Sunday, March 16, 2008

Doomed with debt

A world addicted to easy credit must go cold turkey

Alistair Darling's Budget-day boast that Britain is well placed to cope with this turmoil was irrefutable proof of his intellectual bankruptcy. I'm afraid so. Here in the United Kingdom we have been living a similar dream. Unable to fund all spending ambitions from income, too many Britons have cashed in part of their bricks and mortar for a blast of instant gratification.

Posted by doomwatch @ 06:43 PM (1009 views)
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7 thoughts on “Doomed with debt

  • “For too long, those who warned that the borrowing bubble would burst with terrible consequences were dismissed as congenital gloomsters.”

    An excellent small extract from one of many in this article.

    I like the way this man speaks. Good piece of journalism — Deserves to be a member of this site. The truth is appearing.

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  • Who owns the Telegraph as they are completely at the opposite end of the reporting spectrum to the Times and Rupert Murdoch’s neutered journalists.

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  • Seems to me that the Barclay Brothers have very little to loose, they own their own little island off Sark in the Chanel Islands and their business ventures are all sound and they are not highly leveraged. They also own the Scotsman and the European and appear to be quite hands off with regard to their papers reporting as David Short, a journalist who previously worked on The European, said that he could offer no stories of “strong-armed interference, diktats, statesmannish grandiosity – zilch, nada, rien.”

    Quite a nice position to be in then when many of your rivals appear to have a lot to loose out of any property downturn!

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  • The telegraph is a good newspaper.
    Jeff randall has been banging on for months now about how dire things are…and so has Abrose Evans-Pritchard
    Think you will find that the times, is having a change of sentiment -as of late though

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  • I know some of these quotes have appeared before, but they bear repeating. IMHO, Ludvig vav Mises was totally sussed:

    “The credit expansion boom is built on the sands of banknotes and deposits. It must collapse.

    * * * * * *

    “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

    * * * * * *

    “The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression.

    “The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment.

    “The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. The individual is always ready to ascribe his good luck to his own efficiency and to take it as a well-deserved reward for his talent, application, and probity. But reverses of fortune he always charges to other people, and most of all to the absurdity of social and political institutions. He does not blame the authorities for having fostered the boom. He reviles them for the inevitable collapse. In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit expansion have brought about.

    * * * * * *

    “The whole system is the acme of the short-run principle.

    * * * * * *

    “Credit expansion is the governments’ foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.

    * * * * * *

    “Firmly committed to the principles of interventionism, governments try to check the undesired result of their interference by reporting to those measures which are nowadays called full-employment policy: unemployment doles, arbitration of labor disputes, public works by means of lavish public spending, inflation, and credit expansion. All these remedies are worse than the evil they are designed to remove.

    * * * * * *

    “It is important to remember that government interference always means either violent action or the threat of such action. The funds that a government spends for whatever purposes are levied by taxation. And taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money that it wants to spend. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.”

    Amen to that.

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  • Even the Bible hnts at cycles, ‘seven good years followed by ……………. ‘

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