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Debt Time Bomb Set To Explode In Uk

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http://www.thetrumpet.com/index.php?page=article&id=3406

Debt Time Bomb” Set to Explode in United Kingdom

Tuesday, July 10, 2007

On July 5, the Bank of England raised its lending rates for the fifth time in a year, sending rates to 5.75 percent, the highest level in six years. This is unwelcome news as families experience the biggest squeeze on incomes in a generation.

Rising interest costs are about to take a huge bite out of hundreds of thousands of families across Britain. Approximately 2 million households have adjustable-rate mortgages that are set to ratchet up over the coming months.

Average house prices have gone up by 155 percent since 1997, while wages have risen only 18 percent over that time. To cope with higher purchasing costs, millions of home buyers took out lower-rate adjustable loans.

Now that rates have risen, many homeowners are having trouble with their mortgage payments, many of which have already jumped 30 percent or will in the near future. Consequently, delinquencies are skyrocketing. Repossessions are also rising fast, though they are still shy of levels seen during the 1990s housing crash.

Experts warn that higher interest rates will likely drag on the housing market as families realize they can no longer afford their homes and are forced to sell.

Statistics from the National Debtline, a charitable consulting agency for people with debt problems in England, Scotland and Wales, are astounding. The year before Tony Blair’s Labor Party came to power (1996), Debtline received 60,000 calls for help. Over the next eight years, the annual number more than doubled to 130,000. Just two years later, the number of callers doubled again to 270,000 in 2006. Recent interest rate increases are expected to push the number even higher this year.

But mortgage-related shortfalls only make up part of financial problems facing Britons. Of the 270,000 callers to Debtline last year, 66 percent have credit card and other bank debt burdening them. The number of court judgments served for non-payment of debts soared to a 10-year high during the first quarter of this year.

While Britons continue to borrow more and spend more, the national savings rate has plummeted into negative territory—the worst level since records began in 1960. Even including employers’ contributions to pensions, the national savings rate is only 2 percent. Officially, inflation in Britain is running at around 2.5 percent, which means that even with employer contributions, the average Briton’s savings are eroding, as families are choosing to dig into their savings to finance their everyday spending.

Personal debt levels in Britain have ballooned so quickly (hitting a record £1.38 trillion) that the British Tory party initiated an investigation to determine why Britons on average owe twice as much as continental Europeans.

Such widespread debt levels are dangerous. Adjustable-rate mortgage time bombs resetting en masse over the next year will exacerbate the situation. For more on how you can endure the coming financial blast, read “Storm-Proof Your Financial House

Ticking, ticking, ticking until it goes off to wake people up to reality & teach a lesson to the nation and corrupted politicians that 'An economy built on debt is not an economy built to last'

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Brilliant article. I'll link it in my blog.

What I'm worried of is the cultural shock that the credit crunch will bring. People are now used to consider borrowing as "natural", I wonder what happens when the taps are turned off and the lenders start to want the money back.

Scary stuff. Hyper-realistic though

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I wonder what happens when the taps are turned off and the lenders start to want the money back.

People will either throw their toys out of the pram or will have to save some money, for a change, before buying the stuff they can't afford. They'll learn an educational lesson.

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Brilliant article. I'll link it in my blog.

What I'm worried of is the cultural shock that the credit crunch will bring. People are now used to consider borrowing as "natural", I wonder what happens when the taps are turned off and the lenders start to want the money back.

Scary stuff. Hyper-realistic though

Anyone with half a brain knows that borrowing is not "natural". Only poor people need to borrow money. :rolleyes:

Try earning & saving for that rubbish 4x4 in future. :blink:

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Anyone with half a brain knows that borrowing is not "natural". Only poor people need to borrow money. :rolleyes:

Try earning & saving for that rubbish 4x4 in future. :blink:

You'd be surprised by how many people have even less than half a brain nowadays.

Maybe I came out wrong with my post. I hate 4x4 and I'm a stingy saver... These people DO need a lesson. I just wonder what the consequences will be for the rest of us

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Guest Skint Academic
Try earning & saving for that rubbish 4x4 in future. :blink:

Or better still, buy something optimised for use on tarmac!

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You'd be surprised by how many people have even less than half a brain nowadays.

Maybe I came out wrong with my post. I hate 4x4 and I'm a stingy saver... These people DO need a lesson. I just wonder what the consequences will be for the rest of us

Wasn't having a go at you personally stuckmojo. :)

Just at the punters who have the crazy idea that you can have whatever you want, right now, without taking any responsibility for your actions. :blink:

You're right, when the taps are turned off by the banks, many people are going to be in the sh*t.

