£100,000 Debt Per Household

[time 2 raise interest rates]

This is what Labour are doing for you, with wage inflation at 3% and CPI at 5.2%, if you earn £400 per week and you get a 3% pay rise it

takes you pay up tp £412 per week before tax but with the price of every thing you buy going up by 5.2%, even though you've had a pay

rise you're still earning less than you were last year.

£400 + 3% pay rise = £412 before tax.

£412 with inflation at 5.2% means you're now getting £390 per week £412 - inflation at 5.2% = £390 per week.

Not only this the price of your house has crashed by £27,500 in the last 14 months. well done Labour. muppets.

[Guest Mr Parry]

Or you could just emigrate to a country not run by morons...

I've done that. It may be run by morons, but they leave you alone.

[ken_ichikawa]

The only prediction I am willing to make, and am relatively certain about, is that income tax will rise by at least 5p in the pound in the next budget.

"America's fault" will probably be the reason stated.

If it hits 30%, with a higher rate of 50%... then stuff that, I'm out of this place, and taking my taxes with me. Hong Kong is looking pretty appealing already considering that my work only requires a computer and internet access to complete. I am also well aware of the hideous tax rates of the 80's... could they return?

This isn't just going to be an exodus of the rich, it's going to take out a lot of talented working class, too.

Taxes have to go up, and those with bad mortgages have to go bankrupt and lose their homes, we can't keep paying for them. I'm glad NR is kicking people out at any opportunity.

Hong Kong has barriers to entry , ie you need sponsorship to get the right to work there, since the locals are cheap and work hard (my mate does 7am to 9pm 6 days a week), who says you will have a chance in the job market over there?

But if you are interested I know a guy who will let out a 3rd floor flat (2 bed kitchen bathroom balcony) for $4200 a month which is about £300 a month, it is in Lantau island though so about 45 minutes from central HK, but its 4 minutes walk from beach.

Edited October 21, 2008 by kennichi

[time 2 raise interest rates]

It occurred to me a few years ago that many where living beyond their means, now we are all in debt beyond our means.

And with wage inflation below CPI inflation you're just getting deeper in debt by the day.

[why me]

£100,000, according to Newsnight, is the level of debt PER UK HOUSEHOLD, which is likely to be established when combining already established personal debt with government debt as a result of buying its way out of recession. This is clearly an untenable sum, .

VP

Its the servicing of interest on the debt thats only important not the total amount.

A better figure would be to determine how much each person will be paying each year to do just this.

I think the tax-free day is the best indicator.

[Prof]

And with wage inflation below CPI inflation you're just getting deeper in debt by the day.

I have "wage deflation", so I`m sinking fast !

[time 2 raise interest rates]

I have "wage deflation", so I`m sinking fast !

It'a a shame it truly is a shame, and it's all down to Brown.

Edit an e.

Edited October 21, 2008 by time 2 raise interest rates

[ken_ichikawa]

It'a a shame it truely is a shame, and it's all down to Brown.

shh want to end up in a death camp?

[lets get it right]

It'a a shame it truely is a shame, and it's all down to Brown.

Apparently NOT. Apparently he is the one fixing the problem.

The mind boggles. I think there'll be this is a socialist revolution.

[Guest theboltonfury]

I have "wage deflation", so I`m sinking fast !

I hear you mate, I hear you...

[game over]

No, but until your wage/salary is indexed link in some form you will suffer this debt.

I don't think you'll hear much more on pay restraint form Gordon - he realises that inflation is needed to get rid of the huge debt overhang

[time 2 raise interest rates]

shh want to end up in a death camp?

We're all in one now, maybe the banks will soon be able to start to borrow money they never had and lend it out

to people that can never repay it again, and help to get us out of this mess asap.

Edited October 21, 2008 by time 2 raise interest rates

[bearbullfence]

It'a a shame it truly is a shame, and it's all down to Brown.

Edit an e.

