Telegraph’s economics editor, Edmund Conway, writes today about a whisper that an unnamed agency is set to cut Britain’s sovereign credit rating. Given the S&P reduction in Spain’s rating just days ago, it has the ring of truth.

In the event, it would put up the interest paid on “gilt-edged” government bonds, and filter through to almost every part of the economy.

Gordon Brown and Alistair Darling yesterday gave a blank cheque to the entire banking system. When you consider that Royal Bank of Scotland alone has liabilities of £1.8 trillion ($2.7 trillion), Will Hutton’s jibe that Britain is “Iceland on Thames” hits home hard.

But what is Gordon Brown’s current state of mind? He has a fragile ego at best and apparently needs to believe he leads the world, despite everything he has done in the UK over the past 12 years collapsing around him.

Psychologically this is the danger zone. Politicians often retreat into their bunkers at this point, surrounding themselves with smiling head nodders and sychophants.

He may not even be aware that one more mistake could plunge Britain into a hole that will last a generation. That error may already have been made in the form of Brown’s blank cheque to the banks.

Our Moneyizor site is asking the question, “Should Brown be placed on suicide watch?”

It is not an idle question in the circumstances.

John Evans

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