People are continuing to pay down their debts

MrRee_2

Good news, I'm sure everyone will agree?

"People are continuing to pay down their debts, despite High Street stores offering discounts to tempt shoppers, according to figures from the British Bankers' Association (BBA).

Retail sales grew in November but there was little demand for loans and overdrafts, the BBA said.

Credit card borrowing slightly increased, but mainly as a result of the interest due on existing debts"

Spare money, and there is plenty about, seems to be going into debt reduction.

Are we seeing a change in lifestyle choices?

ruggedtoast

You realise that people paying down debts results in a contraction of the money supply right?

wotsthat

ruggedtoast wrote: »

You realise that people paying down debts results in a contraction of the money supply right?

I've seen this argument a few times as if it's a bad thing.

If I've a credit card charging 16.0% then clearly priority number one is for me to get rid of the debt. Worrying about a contraction in money supply isn't even a consideration.

If people are choosing to pay down debt in preference to discretionary spending in retail outlets that's a good thing.

NEvans_3

wotsthat wrote: »

If people are choosing to pay down debt in preference to discretionary spending in retail outlets that's a good thing.

If people had the money available to spend at retail outlets rather than needing cards or loans than that would be a good thing.

wotsthat

NEvans wrote: »

If people had the money available to spend at retail outlets rather than needing cards or loans than that would be a good thing.

If people hadn't spent money they didn't have using loans and cards I'm certain more people would have more money to spend now - that would be a good thing.

MrRee_2

Discretionary money is clearly huge .... people can pay down debt AND spend in retail .... as they are doing.

Generali

A 3 year graph of the BBA figures for lending:



From the British Retail Consortium:

BRC-KPMG RETAIL SALES MONITOR NOVEMBER 2011: WORST RETAIL SALES GROWTH FOR SIX MONTHS December 6, 2011





UK retail sales values were 1.6% lower on a like-for-like basis from November 2010, when sales had risen 0.7%. On a total basis, sales were up only 0.7%, against a 2.8% increase in November 2010. On both measures, sales performance was the weakest since May.

http://www.brc.org.uk/brc_news_detail.asp?id=2115&kCat=53&kData=2

ruggedtoast

wotsthat wrote: »

I've seen this argument a few times as if it's a bad thing.

If I've a credit card charging 16.0% then clearly priority number one is for me to get rid of the debt. Worrying about a contraction in money supply isn't even a consideration.

If people are choosing to pay down debt in preference to discretionary spending in retail outlets that's a good thing.

It's a good thing for you, but it's not a good thing for a fractional reserve system, which then passes all the pain back to you. and punishes you for your parsimony

Ever feel like you can't win?

RenovationMan

Good graph generali. Its good to see that during a period of national austerity, existing debts are being repaid and fewer new ones are being taken on. When we come out of this period, the country and its populace will all be better off financially.

Thrugelmir

wotsthat wrote: »

I've seen this argument a few times as if it's a bad thing.

Unfortunately it is. As repayment of debt will result in lower GDP.

3 million people are employed in the retail sector, as compared to 2.2 million in financial services and manufacturing combined.

La Senza went into administration today. So not a happy time for the 2,600 employees.

CLAPTON

Thrugelmir wrote: »

Unfortunately it is. As repayment of debt will result in lower GDP.

3 million people are employed in the retail sector, as compared to 2.2 million in financial services and manufacturing combined.

La Senza went into administration today. So not a happy time for the 2,600 employees.

unsuccessful companies go out of business and new ones arise to replace them (otherwise we would all be hunter gathers)

do you really think reducing debt is a bad thing
or do you think expanding debt is a good thing
or is our current level of debt exactly right?