Tory on Today programme this morning (about 7.30 I think). Saying he's made some calculations and if the governement were to live by the same rules they are now saying private companies must adhere to for accountancy transparency, i.e. bringing everything on balance sheet, e.g. pension liabilities, PFI, etc. The Government debt would be 120% of GDP. 3 times higher than it currently is.

Can't find linky but it'll be on the today programme listen again.

[game over]

This is what Labour are doing for you, with wage inflation at 3% and CPI at 5.2%, if you earn £400 per week and you get a 3% pay rise it

takes you pay up tp £412 per week before tax but with the price of every thing you buy going up by 5.2%, even though you've had a pay

rise you're still earning less than you were last year.

£400 + 3% pay rise = £412 before tax.

£412 with inflation at 5.2% means you're now getting £390 per week £412 - inflation at 5.2% = £390 per week.

Not only this the price of your house has crashed by £27,500 in the last 14 months. well done Labour. muppets.

Gordon will have to allow pay rises - so that they at least match the real rate of inflation; if he is to deal with his debt problem. I think he's just about woken up to this fact. Labour governments have 'history' on dealing with a debt problem via wage inflation. Just watch. Inflation might fall in the short-term, but in 24 months or so inflation will be at least double today's levels

Edited October 21, 2008 by game over

[time 2 raise interest rates]

but in 24 months or so inflation will be at least double today's levels

Then so too will interest rates. It's a mess is it not.

[tricksters]

So the size of the planet and its inability to support living beings is the problem...any suggestions?

===========================================================================

One suggestion is to perhaps not completely miss the point. Nobody suggested the size of the planet is the problem.

FFS.

[PopGun]

Or you could just emigrate to a country not run by morons...

Apparently only loosers want to emigrate from this madness according to many nutters on here.

[game over]

Then so too will interest rates. It's a mess is it not.

Rates for savers will still offer a negative real rate of return. Even rates for borrowers seem top be disconnected from the real (not the CPI lie) rate of inflation. How come/ Banks don't need savers anymore? Answer: the banks no longer need savers, they can get all the money they need to finance their lending, at much lower rates, from the taxpayer.

Yep, it is a mess!

However, I would get fixed interest rates on all your debts for as long as possible. If you have assets, rather than debts, then get them out of sterling before exchange controls come into effect. Buying gold may be near impossible in the future too.

Edited October 21, 2008 by game over

[Guest Skint Academic]

China, Japan, the oil exporters, investors...

Hyperinflation or deflation ... there is a third way. Refuse to pay back the debt (it would help to have an independent nuclear arsenal if we did that though).

Deflation looks like the best option all round to me. Strange that the government is doing everything it can to avoid it as they think it's the worst option.

[lypsey]

I wonder how they get to this figure, is it perhaps that someone cannot count

If you look at

http://news.bbc.co.uk/1/hi/business/7644238.stm

It says are liabilities are 387bn , now i calculate that to 5863 quid (working on 66 million in UK)

Can someone explain how 100k is being calculated

[time 2 raise interest rates]

Rates for savers will still offer a negative real rate of return.

But you have to say still much better than in property as it's crashed by £27,500 in the last 14 months, with much, much, more to come.

[Guest theboltonfury]

Hyperinflation or deflation ... there is a third way. Refuse to pay back the debt (it would help to have an independent nuclear arsenal if we did that though).

Deflation looks like the best option all round to me. Strange that the government is doing everything it can to avoid it as they think it's the worst option.

it's funny how anyone with savings wants deflation. I am one of them

Can't see it though - the only way to deal with a crippling debt is crippling inflation

[game over]

But you have to say still much better than in property as it's crashed by £27,500 in the last 14 months, with much, much, more to come.

True

But, watch out for PMs. Don't put all your investment eggs in one basket. If you want to save in British peso I'd go for NS&I, because at least their rate is linked to the RPI - the rate offered won't reflect the real rate of inflation, but it's better than nothing.

