Credit Action Debt Stats Updated September 2013

[Charlie The Tramp Returns]

In the 12 months leading up to July 2013, UK Bank and Building Societies wrote-off £3.67 billion of loans to individuals; the lowest amount for over 6 years. In Q2 of this year, they wrote-off £694 million, of which £371 million was credit card debt – amounting to a daily write-off £7.61m. The total write-offs have continued to follow a steady downward trend since 2012, but the Q2 fall is the most significant since mid-2011.

Credit Action

Rip Off Rents

Edited September 9, 2013 by Charlie The Tramp Returns

[FreeTrader]

Credit Action

Rip Off Rents

Hi Charlie,

Long time no see, and I hope you're well.

The Credit Action stats show total household debt at end of July as 1.426 trillion. They're using the new BoE measure which excludes student loans (which is fair enough because the BoE now excludes student debt from its monthly lending stats release).

The Student Loans Company recently released statistics for outstanding loans, and the BoE consequently updated the old measure in its database. Aggregate student debt at end-Q1 2013 was £54bn, so at the moment we're somewhere north of £1.480 trillion in total.

Still, many people now argue that student loans aren't debt but deferred taxation, so maybe we can ignore it.

I still plot the numbers including student debt, and below is the latest chart. Note that despite record low interest rates and huge opportunities for households to deleverage, the debt-to-GDP ratio is only down from a peak of 102.3% of GDP in Q4 2009 to 94.0%. Furthermore this decline is flattered by the questionable accounting that ONS has been using on imputed rents which has exaggerated nominal GDP.

It's worth bearing in mind that the ratio today is virtually the same as it was at the end of 2006, just before the credit crunch. In that respect things haven't really improved despite several years of slump.

And now the Government, with the open support of the BoE, is doing its level best to encourage households to start taking on even more debt. They talk as if we've had several years of high deleveraging and it's now time to start gearing up again.

I keep waking up and wondering whether this is 2013 or 2003, because things don't seem that much different in terms of what the clever economists at the central bank are doing to encourage us to spend our way out of impending deflation.

[zugzwang]

Great chart, FT. Looks like we've probably breached £1.5trn in the real world.

It's a tragedy. Everything TPTB do to pyramid debt into the UK economy is just serving to make the future correction even more severe.

[gf3]

Seems to me if you have a student loan the best thing you can do is.

Get your credit score as high as possible and borrow enough money to pay it off then go bankrupt.

You've got the rest of your life then without it hanging over your head.

[okaycuckoo]

Seems to me if you have a student loan the best thing you can do is.

Get your credit score as high as possible and borrow enough money to pay it off then go bankrupt.

You've got the rest of your life then without it hanging over your head.

And they don't even have to go to uni to figure that out.

[19 year mortgage 8itch]

Hi Charlie,

Long time no see, and I hope you're well.

The Credit Action stats show total household debt at end of July as 1.426 trillion. They're using the new BoE measure which excludes student loans (which is fair enough because the BoE now excludes student debt from its monthly lending stats release).

The Student Loans Company recently released statistics for outstanding loans, and the BoE consequently updated the old measure in its database. Aggregate student debt at end-Q1 2013 was £54bn, so at the moment we're somewhere north of £1.480 trillion in total.

Still, many people now argue that student loans aren't debt but deferred taxation, so maybe we can ignore it.

I still plot the numbers including student debt, and below is the latest chart. Note that despite record low interest rates and huge opportunities for households to deleverage, the debt-to-GDP ratio is only down from a peak of 102.3% of GDP in Q4 2009 to 94.0%. Furthermore this decline is flattered by the questionable accounting that ONS has been using on imputed rents which has exaggerated nominal GDP.

It's worth bearing in mind that the ratio today is virtually the same as it was at the end of 2006, just before the credit crunch. In that respect things haven't really improved despite several years of slump.

And now the Government, with the open support of the BoE, is doing its level best to encourage households to start taking on even more debt. They talk as if we've had several years of high deleveraging and it's now time to start gearing up again.

I keep waking up and wondering whether this is 2013 or 2003, because things don't seem that much different in terms of what the clever economists at the central bank are doing to encourage us to spend our way out of impending deflation.

Such a drama queen FT

http://www.mindfulmoney.co.uk/wp/simon-ward/strong-uk-growth-does-not-reflect-consumer-regearing/

Nothing to worry about, move along.

