Money Week recently put out a package with the headline, “The next time these two lines cross – Britain goes bust” and, under the headline, there was a chart.
You can see it here:
I have some comments to make:
#1: I think the combination of headline and chart is fantastic. If you’re in their target market – people in the UK interested in investment – you’re going to want to read on.
#2: Unfortunately, I think they failed to back up the headline. There are two things – a claim they make, and an objection they ignore – that undermine their message.
Here’s where I think they dropped the ball:
(A) “It’s happened every single time these lines have crossed”
The examples they give include Spain (2012) and Italy (2011). The problem with this is, although these countries have severe problems, they’re not bust.
At the time of writing, Spain is paying less than 3.5% on their 10 year bonds. Italy is paying just over 3.5%. (Despite their PM resigning just last week.)
So, straight away, an investment-savvy reader is going to feel the word “bust” is hyperbola. And this undermines the whole salesletter.
(B) The copy ignores the #1 counter-argument to Britain going bust – or even defaulting on its debts: it has its own currency so can print its way out of debt.
Personally, I don’t believe this argument holds – history suggests currency can’t be printed indefinitely – but it’s an argument we hear over and over, AND printing has been the approach taken so far, both here in the UK and across the world… and it seems to have staved off disaster. (At least, for now.)
Without addressing this – and showing conclusively how printing eventually leads to sky-high interest rates, which leads to debt default (because creditors and trading partners lose faith) – Money Week is unlikely to convince anyone who believes printing will prevent disaster.
These two problems kneecap what was a really interesting idea. Maybe the idea simply never held water in the first place (it never happened to Italy or Spain). Or maybe it was poor copywriting logic. I don’t know.