Why is personal DEBT so high in this country?

Blue3

People are in debt I feel because they have an 'because I'M worth it' mentality. I want it and I want it now . Not save and then get it. We are a spoilt, greedy, shallow, uneducated, immoral, uncivilised nation.

AHAR

esuhl wrote: »

I guess it depends what he meant by "highest". Inflation would mean that if the purchasing power of loans was constant, one would expect the amount (in £) of loans to steadily increase. In addition, the purchasing power of salaries has changed over the years. And the population has been gradually increasing too.

Quite right.
I don't doubt that personal debt is exceptionally high in the UK but you should take a moment to consider when things that are described the "highest ever". Some things naturally increase over time. As esuhl says, inflation usually sees to that in the sphere of economics.
Here's a great article discussing the current 'record' national debt:
http://news.bbc.co.uk/1/hi/magazine/7733794.stm

Generali

mewbie wrote: »

To save Generali the trouble I've answered this as best I can... answers in red.

Thanks mewbie.

Masomnia

People have become greedy and materialistic, and want to keep up with the Joneses. Credit allowed them to fullfil it all, add that to our instant gratification culture, buy now and think about it later and you have a recipe for disaster.

No one is prepared to work and save for anything now, people are famous (and rich) for being famous... and rich. We don't look up to people for strength of character now, what their talents are or how they use them, rather what they own, what their status is materialistically. People think the world owes them something, so they borrow to get it, and it all has to change.

People were greedy and wanted stuff, the banks were greedy and lent them too much, and the government was greedy and allowed it to happen.

ad9898_3

Why is debt in the UK so high....... simple

1. Credit is/was too cheap (Government/Bank of England fault)
2. Credit lent irresponsibly (Bank's fault)
3. Credit borrowed irresponsibly (The public's fault)

Masomnia

ad9898 wrote: »

Why is debt in the UK so high....... simple

1. Credit is/was too cheap (Government/Bank of England fault)
2. Credit lent irresponsibly (Bank's fault)
3. Credit borrowed irresponsibly (The public's fault)

Put a lot more succinctly than I managed!

Though I don't thnk it was necessarilly too cheap, just too freely available.

Guy_Montag

AHAR wrote: »

Quite right.
I don't doubt that personal debt is exceptionally high in the UK but you should take a moment to consider when things that are described the "highest ever". Some things naturally increase over time. As esuhl says, inflation usually sees to that in the sphere of economics.
Here's a great article discussing the current 'record' national debt:
http://news.bbc.co.uk/1/hi/magazine/7733794.stm

Sorry your making a common mistake - I know it's common because Labour politicians make it all the time when being interviewed, regrettably the interviewers rarely pick up on it.

You are confusing national (public sector) debt with personal debt (mortgages, loans & credit cards).

As far as I am aware personal debt has never come close to 100% of gdp before.

The interesting thing is that even if personal debt doesn't increase it will increase as a proportion of gdp (as will, for that matter, public sector debt) as the economy contracts.

Generali

You missed a bit mewbie

Guy_Montag wrote: »

Sorry your making a common mistake - I know it's common because Labour politicians make it all the time when being interviewed, regrettably the interviewers rarely pick up on it.

You are confusing national (public sector) debt with personal debt (mortgages, loans & credit cards).

As far as I am aware personal debt has never come close to 100% of gdp before.

The interesting thing is that even if personal debt doesn't increase it will increase as a proportion of gdp (as will, for that matter, public sector debt) as the economy contracts.

Debt and household income in the UK:

Masomnia

Guy_Montag wrote: »

Sorry your making a common mistake - I know it's common because Labour politicians make it all the time when being interviewed, regrettably the interviewers rarely pick up on it.

You are confusing national (public sector) debt with personal debt (mortgages, loans & credit cards).

I don't like speaking for others, but the scope of the article is wider than just the national debt. It does discuss how other (all) statistics are subject to different caveats and that to claim anything as a record can be misleading.

If you read the second sentence of the post you can see the poster makes the distinction between the different forms of debt.

harry_w

ad9898 wrote: »

Why is debt in the UK so high....... simple

1. Credit is/was too cheap (Government/Bank of England fault)
2. Credit lent irresponsibly (Bank's fault)
3. Credit borrowed irresponsibly (The public's fault)

After the Asian Debt crisis they saved like mad, along with the Chinese holding down their currency to industrialise, and the Japanese practically giving money away at zero-interest rates after the collapse of their asset bubbles, it created a wave of available credit for the west to consume.

The US, UK, Ireland, Spain, Iceland etc swallowed the bulk of this as cheap debt and convinced themselves that their own resulting asset bubbles were real growth and that trade and [structural] budget deficits could always be financed.

The asset bubble encouraged many individuals to speculate themselves, and gave them the confidence to use their wealth for conspicuous consumption signifying their success rather than consolidate their gains.

The rapid expansion and seemingly endless duration of the bubble also drove others to take on huge amounts of the cheap credit available in order to avoid being 'left behind' relatively poorer.

The progressive erosion of sensible regulation and controls over finance during the Thatcher years and under Blair/Brown allowed for the bubbles to go on unchecked. In some ways, I think this is The Lawson Boom squared. We're in a state of negative equity.