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Britain Leads World In Borrowing To Pay For Housing Boom

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http://www.telegraph.co.uk/finance/newsbys...1-trillion.html

IMF puts total cost of crisis at £7.1 trillion

The cost of mopping up after the world financial crisis has come to $11.9 trillion (£7.12 trillion) − enough to finance a £1,779 handout for every man, woman and child on the planet.

By Edmund "Ed" Conway

Published: 10:01PM BST 08 Aug 2009

The staggering total is is equivalent to around a fifth of the entire globe's annual economic output and includes capital injections pumped into banks in order to prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees over debt and liquidity support from central banks. Although much of the total may never be called on, the potential outlay still dwarfs any previous repair bill for the global economy.

The IMF calculations, produced ahead of the two-year anniversary of the crisis, underline the continually mounting cost. Most of the cash has been handed over by developed countries, for whom the bill has been $10.2 trillion, while developing countries have spent only $1.7 trillion − the majority of which is in central bank liquidity support for their stuttering financial sectors.

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The IMF figures also show that Britain has been the biggest of all the spenders on emergency measures to support its financial sector, with its total bill for the clean-up amounting to 81.8pc of its gross domestic product − equivalent to £1,227bn.

Britain's record bill is also unique in that it has also already spent much of it already, with 20pc of GDP having already supported struggling institutions.

The countries that make up the G20 grouping will face a combined budget deficit of 10.2pc of GDP in 2009 − the biggest since the Second World War. Although the biggest will be faced by the US, with 13.5pc of GDP, Britain also faces an 11.6pc deficit and Japan a 10.3pc one.

I recall suggesting well over a year ago that our share of the bill would be well in excess of 2tr pounds. Based on the ONS' estimate of our total net worth of around 8tr of which house prices were 60%. A 50% drop in value of houses and voila!

We have yet to pick up the bill. Unemployment and national debt coupled with lowered credit ratings may well push IR up 2 fold as winter sets in. Green shoots? Not this side of 2020.

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god we are rich...we are in the priveleged position to be able borrow enough to hand out £1779 to every man woman and child in the world.

well done Tony and Gordon.

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You work hard all day for your money, and most of it goes on taxes, interest, expenses etc. When they can just print the stuff in the first place.

The realisation of this, for many with make their stomachs churn.

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Why am I paying for someone else's housing boom?

good question. Presumably you'll find the answer to that when you reach your 50's.

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You work hard all day for your money, and most of it goes on taxes, interest, expenses etc. When they can just print the stuff in the first place.

The realisation of this, for many with make their stomachs churn.

The realisation of this will trigger the hyperinflation and skyrocketing interest rates (regardless of what how low they keep the base rate)

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The realisation of this will trigger the hyperinflation and skyrocketing interest rates (regardless of what how low they keep the base rate)

with the BOE mopping up all government debt (they hold a fifth of it now), 10yr rates are 3.7% odd.

when the BOE stop buying (end of QE) and maybe start trying to unload some, where will rates end up? 7,8,9,10%??

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good question. Presumably you'll find the answer to that when you reach your 50's.

Don't have to wait till then I can tell you now : It's 'cos under a fiat money system the tax payer is the banker's bitch.

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Imagine if we'd really given £1,779 to everyone on the planet. It would have been revolutionary - particularly in the Third World. Imagine the good that could have been done or the social changes that could have been effected (not all of them positive, true enough - but some of that potential would have been realised on an epic scale).

Now think about what we actually have to show for all that money... It's such a monumental folly...

:angry:

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good question. Presumably you'll find the answer to that when you reach your 50's.

no. its the young ones who want to get in and think they will gain from the housing boom

the current owners are just innocent beneficieries.

My MIL and FIL bought their house 60 years ago. the attititude was NOT...lets buy so we can rip off out kids...they did NOT increase the value in any way shape or form apart from adding a garage and upkeep.

the BANKS did the value rising thing. with their finance. with their marketing. with their teaser rates..with their reduced loan criteria. with their IO.with their buy with a friend.with their no checks on income.

they marketed FEAR. they blew it all up. and now those same pensioners...who saved CASH get Frack all for it.

think again who caused this.

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How can this be the "total" cost this crisis hasn't finished yet. What they mean is the running total so far is £7.1tr.

We are already at 20% of world GDP and the cost is growing, the blackhole is getting bigger.

The entire globe is in trouble, if we are not in recover this bill is going to end up at what 50% of world GDP, 100% of world GDP?

When you start thinking like this the only solution is going to be a debt jubilee there isn't the money in the world to pay for this mess.