A mixture is the way forward:

NS&I

Gold

Norweigen krona (oil)

Yen (huge current a/c surplus)

[Guest Skint Academic]

I don't think you'll hear much more on pay restraint form Gordon - he realises that inflation is needed to get rid of the huge debt overhang

Does he though? My thoughts on this government is that they don't actually understand what they are doing. The current chancellor of the exchequer trained as a laywer. Judging from how praised Gordon Brown was you would have thought he was an economist but actually he's nothing but a historian. How mad is that? There should be economists in charge of our economy. It's like having a social worker in charge of flying your plane and whose opinions override that of the pilots and the aeronautical engineers.

Do they have anything more than a Daily Mail understanding of the economy? In other words, do they truly believe that you can talk yourself into a recession? That you can overcome the economic cycle and have a never ending boom? That you can spend your way out of any economic collapse before it has really even started?

As far as I can see, they do not understand the underlying problems.

Edited October 21, 2008 by Skint Academic

[VacantPossession]

I forgot to add a couple more salient points: A very large number of people are going to be relatively immune from the approaching recession, because they, through pure luck, made up to several hundred thousand pounds profit at the top of the market and are now keeping a low profile, using their gains to offset what everyone else will have to pay for. There is no better proof that the property "ladder" has been a pyramid scheme from the beginning of the new millenium. Furthermore, there are many 50 somethings, around my age, who have inherited large amounts of cash/equity from the properties of deceased relatives. Yet a significant number of these two categories are the very people who are now complaining that they can't get the price for their mainly tax-free gains that they felt entitled to.

In order to save even half the equivalent of cash without cheating, ie: without playing roulette with property, I would have to work extremely hard for at least two decades and penny pinch all the way. But I would have paid TAX on that income too, a burden that has escaped millions as they profited from the pyramid. In effect, those who bought and sold at the right time, without doing ANY work whatsoever, have gained a pile of cash which the average person would be unlikely to be able to save in a whole lifetime of working and saving.

The first time buyers who were silly enough to buy at these inflated prices, hoping to get quickly to the top of the pyramid themselves, effectively paid for much of the profit made by the sellers. But that loss is now being passed on to us because the defaulters, including the banks, instead of owning up to a loss they deserve, now expect US to pay for the accumulated losses. Pour on top of this inflation which wages will not keep up with, increased power and fuel costs which although now dropping in wholesale prices, are not reflecting this fact in the prices we pay...in fact opposite is the case.

In town halls up and down the country, executives are complaining they have been fleeced of their "tax payers" cash by banks they were unwise enough to invest with. But what these councils are not telling us is that the vast majority of this cash is not for the benefit of council tax payers, for it was largely earmarked as PENSION funding for the councils' own employee pension scheme, and of this most of it was for the pensions of the higher paid executives, not the rank and file employees.

At each and every turn, we have a vast army of people who collectively caused this whole mess but assume that the rest of us will willingly pay for their stupidity, greed and neglect. Meanwhile many of them will get away scot free, having paid not a penny tax on their gains and having sufficient funds to weather the storm. This is wealth redistribution on a huge scale. The inland revenue rules and those that legislated them have an enormous culpability here. The tax system of the last ten years has done nothing but encourage the abandonment of real work in favour of tax free acquisition of property. One must remember that the vast majority of gains from property has been ENTIRELY tax free.

I feel I am not alone in being surrounded by many people, including family and friends, who are outrageously whinging about the fact that they have "lost a fortune" on property, having completely forgotten that they already made a stack of cash in the preceeding eight years. And this is a very important point. Even if about four million people think they have lost a packet on property deflation, it has not occured to them that they had already made a huge pile of cash in the years up to the crash, but they of course have spent all that profit and now cannot understand where it all went. It is hard to escape my notice that many people I know of my age have literally done no work at all in the last decade. They have survived purely on property deals. This is a regime that simply had to end. All those accumulated free lunches are now signalling pay back time, but those paying it back are often the very people who refused to take part in the whole grotesque circus, but are now being forced to stump up for everyone else.

VP

Edited October 21, 2008 by VacantPossession