According to the Office of National Statistics, at the end of last year, UK gross external debt stood at ₤6.4 trillion.Take a look at any UK financial sector database, and one overwhelming observation springs forth. It doesn't matter the sector; public or private, households or businesses, the story is always the same. The UK is drowning in debt.
Where did we pick up this corrosive culture of debt accumulation? We were not always this indolent and extravagant. Yet somewhere along the way, we lost ourselves in a mind numbing spasm of debt fuelled consumption. Now we find ourselves overwhelmed by a mountain of financial claims on our future income.
The destructive era of debt accumulation is now drawing to a close. This is the great message of the UK banking crisis. There are some, like new Labour, who are in denial. But the vast majority of us know we cannot continue spending what we do not earn. We have to stop borrowing and start repaying.
13 comments:
It doesn't look like it is going to fall anytime soon.
The people who caused this should be put in labour camps for the rest of their lives and be made to do some proper work.
Where did it come from ?
We're looking at it through the wrong end of the telescope entirely.
First we the had devaluation of the people - the devaluation of our currency followed this.
Debt was facilitated by government in order to maintain the standard of living of the devalued people - to hide from them the fact that they were being devalued - and to create an illusion of wealth and normality whilst our country was being debased and whored out.
:)
This has all the hallmarks of an exponential curve...doubling every ten years.
These types of systems have a nasty tendency to flip backwards at a certain stage...
actually you are being unfair...
There is a methodology here:
http://www.southparkstudios.com/clips/collections/sps_homepage_videos/222638
It came from a mass delusion (started by socialism) that you could have what you wanted without ever having to pay for it (or getting someone else to pay for it on your behalf).
You can really trace it back to Lloyd George's pension proposals which were the first 'something for nothing' proposals. Whether they were a 'good thing' or not, it opened the door for more of the same. The result is the benefit sytem we have today.
Hand in hand with that rose the idea that we 'deserved' things, and should have them now, rather than wait, having saved the money first. This I trace back to the end of WW2 and a national feeling of 'We've done all this suffering, now we want to live a bit'. You can trace the rise in consumerism to the Post War age.
Along the way we discovered that taxing 'the rich' gets in only so much cash, and to keep up with the demands for more and more spending, tax was extended to lower and lower income brackets, and rates rose higher and higher.
We also forgot that what is borrowed must be repaid eventually, both privately and nationally. Unless inflation can do the trick for you by stealing the money from the prudent, and giving it to the spendthrift.
Perhaps in 20 years time we will look back with nostalgia at a time when you earned hundreds of pounds a week, and could get a meal out for £10-15. When incomes are £100-200K pa, and the average house costs £750K, current mortgage and credit card debts will assume a lesser importance.
what is the UK's GDP? It can't be anything above 2 trillion pounds, given a population of 60 million.
so you are saying that the UK has a debt that is 3 times its GDP???? MNot even in Latin America did any country reached half that ratio in the 80s
Debt was used to cover up the fall in living standards caused by rises in state extortion.
Our external assets are 6.4 trillion. So our overseas liabilities is 0. At least that's what the following linked article says:
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2008/12/uk-overseas-debt-scare.html
The roots of the UK's problems are a) a class-divided society and b) an inadequate educational system.
It has proved beyond the intellectual and moral capacities of the English to run an automotive industry, and similar, so we have just lost out to the Germans, French, Japanese...
The class divide means the sides of industry despise each other while inadequate education and training mean industry was always playing catch-up on design and quality.
Those with more privilege than intelligence have gone into 'clever' financial things in droves since the eighties, eager for the fast buck. And that has finished the country off.
B. in C.
we have yet to see the societal outworking of the newly-imposed regime of student debt in the UK
although in the USA (e.g.), paying one's way through college - and working or saving to do so - is a long-established state of affairs, fully built into the culture, it is entirely new in the UK
and, without warning or preparation a generation of graduates has been told it's just fine to be in 6-figure debt, which is fantasy money for most of them
we can only guess how this will work through
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