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no. its the young ones who want to get in and think they will gain from the housing boom

the current owners are just innocent beneficieries.

My MIL and FIL bought their house 60 years ago. the attititude was NOT...lets buy so we can rip off out kids...they did NOT increase the value in any way shape or form apart from adding a garage and upkeep.

the BANKS did the value rising thing. with their finance. with their marketing. with their teaser rates..with their reduced loan criteria. with their IO.with their buy with a friend.with their no checks on income.

they marketed FEAR. they blew it all up. and now those same pensioners...who saved CASH get Frack all for it.

think again who caused this.

Yep, good post.

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How can this be the "total" cost this crisis hasn't finished yet. What they mean is the running total so far is £7.1tr.

We are already at 20% of world GDP and the cost is growing, the blackhole is getting bigger.

The entire globe is in trouble, if we are not in recover this bill is going to end up at what 50% of world GDP, 100% of world GDP?

When you start thinking like this the only solution is going to be a debt jubilee there isn't the money in the world to pay for this mess.

funny, but the world looks just about the same this week a it did last week from the ISS.

its the man made imaginary stuff thats in trouble.

grass is growing, cows eat the grass, we can still eat the cows.

strange reality.

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Cos the tax-payer is the banker's bitch.

(That's fiat currency for you)

The fiat currency system means that the government can always use our money meet its obligations.

Under these bailouts the government has used our money to help private businesses meet theirs.

And we're paying the interest on the money we've given them.

This is what the sheeple need to understand and if they ever did . . . . they'd watch Eastenders.

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Guest KingCharles1st

You lot should be at Church- they will save you- and it's free! :lol:

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no. its the young ones who want to get in and think they will gain from the housing boom

the current owners are just innocent beneficieries.

My MIL and FIL bought their house 60 years ago. the attititude was NOT...lets buy so we can rip off out kids...they did NOT increase the value in any way shape or form apart from adding a garage and upkeep.

the BANKS did the value rising thing. with their finance. with their marketing. with their teaser rates..with their reduced loan criteria. with their IO.with their buy with a friend.with their no checks on income.

they marketed FEAR. they blew it all up. and now those same pensioners...who saved CASH get Frack all for it.

think again who caused this.

+1

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Guest Parry aka GOD
http://www.telegraph.co.uk/finance/newsbys...1-trillion.html

IMF puts total cost of crisis at £7.1 trillion

The cost of mopping up after the world financial crisis has come to $11.9 trillion (£7.12 trillion) − enough to finance a £1,779 handout for every man, woman and child on the planet.

By Edmund "Ed" Conway

Published: 10:01PM BST 08 Aug 2009

The staggering total is is equivalent to around a fifth of the entire globe's annual economic output and includes capital injections pumped into banks in order to prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees over debt and liquidity support from central banks. Although much of the total may never be called on, the potential outlay still dwarfs any previous repair bill for the global economy.

The IMF calculations, produced ahead of the two-year anniversary of the crisis, underline the continually mounting cost. Most of the cash has been handed over by developed countries, for whom the bill has been $10.2 trillion, while developing countries have spent only $1.7 trillion − the majority of which is in central bank liquidity support for their stuttering financial sectors.

Related Articles

*

Budget 2009: British taxpayers face £5k bill each due to financial crisis

*

Million pound homes sold halves during credit crunch

*

Britain's national debt to reach £1.4 trillion under 2009 Budget

*

Michael Jackson O2 setlist: Billie Jean, Thriller and Beat It

The IMF figures also show that Britain has been the biggest of all the spenders on emergency measures to support its financial sector, with its total bill for the clean-up amounting to 81.8pc of its gross domestic product − equivalent to £1,227bn.

Britain's record bill is also unique in that it has also already spent much of it already, with 20pc of GDP having already supported struggling institutions.

The countries that make up the G20 grouping will face a combined budget deficit of 10.2pc of GDP in 2009 − the biggest since the Second World War. Although the biggest will be faced by the US, with 13.5pc of GDP, Britain also faces an 11.6pc deficit and Japan a 10.3pc one.

I recall suggesting well over a year ago that our share of the bill would be well in excess of 2tr pounds. Based on the ONS' estimate of our total net worth of around 8tr of which house prices were 60%. A 50% drop in value of houses and voila!

We have yet to pick up the bill. Unemployment and national debt coupled with lowered credit ratings may well push IR up 2 fold as winter sets in. Green shoots? Not this side of 2020.

Since most of the GDP was based on this debt in the first place, surely this is worse than it looks?

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