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Sancho Panza

20M Uk Adults Concerned About Debt

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Telegraph

' The number of debt-ridden adults who worry about their finances has risen by 8pc since February, according to a survey by insolvency trade body R3.

One fifth of UK adults say they are "very" or "extremely" concerned about their current debts.

Worryingly, 42pc of adults said they struggled to make it to pay day, with most saying the high cost of living was to blame.

More than 12 million Britons said they had no savings.

The number of ‘zombie debtors’ – those who can only repay the interest accrued on the debt rather than the orginal sum - has increased since February.

Ten per cent of UK adults admitted to only paying the interest on their credit card bills, up from 7pc in February. Another 7pc of UK adults said they were only paying the interest on their overdraft, rather than tackling the principal. This was up from 4pc in February. '

And yet from the BOE trends in lending thread

'The annual rate of growth of consumer credit (excluding

student loans) was above 3% in May (

Table 1.C

), the highest

in over four years. This partly reflected an increase in car

finance'

Edited by Sancho Panza

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The monster of low interest rates.......created by Brown, scapegoated onto the MPC, now on Osbornes high protein Help to Buy diet, and pumped full of steroids by King and now Carney. The slaves are mainlining debt junkies getting sicker and more pallid daily.

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Just seems to be the intrinsic problem with a debt based money system. The higher the debts the lower the interest rates must be so the debts can be serviced.

If debts start to be paid back we go into recession.

Once we hit peak debt ZERP and QE forever.

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I think the one thing that has missed all the policy makers, economists and media....is the link between high debts and the sensitivity of the economy and thereby inflation to any interest rate changes effected via the 'monetary transmission mechanism'.

With such high debts the world cannot raise rates meanigfully...this is the other side of the deflationary coin and it's been steadily proceeding since 1971 with increases in the money supply and fallng interest rates.

Unless this was a secret Keynesian 'euthanisation of the rentiers' by making all tokens eventually non interest bearing and money issued instead by government edict.

I think we are on the same wave length. I think there is a small window to make money out of the stock market and then yields will become more or less zero. profits in the past came from some one some where taking out more debt. Profits in the future will come from (government deficit spending + QE) although when yields do hit zero maybe the rich may start to spend instead of just accumulating money all the time and then QE can stop.

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With such high debts the world cannot raise rates meanigfully...this is the other side of the deflationary coin and it's been steadily proceeding since 1971 with increases in the money supply and fallng interest rates.

Agreed,reminiscent in a way of Fisher's paradox.He argued that as debt deflation got underway,the effect of paying down debt could actually lead to a rise in the debt to GDP ratio thus:

'According to Fisher, the steps that lead from a debt crisis, to falling prices, and a Depression are:

"(1) Debt liquidation leads to distress selling and to

(2) Con­trac­tion of deposit cur­rency, as bank loans are paid off, and to a slow­ing down of veloc­ity of cir­cu­la­tion. This con­trac­tion of deposits and of their veloc­ity, pre­cip­i­tated by dis­tress sell­ing, causes

(3) A fall in the level of prices, in other words, a swelling of the dol­lar. Assum­ing, as above stated, that this fall of prices is not inter­fered with by refla­tion or oth­er­wise, there must be

(4) A still greater fall in the net worths of busi­ness, pre­cip­i­tat­ing bank­rupt­cies and

(5) A like fall in prof­its, which in a “cap­i­tal­is­tic,” that is, a private-profit soci­ety, leads the con­cerns which are run­ning at a loss to make

(6) A reduc­tion in out­put, in trade and in employ­ment of labor. These losses, bank­rupt­cies, and unem­ploy­ment, lead to

(7) Pes­simism and loss of con­fi­dence, which in turn lead to

(8) Hoard­ing and slow­ing down still more the veloc­ity of cir­cu­la­tion. The above eight changes cause

