Britain faces up to 10 years in debt.

harryhound

Rochdale_Pioneers wrote: »

It took a global collapse of banking to pitch us into recession. Every single year we'd get to budget time and the right would wail about how it was all about to end in tears, then the numbers would be published and prove them wrong year after year after year.

If on the other hand you want to look at how an inept chancellor and irresponsible policies can pitch the UK (and just the UK) into a recession, look at Lawson's budget of 88, the huge bubble it directly blew, and the fallout when this popped.

Lawson's position was very similar ours now.
In 1987 there was a world wide crash in share prices - some markets had to shut up shop.
So Lawson did his Quantitive Easing to get things moving again - trouble was the new money caused inflation, especially in property values. The real failure of capitalism is and was the refusal to invest in things productive. The money floods into speculation or current consumption, then it was property now it is commodities of one sort and another.
Business is operating in survival mode or perhaps trying to take out competition by "investing" in distressed rivals to "rationalise" an industry.
The difference between then and now was Margaret Thatcher's cushion of oil revenues and determination to keep "honest money"; this time the bubble was allowed to get very much worse, and became systemic right across all sections of all economies world wide when it burst.
Currently we are operating on a policy of crossed fingers and fudge until the next general election.

Thrugelmir

julieq wrote: »

All "toxic" debt is not valueless. Bad debt is mixed with good debt in proportions that are difficult to work out. Using the word "toxic" is essentially hyperbole anyway, it's designed to create a particular response in a reader (like, and just about as meaningless as, the idea of de-toxing). The idea that there's a slow poison in the banking system is much more compelling than the idea that a proportion of their mortgage lending was made to people who won't pay it back and they've confused the situation by mixing all the lending together and selling it on.

Agree with your comments. However its not just mortgage debt.

The issue with "toxic" debt is that no one knows who will be left holding the bomb when the positions unwind. Until all the multi layered , split up and repackaged and sold on debt is either repaid or becomes a bad debt.

At the moment we the taxpayers are underwriters for this potential bomb. It may have gone off radar but its still out there somewhere, and at some point will explode.

nearlynew

julieq wrote: »

................there's a slow poison in the banking system........

Well done.

You got there in the end.
(with a bit of heavy editing)