UK debt crisis is imminent. What happens to the economy ?



Does the consumer debt of £1 trillion include mortgages?
--
Richard Faulkner

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Yep. Roughly 82% is mortgages and the balance is credit cards and other personal loans. It has doubled since 1997 while the economy has only grown by about a third to a half. Subtract the debt out and you have negative growth.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

How much of the debt on credit cards actually paid off each month? On average I owe the credit card companies around £300 throughout the year but I pay the full amount when presented with a monthly statement. I guess the £300 is actually included in the debt figures but I'm just using the card instead of readily available cash because its more convenient.
--
Alan
mailto:news2me_a snipped-for-privacy@amacleod.clara.co.uk
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I think the figure is net debt, so if you owe 300 buy pay in 300 that would count as 0 in the figure.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Sun, 5 Jun 2005 10:02:36 +0100, "John Redman"
typed:

negative growth of what? all you seem to be claiming is higher property prices are funded on a debt basis....
you are not claiming the uk is producing less potatoes or even building less houses....
you are increasingly giving me the impression you don't understand inflation... http://www.abelard.org/inflation.htm it matter centrally if you are to make a case....
regards....
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I assumed he meant that GDP growth would have been negative if the credit spending was taken out.

Not quite, though that's a component of it.

No, but the UK could be growing its economy by "borrowng" future demand through credit-based spending. When the piper wants paid, we then get a bad recession because the future spending that was brought forward has vanished, and a period has to be spent paying down debt. If this gets bad enough then we get a debt deflation, which has always been a component of the worst recessions and depressions (the last of which was in the 1930's to give a rough idea of what "worst" can mean).
But you and I at least have danced this dance before...
FoFP
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
typed:

but gdp growth is essentially real world.... a bit of paper floating around doesn't effect gdp growth.... except somewhat related to counting with elastic!

i see no reason to dispute that....but where does that get you....read on.

in the thirties there were attempts to get back to sound money....nobody is *that* mad anymore... if the debts can't be paid....they'll essentially get written off.....

i'm not convinced you understand my position sufficiently :-)
regards
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Available credit does encourage people to trade when they otherwise couldn't, or even shouldn't.

That's a real shame.

Writing off a debt collapses the money supply in just the same way as paying off a debt does. Do enough of either and you get a deflation.

I have similar suspicions about thee sir!
FoFP
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
typed:

a very reasonable claim...

a pov.....but do you want an old time deflation? at the heart of what keynes taught is that there is no natural rate of unemployment....

so, you do it slowly? you print more than you write off? japan is in the midst of that learning curve....
best you try to keep out of it in the first place... 'i'd rather not start from here'
the objective is to keep the roundabout spinning..... so, 5% go down in a year....you can manage that ok..... i rate uk's inflation ~6% last time i checked.....

that could easily be... i start from the real world.....i get the impression you still have the cobwebs of uni voodoo economics! i regard that paradigm as nutz.....i can't think in nutz!
regards....
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Sure. After six decades of inflation, it's time for the medicine.

I'm an Austrian, not a Keynesian.

Why have twenty years of recession when you can have four of depression and get on with the new boom?

The quickest way to currency repudiation and the return of Gold that exists.

Helicopter money was tried in Japan. It failed.

Indeed, but You Are Here ->

I've never been to a University Economics class in my life.
If you're serious about reasoning from what you see, check out the Austrians: they're much hotter on what happens in fact than what happens in theory.
FoFP
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
typed:

where's the purpose...25% 'unemployed'

you don't have to get religion to recognise the problem

repeat stt re keynes....why do you believe there will be a 'boom'?

durrrhhhhh.....to refuse to return it would be a repudiation.... you're not one of those damnable gold bugs are you.....

they are still eating.....rather well..... and the problem, such as it is....appears to be *gradually* sighing away.... work is the curse of the drinking classes.....
i'm told brown is moving towards 40-50% clientalism..... this is a new world..... much 'work' is designed to stop grafitti....not to produce anything....

no....we have no serious deflation so far....

don't stop you reading the scribblers in the daily slime....and getting infected

that suits me fine..... but i'd rather you were much more specific than 'the austrians'...even adolf was one of those....
regards...
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