(9) Com­pli­cated dis­tur­bances in the rates of inter­est, in par­tic­u­lar, a fall in the nom­i­nal, or money, rates and a rise in the real, or com­mod­ity, rates of inter­est.” (Econo­met­rica, 1933, Vol­ume 1, p. 342)

- See more at: http://www.debtdeflation.com/blogs/2008/11/20/has-debt-deflation-begun/#sthash.F1BEC0DO.dpuf'

The longer they keep rates low,the more they destroy long term demand as the velocity of money decreases.The BoE lending figures detail how consumers are loading up with more debt despite shrinking disposable incomes and a rising cost of living.Elsewhere SME's,despite the availability of credit,aren't availing themselves of it.So,we seem effectively,to be expanding credit to those whose balance sheets are most exposed and less to those more conservative borrowers who underpin longer term demand.We can't live on increases in car leasing forever,or can we?

Raising interest rates would solve a lot of problems-particularly pension related but it would bring on the end game for the inflationary bubble of the last 40 years.Who would want to be the CB Chairman who does that?Betwixt a rock and a hard place.

Edited by Sancho Panza

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Mostly, but I think the stage we are increasingly in is the speculation stage where yields matter less than price moves.

Over time you may expect price to beome increasingly static too as yields move to zero - but I would argue the obverse because with everyone trying to speculate and fewer prepared to hold for yield , volatility of price will rise. Other effects such as weather, war, breakthroughs and fashion that all will continue to have effects on prices, will have increasing importance.

In fact we have 'volaflation' right now - where changes in currency and commodities are the key determinants of our inflation rate.

yes inflation would be near zero if the pound hadn't fallen. and a lot of the money I have made out of shares are down to the fact that a lot of the FTSE companies are international so I am speculating in foreign currency's. which suits me don't like having all my eggs in one basket.

The yield on shares is about 3.7% not much better than savings accounts but they have a bit more of an advantage in that there is a bit of inflation proofing built in as well.

Edited by gf3

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I wish more people would just stop paying and bring the whole sorry mess to a close quickly.

About a year or so ago I wrote here on this board, on a somewhat similar themed thread that I have lost track of, about helping out a friend/colleague 'escape' from crippling debts. This was achieved by persuading him to do the one thing that you will never see advocated as an option in the mainstream press, financial help experts, etc..... just walk away from it!

And it has worked outstandingly!

The satisfaction is two fold. Seeing someone rebuild their life and see the transformation for the better in them. The other is the satisfaction in knowing that one can, if they do they homework, learn how to beat the buggers at their own game and screw them royally!

I look on in near sadness at other people slavishly paying away at credit cards, unsecured loans unquestioningly - knowing that many will waste large portions of their productive lives doing so and achieve nothing.

Clearly it is not a course of action that most can do, but I am convinced that a sizeable portion of the population with various debts could take similar action. Such a mass action, of plain and simply walking away and turning your back on the debts, would indeed have the effect of bringing about a 'reset' of the system, so to speak.

Obviously such advice is of no use if the debtor does not change his/her ways and just simply ends up repeating the same mistakes and ends up in the same sorry mess. BUT IF they can change/learn their lesson and use the opportunity to rebuild their lives then I have no problem with it.

I've always taken the view that it takes two to tango and the large numbers of todays debtors would not have been lent the money they owe their debts on in the first place, if the lenders had exercised historically prudent and common sense approaches to lending.

I too hope, as you say, that more people will wake up and start to think along these lines and bring the whole sorry mess to a close quickly.

Edited by anonguest

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About a year or so ago I wrote here on this board, on a somewhat similar themed thread that I have lost track of, about helping out a friend/colleague 'escape' from crippling debts. This was achieved by persuading him to do the one thing that you will never see advocated as an option in the mainstream press, financial help experts, etc..... just walk away from it!

And it has worked outstandingly!

The satisfaction is two fold. Seeing someone rebuild their life and see the transformation for the better in them. The other is the satisfaction in knowing that one can, if they do they homework, learn how to beat the buggers at their own game and screw them royally!

