Saturday, Sep 05, 2009
We are bust irrespective of the banks
Institute of Economic Affairs: A Bankruptcy foretold
UK debt in terms of properly measured liabilities was 274% GDP as of Nov 2008 essentially because of pensions. There are intermittent articles on our pension "timebomb" but this is an easy to understand (not economicese) explanation of how stuffed we actually are. The conclusion, "introduction of austerity measures; it will be forced to cut spending, increase taxes, possibly print money, and almost certainly look to break its pensions promises." doesn't bode all that well and explains the reticence gov. ministers show to immigration overhaul. This is particularly gloomy because the noose continues to tighten for the next 25 years i.e. if you are an innocent 39 year old, you get robbed blind.
Posted by stillthinking @ 05:17 PM (595 views) Add Comment
3 Comments
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1. drewster said...
What about Japan though? They have an older population than us and far fewer immigrants. Somehow they're still functioning normally and with a relatively high standard of living.
The simple answer is that we will all have to work longer and retire later. Already the retirement age has been raised to 68 for anyone currently aged under 33. It will probably have to rise further still.
2. stillthinking said...
I don't think Japan is OK, the worst of their problems are en route. Our own problems get worse and worse for the next twenty years. This isn't an immediate problem, just an unavoidable one. I am not so sure that raising the age to 68 works for many jobs, particularly physical jobs.
3. bellwether said...
In Japan there is nothing like the personal debt levels we have in the UK, an edifiice which will become more and more exposed as the collateral that is meant to support it (housing) collpases in value. Albert Edwards refers to the UK as a ponzi scheme and it seems to me a reasonable assessment.