Chronically sick nation determined to learn nothing

mewbie_2

Agree with the sentiment Graham - too much lending requires too much lending to fix.

However my current gripe is the Abuse button. Click Thanks and the Abuse button moves under your mouse. Amateur web designers need a bit more control Martin.

kennyboy66_2

Graham_Devon wrote: »

http://www.independent.co.uk/news/business/news/personal-debt-in-uk-exceeds-gdp-for-second-year-905461.html
The total amount of UK personal debt has exceeded the country's entire GDP for the second year running.

According to the accountants Grant Thornton, the total amount of outstanding debt amassed through mortgages, loans and credit cards rose by 7.3 per cent to £1.44 trillion over the year to June 2008, up from £1.35 trillion the previous year. UK GDP is estimated to be £1.41 trillion, having increased by just 5.1 per cent in nominal terms over the past year.

Sorry Graham you were spot on. I had in my mind secured lending.

I would be pretty sure that debt will be greater than GDP for 2009 and 2010 and probably 2011 as well.

CLAPTON

simply quoting total personal debt figures and ignoring the assets they buy is really only telling half the story.

debt to buy houses is different to debt to buy TVs/holidays etc
a. because at the end of the day you own a valuable asset
b. if you weren't repaying the mortgage debt you would be paying rent

Thrugelmir

CLAPTON wrote: »

simply quoting total personal debt figures and ignoring the assets they buy is really only telling half the story.

debt to buy houses is different to debt to buy TVs/holidays etc
a. because at the end of the day you own a valuable asset
b. if you weren't repaying the mortgage debt you would be paying rent

With houses you aren't really buying a valuable asset.

The asset is land which in this country is scarce.

Break a house into two parts land and bricks. Value the land and work out the costs of reconstruction. Seperately the combined value will be less than the two parts sold as a property. The price contains a premium.

Where the argument of purchasing vs renting doesn't totally hold water in my mind. Is that a lot of people live in far bigger and expensive houses than actually need to. Their mortgages (the amount borrowed), is large due to their income. They buy homes partly as an investment. The only effect of this is to drive up costs for all of us in a rising market. Causing us to borrow more without having anything more to show for it. Which comes back to point about land.

Thrugelmir

Graham_Devon wrote: »

http://www.independent.co.uk/news/business/news/personal-debt-in-uk-exceeds-gdp-for-second-year-905461.html
The total amount of UK personal debt has exceeded the country's entire GDP for the second year running.

According to the accountants Grant Thornton, the total amount of outstanding debt amassed through mortgages, loans and credit cards rose by 7.3 per cent to £1.44 trillion over the year to June 2008, up from £1.35 trillion the previous year. UK GDP is estimated to be £1.41 trillion, having increased by just 5.1 per cent in nominal terms over the past year.

Lets not forget that the Government and Companies borrow too......

julieq

As a point of history, Mrs Thatcher didn't destroy manufacturing, manufacturing did, via the unions and ludicrously inefficient working practices. Mrs Thatcher took the problems on head on and effectively emasculated the unions, which has ultimately been beneficial. I doubt anyone painting a rosy picture of the 1970s actually lived through it, this was a period when strikes and shortages were virtually dopesteresque in their unrelenting capacity to create gloom.

Pobby

Thrugelmir wrote: »

With houses you aren't really buying a valuable asset.

The asset is land which in this country is scarce.

Break a house into two parts land and bricks. Value the land and work out the costs of reconstruction. Seperately the combined value will be less than the two parts sold as a property. The price contains a premium.

Where the argument of purchasing vs renting doesn't totally hold water in my mind. Is that a lot of people live in far bigger and expensive houses than actually need to. Their mortgages (the amount borrowed), is large due to their income. They buy homes partly as an investment. The only effect of this is to drive up costs for all of us in a rising market. Causing us to borrow more without having anything more to show for it. Which comes back to point about land.

Totally agree. My brother in law is a builder and some time ago we were thinking about buying a plot of land. He said that he could build us a house for about £80k. He then said, for very little more, 2 semis could be built, sell off one and you would get a very cheap property.

CLAPTON

julieq wrote: »

As a point of history, Mrs Thatcher didn't destroy manufacturing, manufacturing did, via the unions and ludicrously inefficient working practices. Mrs Thatcher took the problems on head on and effectively emasculated the unions, which has ultimately been beneficial. I doubt anyone painting a rosy picture of the 1970s actually lived through it, this was a period when strikes and shortages were virtually dopesteresque in their unrelenting capacity to create gloom.

You are of course correct; these types of generalisation are not very helpful.. No more that the stupid comments made about Brown ruining the country. Obviously government policy can help or hinder but here are many factors that make up the whole picture.

However, the very high value of the pound at that time did cause significant parts of manufacturing industry to collapse. And maybe that was overall a good thing to revitalise what was left.

The high value of the pound was very much because of the political decision to pump out as much oil and gas out of the N Sea as possible. I'm sure that most of us would quite like a bit more of that oil and gas still to still be under the sea.

zappahey

Really2 wrote: »

If the debt is there it is real money all right. If it takes real money to pay it back it must be real.

Arguably, it's real money but it's paid back with tomorrow's money, not money we have today.

mewbie_2

zappahey wrote: »

Arguably, it's real money but it's paid back with tomorrow's money, not money we have today.

Pity we couldn't have paid it with yesterdays money... ie. savings. Mr. Brown if you are listening, that's when you put some money aside in case it is needed.