I look on in near sadness at other people slavishly paying away at credit cards, unsecured loans unquestioningly - knowing that many will waste large portions of their productive lives doing so and achieve nothing.

Clearly it is not a course of action that most can do, but I am convinced that a sizeable portion of the population with various debts could take similar action. Such a mass action, of plain and simply walking away and turning your back on the debts, would indeed have the effect of bringing about a 'reset' of the system, so to speak.

Obviously such advice is of no use if the debtor does not change his/her ways and just simply ends up repeating the same mistakes and ends up in the same sorry mess. BUT IF they can change/learn their lesson and use the opportunity to rebuild their lives then I have no problem with it.

I've always taken the view that it takes two to tango and the large numbers of todays debtors would not have been lent the money they owe their debts on in the first place, if the lenders had exercised historically prudent and common sense approaches to lending.

I too hope, as you say, that more people will wake up and start to think along these lines and bring the whole sorry mess to a close quickly.

I know from personal experience that with credit cards for example, they stop the interest and will settle for monthly payments (my debts were about 30k) as long as you pay every month, and after a while they will ask for one off payments to clear the debt, so if you owed 20k they might let you clear the account at 11k maybe. I think the problem for many is that they can`t let go the credit teat, and as you lose the use of your cards when you do what I did, and you won`t get credit after doing a part payment as far as I know (I paid in full) this is just too scary for many, they would rather just make the minimum payments and keep buying "stuff" along with all the other drones. If all the drones woke up at once the big banks would be well screwed?

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I know from personal experience that with credit cards for example, they stop the interest and will settle for monthly payments (my debts were about 30k) as long as you pay every month, and after a while they will ask for one off payments to clear the debt, so if you owed 20k they might let you clear the account at 11k maybe. I think the problem for many is that they can`t let go the credit teat, and as you lose the use of your cards when you do what I did, and you won`t get credit after doing a part payment as far as I know (I paid in full) this is just too scary for many, they would rather just make the minimum payments and keep buying "stuff" along with all the other drones. If all the drones woke up at once the big banks would be well screwed?

That was what we discovered in investigations prior to my friend making the decision to deal with the matter.

The difference being, with what you did, is that the decision was made to completely and totally 'walk away' and turn his back on the lenders (i.e completely ignore all letters from the lenders, etc) without making any further payments at all. I cannot emphasise that point enough as it is the key to it all. The apparently fatal mistake that most make, perhaps because we British are just all too decent you know old chap, is that they periodically respond to a communication from a lender that is chasing them. This simple action has the effect of, very simply, re-starting the debt 'clock' back to zero - and so the creditors can continue to use legal powers to attempt to extract the debt from them. By ignoring any and all communications from the creditors the debtor allows the debt clock to tick long enough until such time that records of the debts are erased from his/her credit record - and thus the day from which they will again have a chance to re-apply for credit that will allow them to rebuild their lives(e.g get a mortgage, etc).

Sure enough stern angry and threatening letters quickly started to arrive over the following months. The 'reward' was in deciding to 'call their bluff' and continue to ignore, rather than be swayed by what I noticed to be very carefully worded letters (e.g. "...we may take court action...", etc). The point at which victory was realised was when the letters actually started to repeat in almost a cycle!

Like you his credit rating is, I have no doubt, shot to pieces - for now. The point that he so eloquently grasped at the time was that if he paid, either in reduced installments or reduced lump sum to 'clear' the debt, his rating would be blackened for the same amount of time if he simply didn't pay anything at all. So where was his incentive to pay anything back once his record had already been marked!?

One other point to note is that these reduced lump sum offers that debtors may receive, after falling into difficulties with their payments for an extended period, are invariably not from the original lender - even though they may be worded or presented in such way as to give the illusion that they are. Such offers come from the new owners of the debt. The legal rights to the original loan having long since been sold on to other interested commercial bodies who deal in distressed debt. Vultures effectively, in my mind.

