British economy in
turmoil - debt and bankruptcies at record levels
August 9 2004 at 9:07 PM |
Carlyle
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BWMA members in an attempt to bad
mouth anything European because Europe is anti-imperial have repeatedly
claimed the UK economy is doing wonderful while the EU economy is in
shambles. But recent news articles have exposed the truth about how bad
the British economy really is.
First of all, British personal debt
has exceeded 1 trillion pounds. The British economy is experiencing record
monthly bankruptcies due to excessive borrowing especially from credit
cards. In order to maintain a suitable standard of living British
consumers are buying what they can't afford to buy with credit. And with
British interest rates the highest in the industrialised world, the debt
burden is wrecking havoc on peoples personal finances.
The British
are in the same trap as the Americans. The economy appears to be growing
because people are buying. But they are buying with money they don't have,
borrowing more and more with either no intent or no ability to pay back
the loans plus interest.
This is not the sign of a healthy economy,
but one doomed to a big crash. The UK does not have a hegemonic currency
like the US and must continue to raise interest rates to attract foreign
investment that is used to secure the debts until (if ever) the consumers
start repaying. The US has a hegemonic currency and can print the dollars
it needs at will to secure its debts, thus keeping the cost of borrowing
down to less than disastrous levels. The increasing interest rates in the
UK make the cost of borrowing even costlier. Thus a deficit bubble forms
and eventually collapses.
From this article are posted some
warnings from various British groups on the seriousness of the
problem.
http://www.ananova.com/business/story/sm_1037528.html
British
household debt is now equal to the total amount owed by Africa, Asia and
Latin America to international banks and through loans from other
countries.
Consumer groups and MPs have warned that people could be
storing up problems for the future, with rising interest rates making
debts unmanageable.
Citizen's Advice said it had seen a 44%
increase in the number of people coming to it asking for help with debts
in the past six years.
A spokeswoman said: The ever-increasing
growth in consumer borrowing will almost certainly lead to problems for a
record number of people."
The Bank of England's Monetary Policy
Committee has also expressed concern that the rate at which consumers are
taking on debt is unsustainable.
It is strongly predicted that its
Monetary Policy Committee will hike the cost of borrowing again next
week.
More
articles:
http://www.smh.com.au/articles/2004/07/30/1091080437818.html?>
UK
bankruptcies jump 30pc in Q2
Friday, August 06 10:38:57
(BizWorld)
The number of Britons going bankrupt in the
second quarter shot up by nearly 30pc on a year earlier, according to
official figures released by the Department of Trade and Industry today.
There were 11,214 individual insolvencies in England and Wales in
the second quarter of 2004 on a seasonally adjusted basis. This was an
increase of 7.9pc on the previous quarter and 28.7pc on the same period a
year earlier.
Within this, there were 8,740 bankruptcies, an
increase of 7.6pc on the quarter and 29.0pc on the year, and 2,475
individual voluntary agreements, a rise of 8.9pc on the quarter and 27.4pc
on a year earlier.
The figures will likely reinforce concern
about the record rise in personal debt - outstanding borrowing hit a
trillion pounds in June - as interest rates head upwards.
Anyone who thinks that the UK has a thriving economy really
needs to bone up on economics. Voodoo economics only works for a short
time. The only thing that will save the UK is complete adoption of the
euro. Then the British will have to live withing their means.
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