All I can say is ABOUT TIME. ;)

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Anyone with half a brain knows that borrowing is not "natural". Only poor people need to borrow money. :rolleyes:

Try earning & saving for that rubbish 4x4 in future. :blink:

Thats not true. Poor people are exactly the ones that cannot afford to borrow money.

The rich need to borrow money to make investments (ie business investments, that provide jobs for poor people), not BTL or other stupid schemes. (new kitchens, e.t.c blah blah.

The main problem is noone in this damn country knows what poor is. Poor is not being able to eat. Poor is not not being able to afford a plasma TV and having to make do with a 17" one for 80 quid.

Poor people don't have TV's, live on the streets and are on the breadline.

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Thats not true. Poor people are exactly the ones that cannot afford to borrow money.

The rich need to borrow money to make investments (ie business investments, that provide jobs for poor people), not BTL or other stupid schemes. (new kitchens, e.t.c blah blah.

The main problem is noone in this damn country knows what poor is. Poor is not being able to eat. Poor is not not being able to afford a plasma TV and having to make do with a 17" one for 80 quid.

Poor people don't have TV's, live on the streets and are on the breadline.

The point I was trying to make was that no one has any shame about being 50k in debt anymore. They don't realise that buying an Audi TT on tick isn't impressing anyone. Signing a cheque for that TT however is more of a sign that someone is doing well - Paying in cash.

People need to understand that, buying expensive items using credit is nothing to be proud of. Paying in cash is.

Middle class people are poor these days because they are DEBT SLAVES. Having new 4x4's and plasma TV's doesn't make up for the fact that they never see their kids grow up and are forced to work in job's they hate until the day they drop. That's really being POOR. :rolleyes:

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Middle class people are poor these days because they are DEBT SLAVES. Having new 4x4's and plasma TV's doesn't make up for the fact that they never see their kids grow up and are forced to work in job's they hate until the day they drop. That's really being POOR. :rolleyes:

Your description is pretty accurate, but I think a few people will take issue with that rather blasé use of the phrase "middle class"! I am as middle-class as they come, in terms of education, upbringing and profession (which is pretty much what defines "class" in my mind nowadays, if anything does!) - but I don't conform to that particular stereotype.

Personally I think the "attitude to debt" problem is orthogonal to any question of class - it cuts right through social strata.

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I am as middle-class as they come, in terms of education, upbringing and profession (which is pretty much what defines "class" in my mind nowadays, if anything does!) - but I don't conform to that particular stereotype.

Me too,

but it seems that, these days, the so called middle class are more worried about what the neighbours think of them, than in thinking clearly about how best to provide for their families. Point taken though, their are plenty of chavs who work down the chippy and are now 'BTL tycoons' and drive Mercs. :rolleyes:

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The way i see it if some ones 18K in debt then theres a person with 18K, if people think like that then they wouldnt spend so much in fact life would be better for most. i look at finance like this if i spend £10 then iam £10 worse off the less you spend the more you dont spend the better off you will be. the whole idea is spend min but get the max out of it, like they did back in the 70 80 fix your owe car etc.. i just can't understand how people dont even know how to change an oil filter they spend over £100 to change a filter yet the filter costs £20 and doesnt take that long.

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http://money.aol.co.uk/loans/consumers-in-...718054809990001

You might all be interested in this article 'Consumers in denial over debt'.....It will all end in tears!!!!

"It said the average person thought they owed £5,251 in unsecured debt, but Bank of England figures show the actual amount is nearly twice this at £10,300".

"The group found that households with earnings of more than £50,000 a year were more likely to borrow money to increase their assets or pay for education, while those earning less than £15,499 tended to borrow money just to meet everyday expenses".

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http://money.aol.co.uk/loans/consumers-in-...718054809990001

You might all be interested in this article 'Consumers in denial over debt'.....It will all end in tears!!!!

"It said the average person thought they owed £5,251 in unsecured debt, but Bank of England figures show the actual amount is nearly twice this at £10,300".

"The group found that households with earnings of more than £50,000 a year were more likely to borrow money to increase their assets or pay for education, while those earning less than £15,499 tended to borrow money just to meet everyday expenses".

I think it's worse than that. Three generations of my family don't owe a penny to anyone.

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.......i just can't understand how people dont even know how to change an oil filter they spend over £100 to change a filter yet the filter costs £20 and doesnt take that long.

£20!, Maybe for a Bentley, under £10 will get you a FRAM filter for pretty much any engine ;)

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I think it's worse than that. Three generations of my family don't owe a penny to anyone.