The original lender will (e.g high street bank) will have long since already have recouped its losses via insurance against such events - and so will not be out of pocket. Bare in mind that it is the original lender, before even selling on the debt, will have already have had the borrowers credit record blackmarked.

Edited by anonguest

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That was what we discovered in investigations prior to my friend making the decision to deal with the matter.

The difference being, with what you did, is that the decision was made to completely and totally 'walk away' and turn his back on the lenders (i.e completely ignore all letters from the lenders, etc) without making any further payments at all. I cannot emphasise that point enough as it is the key to it all. The apparently fatal mistake that most make, perhaps because we British are just all too decent you know old chap, is that they periodically respond to a communication from a lender that is chasing them. This simple action has the effect of, very simply, re-starting the debt 'clock' back to zero - and so the creditors can continue to use legal powers to attempt to extract the debt from them. By ignoring any and all communications from the creditors the debtor allows the debt clock to tick long enough until such time that records of the debts are erased from his/her credit record - and thus the day from which they will again have a chance to re-apply for credit that will allow them to rebuild their lives(e.g get a mortgage, etc).

Sure enough stern angry and threatening letters quickly started to arrive over the following months. The 'reward' was in deciding to 'call their bluff' and continue to ignore, rather than be swayed by what I noticed to be very carefully worded letters (e.g. "...we may take court action...", etc). The point at which victory was realised was when the letters actually started to repeat in almost a cycle!

Like you his credit rating is, I have no doubt, shot to pieces - for now. The point that he so eloquently grasped at the time was that if he paid, either in reduced installments or reduced lump sum to 'clear' the debt, his rating would be blackened for the same amount of time if he simply didn't pay anything at all. So where was his incentive to pay anything back once his record had already been marked!?

One other point to note is that these reduced lump sum offers that debtors may receive, after falling into difficulties with their payments for an extended period, are invariably not from the original lender - even though they may be worded or presented in such way as to give the illusion that they are. Such offers come from the new owners of the debt. The legal rights to the original loan having long since been sold on to other interested commercial bodies who deal in distressed debt. Vultures effectively, in my mind.

The original lender will (e.g high street bank) will have long since already have recouped its losses via insurance against such events - and so will not be out of pocket. Bare in mind that it is the original lender, before even selling on the debt, will have already have had the borrowers credit record blackmarked.

If you have no assets (other than a car worth less than 1k) then repayment of unsecured debt is entirely optional, worst case you get a court summons and provided to can massage your finances to demonstrate no appreciable disposable income then you will ordered to pay £1 a month.

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If you have no assets (other than a car worth less than 1k) then repayment of unsecured debt is entirely optional, worst case you get a court summons and provided to can massage your finances to demonstrate no appreciable disposable income then you will ordered to pay £1 a month.

For the record....

his car was worth,in my opinion, about £2500 absolutely max.

and to correct you,

Before a court summons can be issued the creditor must have established contact first with the debtor. A court will not issue summons etc IF the debtors precise whereabouts are unknown! Another reason for cutting all ties with the creditors.

Paying £1 a month seems easy. BUT the debt will never be erased! It will be there forever like a mark of Cain.

Edited by anonguest

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The monster of low interest rates.......created by Brown, scapegoated onto the MPC, now on Osbornes high protein Help to Buy diet, and pumped full of steroids by King and now Carney. The slaves are mainlining debt junkies getting sicker and more pallid daily.

Awesome! :)

Edited by dryrot

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The monster of low interest rates

It's not low interest rates that's the problem, after all there's plenty maxed out on expensive credit cards and even more expensive payday loans, it's the easy availability of debt that's the real problem.

Anyone who can't resist pigging out on Maccy D's is unlikely to be able to resist the siren song of debt...so every time you see some bloated lard @rse waddling down the road reflect on the fact that you're probably also seeing a bankrupt in waiting.