I suspect he means the school of economic thought that Hayek, Mises and some others are from. Not that I've read any of it other than Hayek.
James
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 06 Jun 2005 22:56:54 +0100, James Hammerton
typed:

very likely....but i don't like to assume.... i have read much of hayek....most of mises leaves me cold..... but what i understand by 'the austrians' goes much further.... adolf is even shown in the same school photo as wittgenstein (in a different year though)...(adolf also applied keynsian theory) freud is austria as approximately is einstein... godel is austria and the positivists whom i somewhat disdain..... despite having spent many years burrowing through carnap..... one of the most read books i have....i even bought a second copy as the first got somewhat disassembled!
in some ways 'austria' means a world view to me which has made great contributions and also imv generated great confusions
so i remain unsure what the poster means by 'the austrians'
regards...
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Not unemployed, available to be redeployed to truly profitable jobs rather than servicing the bubble in estate agency, banking or retailing.

Keynes is old hat. Essentially he's just an excuse for governments to tax and spend us into perdition.

After the bust there's always a boom.

Not specifically, but I would rather we outlawed fiat currency as fraud.

So will we.

If it's not worth doing. It's not worth doing at all.

Damn near it in 2003, which is why emergency rate cuts were touted worldwide. Now that's caused a real estate bubble which will produce an even bigger mess than the deflation from the stocks bubble. Looks like Greenspan saved a recession at the cost of a depression.

Maybe, but I've yet to predict a crash and be wrong.
There's always a first time I suppose, but it's playing ominously to the plan so far...
FoFP
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
typed:

why do you suppose such 'profitable jobs' exist? why do you care about 'profit' so....if you're eating fine....?

governments will always find excuses for that.... that says nothing about keynes

keynes taught otherwise... listening to him essentially stopped the depression.....
why do you believe that

attempting to cling to gold is blamed as a major reason for depressions... i would prefer a free market in currencies....including gold currencies, if people wish to run them.... what i object to is a government cartel in money....

how will incompetent people eat if no-one gives them money and no-one wishes to employ them? there is an ever growing class of such people in society...
a vast majority of the population was employed scrabbling for food a hundred or 2 years ago....now it is mostly well under 5% in all western societies.... why should farmers bother to grow food for government pretend workers...let alone 'the unemployed'?

repeat....under such conditions...how do you propose the ever growing numbers who cannot manage in an advanced society are to eat?
play monopoly.....gradually all the money gets concentrated in few hands.. why do you suppose it would be greatly different in an advanced society without redistribution to keep the casino going? how many servant do you wish to employ? how much would you pay them? what about the smelly ones? what about some of the seriously dopey posters to this group?
unemployment dole is a way of keeping idiots from out underfoot....

i don't think you understand (fiat) money or greenspan... you have constant deflation in manufacturing....you have for more than a century....it is part of how you get rich..... problem is idiots want to be paid more than they can produce....and very large numbers are so paid....they are really on part charity.... if you didn't do that you'd have them starving and sleeping in doorways...some people don't want that..... most of society is innumerate....with inflation you can keep paying them 'more'....at least they believe that.... there were a million housing units empty in the uk last i checked.... yet there is constant cry to build more....
people with 20 square metres seem to want 40.....the other 20 then sits empty and is heated.....
much of what you call work is quite unnecessary.... much serious work most people are incapable of doing....
you have inherited a puritan work effort.... much of the time many people would be better watching tv.....or eating themselves into a lard lump....
in the factory or office they'd just get in the way or look ugly!
then those who work resent having to pay for those that don't.....
what do you want to do about it in the real world,,,

if you predict it every year you are bound to guess right eventually....

try defining 'a crash'? so what some people lose some monopoly money of the stock exchange or the housing market.... they mostly only got the stuff by a bit of luck... so....let them lose it again by luck....
they'll still eat as things are....
regards...
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Thanks for saving me the job of explaining something obvious to someone who appears to be a teeny bit thick. You've more patience than I have.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Mon, 6 Jun 2005 17:31:53 +0100, "John Redman"
typed:

no, you are less aware and numerate than the other poster....
the problem in fact is you cannot explain your position, probably because you don't even understand it or know what you are on about with any useful clarity....
--
web site at www.abelard.org - news and comment service, logic,
energy, education, politics, etc 1,440,501 document calls in year past
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote

Take no notice of Lardmouth, John. No one else does. He's that thick he'd fail his own franchise by examination, exam.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

Heh. The classic "Eating the Seedcorn" scenario.
FoFP
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Presumably we are using trillion to mean billion, which personally I find very annoying.
--
Timothy

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.