It's the same for me....There seems to be alot of people that don't have any personnal loan/credit card/car loan debt etc. so to get those average figures there must be some people that are well and truely out of their depths....

And with some crdit cards charging near on 30% apr I hate to imagine what the interest alone is....

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It's the same for me....There seems to be alot of people that don't have any personnal loan/credit card/car loan debt etc. so to get those average figures there must be some people that are well and truely out of their depths....

And with some crdit cards charging near on 30% apr I hate to imagine what the interest alone is....

Take a look at the MSE board. I'd turn grey if I owed what some of those people do. Even though most seem to get benefits / tax credits they borrow money. I don't understand that mentality all.

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It's the same for me....There seems to be alot of people that don't have any personnal loan/credit card/car loan debt etc. so to get those average figures there must be some people that are well and truely out of their depths....

And with some crdit cards charging near on 30% apr I hate to imagine what the interest alone is....

But the problem is, that if all these indebted people actually managed to repay their debts, there’d be a huge black hole in the money supply, since every single penny in circulation is now owed by somebody, somewhere to the banking system.

In fact, it’s worse than that, since the total owed is now far greater than the amount of money that exists.

If other people, and businesses (not to mention the Government), weren’t over their heads in debt, people like you and me, who don’t owe anything, wouldn’t have any money to do our shopping with.

http://www.freewebs.com/whosemoney

http://video.google.com/videoplay?docid=-9050474362583451279

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I think all us savers should go to their bank and withdraw all their cash on a certain day (cash in notes only) take the money and stick it under the mattress for a few days. Like taking the entire bottom layer away from the house of cards in one go and an instant reversion to and beyond the mean. :blink:

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Anyone with half a brain knows that borrowing is not "natural". Only poor people need to borrow money. :rolleyes:

Try earning & saving for that rubbish 4x4 in future. :blink:

What a load of twoddle!

Borrowing money is no less natural than borrowing step ladders.

Your second comment is better informed but with an incorrect connotation. What you should have written was something like this, 'try getting back the money you lent to someone who simply cannot pay.' - See the difference?

The only reason people are able to borrow money they will not pay back is because the originator is not lending their own money. They just take the fee with little risk other than to reputation. The real creditors are not fully known at this time, but it will mostly end up being the average taxpayer as bailout of the banking sector, pension funds, over indebted millions of home'owners' is inevitable (it is one of the purposes of the central banking scheme)

Edited by Far Out Bear

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Guest Charlie The Tramp
I think all us savers should go to their bank and withdraw all their cash on a certain day (cash in notes only)

So you want to see an Argentinian type panic, with the Banks putting up the shutters refusing to pay them the money ? :blink:

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Borrowing money is no less natural than borrowing step ladders.

Borrowing money would be ok if interest was outlawed. It's like lending someone those ladders and demanding the

ladders plus a hedge cutter in return. :blink:

The system is f**king rubbish and only suits the banks. :rolleyes:

Watch moneyasdebt to find out more. ;)

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Guest Charlie The Tramp
Borrowing money would be ok if interest was outlawed. It's like lending someone those ladders and demanding the

ladders plus a hedge cutter in return. :blink:

Well don`t borrow mine as you would have to throw in a Lawnmower as well. :rolleyes:

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Borrowing money would be ok if interest was outlawed. It's like lending someone those ladders and demanding the

ladders plus a hedge cutter in return. :blink:

The system is f**king rubbish and only suits the banks. :rolleyes:

Watch moneyasdebt to find out more. ;)

There are some very serious errors being made in this thread. I will of course attend to them.

#1 Withdrawing all your cash from the bank will do nothing but increase monetisation at the central bank. It's just paper - or worse, electronic entries. You have it backwards. Increased demand for money (cash holding) makes the money more valuable - just permits the government and banks to continue the wealth transfer program with abandon. What you want is the opposite, bring about a sharp drop in demand (so crashing the value) You do this by redeeming your cash (spending it on something useful today)

#2 Interest is a category of human action and is necessary for action. It is not an arbitrary creation of an evil banking monster. The time preference (tomorrows goods, all things being equal, are valued less than the same goods today) is the source of the phenomenon of interest. The proof is that if future goods were not discounted, then it would be impossible to purchase land for a finite money price. Also, if goods today were not valued more than those goods later (all other things being equal) then no one would ever consume, they would always save everything - and, clearly, people do consume and enjoy today.

This discount is how the interest is earnt with the passing of time (provided the capital goods are maintained) - that is why we talk of the 'discount rate'.

Edited by Far Out Bear

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