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The thing with debt, the right debt, for the right amount, that is a manageable debt, that creates wealth and a better quality of life and provides more freedoms and choices....all well and good.........bad debt, lent to the wrong people for the wrong purpose, that creates poverty, pain and misery does not deserve to be repaid, because it is debt that doesn't work so it won't work. ;)

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Mostly, but I think the stage we are increasingly in is the speculation stage where yields matter less than price moves.

Over time you may expect price to beome increasingly static too as yields move to zero - but I would argue the obverse because with everyone trying to speculate and fewer prepared to hold for yield , volatility of price will rise. Other effects such as weather, war, breakthroughs and fashion that all will continue to have effects on prices, will have increasing importance.

In fact we have 'volaflation' right now - where changes in currency and commodities are the key determinants of our inflation rate.

I would agree, they are gambling on price movements.....they only keep the stock for short periods long enough to make a profit from.....the company in question is not a reason to buy.... volatility means more, more to gain from that, the price does not tell much about the strength, stability or solvency.....people are trying to guess market moves and the aim is to make money short-term not hold for the long-term.......a quick game turnaround process for quick easy profits. ;)

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The thing with debt, the right debt, for the right amount, that is a manageable debt, that creates wealth and a better quality of life and provides more freedoms and choices....all well and good.........bad debt, lent to the wrong people for the wrong purpose, that creates poverty, pain and misery does not deserve to be repaid, because it is debt that doesn't work so it won't work. ;)

couldn't have put it better myself!

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That was what we discovered in investigations prior to my friend making the decision to deal with the matter.

The difference being, with what you did, is that the decision was made to completely and totally 'walk away' and turn his back on the lenders (i.e completely ignore all letters from the lenders, etc) without making any further payments at all. I cannot emphasise that point enough as it is the key to it all. The apparently fatal mistake that most make, perhaps because we British are just all too decent you know old chap, is that they periodically respond to a communication from a lender that is chasing them. This simple action has the effect of, very simply, re-starting the debt 'clock' back to zero - and so the creditors can continue to use legal powers to attempt to extract the debt from them. By ignoring any and all communications from the creditors the debtor allows the debt clock to tick long enough until such time that records of the debts are erased from his/her credit record - and thus the day from which they will again have a chance to re-apply for credit that will allow them to rebuild their lives(e.g get a mortgage, etc).

Sure enough stern angry and threatening letters quickly started to arrive over the following months. The 'reward' was in deciding to 'call their bluff' and continue to ignore, rather than be swayed by what I noticed to be very carefully worded letters (e.g. "...we may take court action...", etc). The point at which victory was realised was when the letters actually started to repeat in almost a cycle!

Like you his credit rating is, I have no doubt, shot to pieces - for now. The point that he so eloquently grasped at the time was that if he paid, either in reduced installments or reduced lump sum to 'clear' the debt, his rating would be blackened for the same amount of time if he simply didn't pay anything at all. So where was his incentive to pay anything back once his record had already been marked!?

One other point to note is that these reduced lump sum offers that debtors may receive, after falling into difficulties with their payments for an extended period, are invariably not from the original lender - even though they may be worded or presented in such way as to give the illusion that they are. Such offers come from the new owners of the debt. The legal rights to the original loan having long since been sold on to other interested commercial bodies who deal in distressed debt. Vultures effectively, in my mind.

The original lender will (e.g high street bank) will have long since already have recouped its losses via insurance against such events - and so will not be out of pocket. Bare in mind that it is the original lender, before even selling on the debt, will have already have had the borrowers credit record blackmarked.

I can back this up. We moved into a rental where the previous tenant had done a runner. We sent back all mail addressed to this person marked "return to sender, not at this address" for a year then stopped. I started opening the letters then and throwing them in the bin. They started off very threatening and important sounding but the debt was passed from company to company and each new company asked for less to settle. I assume the debt was sold on at a lower and lower price each time. This went on for another year. Scary demands for thousands of pounds of debt turn into very polite requests for a few hundred. At no time did a court order turn up. Eventually they stopped coming. By my reckoning this person walked away from around £50k debt.

Was a real eye opener.

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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