[FreeTrader]

Such a drama queen FT

http://www.mindfulmoney.co.uk/wp/simon-ward/strong-uk-growth-does-not-reflect-consumer-regearing/

Nothing to worry about, move along.

Ah, the soothing words of an economist working for an investment company.

-----------------------------------------------------

Ten reasons for investors to be optimistic

By Simon Ward of New Star Asset Management

8:30AM BST 01 Apr 2008

"The pessimism is overdone. The odds are that the current

financial crisis is winding down and equity markets will stage

a come-back over the remainder of 2008. Here’s why:"

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2787274/Ten-reasons-for-investors-to-be-optimistic.html

-----------------------------------------------------

The FTSE-100 only lost 22% over the rest of 2008...

[Eddie_George]

Ah, the soothing words of an economist working for an investment company.

-----------------------------------------------------

Ten reasons for investors to be optimistic

By Simon Ward of New Star Asset Management

8:30AM BST 01 Apr 2008

"The pessimism is overdone. The odds are that the current

financial crisis is winding down and equity markets will stage

a come-back over the remainder of 2008. Here’s why:"

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2787274/Ten-reasons-for-investors-to-be-optimistic.html

-----------------------------------------------------

The FTSE-100 only lost 22% over the rest of 2008...

Haha! Well spotted.

[Sancho Panza]

Furthermore this decline is flattered by the questionable accounting that ONS has been using on imputed rents which has exaggerated nominal GDP.

I keep waking up and wondering whether this is 2013 or 2003, because things don't seem that much different in terms of what the clever economists at the central bank are doing to encourage us to spend our way out of impending deflation.

2013 is the new 2003.

Any chance of a link for the ONS imputed rent data please?Especially it's historical rate as a proportion of GDP?Have had a look on their site,but this only refers back to 2001 when it was roughly £73 bn.

ONS

HPC Aug 2012 thread

[FreeTrader]

2013 is the new 2003.

Any chance of a link for the ONS imputed rent data please?Especially it's historical rate as a proportion of GDP?Have had a look on their site,but this only refers back to 2001 when it was roughly £73 bn.

ONS

HPC Aug 2012 thread

Suggest you check out this thread Sancho, starting at post #15.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=191500&st=0

Later on (post #43) cheeznbreed links to the ONS Consumer Trends datasets.

I don't know whether ONS will be revising the imputed rent numbers back to 1963 rather than just 1997.

[zugzwang]

Haha! Well spotted.

Ward is a monetarist charlatan which is why (like Andrew Lilico) he's spent the last three years handwaving over nonexistent consumer price inflation. Meanwhile, of course, he's missed entirely the inflationary run up in financial assets that's been caused by QE.

http://blogs.thisismoney.co.uk/2011/10/the-economist-who-devised-a-new-way-of-forecasting-future-inflation-is-worried-about-2012.html

The economist who devised a new way of forecasting future inflation is worried about 2012

Simon Ward (right), an economist at fund manager Henderson, has argued since early 2010 (the consumer price index was at 3 per cent) for the need to raise interest rates to stop future inflation taking hold. He argued then that 'money supply' - the amount of money in the economy and an early indicator of future economic growth and inflation - was on the rise even though the Bank of England's official indicators suggested it wasn't.

With CPI inflation now at 5.2 per cent, way above the Bank's target of 2 per cent, he warns the Bank's indicators are still wrong - he has a different way of measuring it - and that while inflation may fall early next year, it will be firmly on the rise in late 2012 unless action is taken.

[Errol]

Ah, the soothing words of an economist working for an investment company.

-----------------------------------------------------

Ten reasons for investors to be optimistic

By Simon Ward of New Star Asset Management

8:30AM BST 01 Apr 2008

"The pessimism is overdone. The odds are that the current

financial crisis is winding down and equity markets will stage

a come-back over the remainder of 2008. Here’s why:"

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/2787274/Ten-reasons-for-investors-to-be-optimistic.html

-----------------------------------------------------

The FTSE-100 only lost 22% over the rest of 2008...

LOL! Classic.

I find it hilarious that people are listening to Financial pundits/Fund managers/'experts' etc who didn't see the 2007/08 issues coming. These people will be caught just as they were before - completely wrong-footed when the real crash happens. Which it will.