BlackRock & Fidelity In Collusion With The UK Government?
The Western World is Already In Recession
Subtract budget deficits from national GDPs, and private sector GDPs are shrinking. While government spending is creating more debt, the tax base to pay interest costs is contracting.
Some analysts are pointing out that private sector debt is declining and they conclude that lending risk is lower than commonly thought. An article in the UK’s Daily Telegraph (Wednesday, 16 July) by veteran journalist Ambrose Evans-Pritchard was headed, “British debt is a screaming buy and Blackrock, Fidelity, and Schroders agree”.
As Evens-Pritchard points out, these financial megaliths are at odds with the sentiment in the gilt market, which must also be the case in other economies with a significant government borrowing requirement. It begs the question as to whether this story is planted in cooperation with the UK government, aware of a funding problem.
Conspiracy theory, maybe, but government disinformation is remarkably common. We must proceed with what we know in answering the question raised: Do you buy or sell government debt?
GDP tells a different story
To answer it, we must deconstruct GDP, changing our focus to the US economy, which is the one that really matters. The US budget deficit last year was 6.4% of nominal GDP. But nominal GDP growth was only 5.0%, meaning that the private sector must have contracted by 1.4%. In Q1 2025, nominal GDP increased at an annualised rate of 3.25%, yet the budget deficit is still over 6% and rising. Therefore, the private sector is contracting at an increased rate. In fact, adjusted for price inflation, real GDP actually contracted 0.5% on revised official estimates.
Obviously, nominal GDP is only growing due to the federal government’s excess spending over revenues. And because GDP is no more than a credit figure, credit deployed by the private sector is actually contracting. It reflects not only overall economic activity in the private sector but is a net figure encompassing changes in savings rates, bank credit, business start-ups and closures, and debt write-offs. The FRED chart below illustrates the reduction of bank credit for non-financial private sector lending as a proportion of the total economy.
https://www.zerohedge.com/geopolitical/blackrock-fidelity-collusion-uk-government