Monday, Aug 17, 2009
UK bottom 40% in negative cashflow
Telegraph: The way to a macro recovery that includes not only the privileged
Over 2008 the lowest income 40% had insufficient cash flow. Previously they were borrowing the difference. The suggestion in this article is to force bank lending, which misunderstands IMO the difference between liquidity and solvency. Also points out a growing gap between rich and poor. 40% of the population being dependant on additional debt for running costs is pretty scary.
Posted by stillthinking @ 09:56 AM (470 views) Add Comment
5 Comments
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1. uncle tom said...
Makes reference to statistics for household cash flows in 2008 - anyone have a link to that?
(I get really hacked off trying to navigate the ONS site these days - it used to be quite well ordered, but is now loaded with dead ends and links to old press releases..)
2. andrew said...
I still don't get this. If you don't have the income to cover your lifestyle and you borrow then how are you going to pay back the loan if you didn't have the income in the first place ?
3. stillthinking said...
andrew, I think you do get it. the article is wrong to suggest that additional lending will help, because the bottom 40% are busted, it isn't liquidity its insolvency. they can't cover their costs its as simple as that.
4. vacuouspolitician said...
@2
it's the Establishment way...borrow now... pay dearly later...
5. tenyearstogetmymoneyback said...
Andrew @ 2
The answer is with the increased value of your house.
Highly paid executives at banks like Northern Rock worked out that by 2015 anyone with a house
would be a Multimillionaire who could give up work and employ non houseowners as servants, just like
they did in the 1800s. :-)