by Kathleen Brooks

The U.K. economy is unwell. Like the Obama administration, the government of Gordon Brown planned to spend their way out of the crisis. Sharing more similarities with their neighbors across the pond, the U.K. also need to borrow the money to fund their plan.

But yesterday an auction of gilts (the U.K. equivalent of Treasury bills) did not get fully sold. The demand for all the gilts the government wanted investors to buy simply wasn't there. This is not good news for the government. The headlines such as this one on Bloomberg called it a calamity for Brown and a sign investors did not trust his leadership.

Brown's popularity is down to 30 percent, but these headlines may have been a little hasty. The gilts issued were for 40 years. The U.S. government doesn't even sell Treasuries beyond 30 years, so maybe investors just didn't want their money locked up for such a long time. Today's gilt auction in the U.K. was heavily oversubscribed, by three to one. These bonds are due in 2022, so maybe 13 years is not far enough out in the future to spook investors.