Channel 4 - the Zombie economy

Wookster

Has anyone else seen the bits C4 has been doing on the Zombie Economy?

It really is quite compelling and interesting with the theme that large parts of the economy are generating enough cash only to service debts, but not to pay them down.

But as a long-term strategy; not dealing with Britain’s private debt is now creating problems, draining the blood out of the recovery. Banks hoard capital. Companies can’t invest. Households don’t spend. Half of all mortgages in London are interest-only. More of the same “extend and pretend” could lead to a long term Japanese-style rot. Other countries like Sweden dealt aggressively with private debts, painfully cleansed their banking systems, and then grew again.

The coup de grace is:

So is this the real reason why Britain is not growing, that few want to face up to. The chancellor judges himself on dealing with the public debt.

Full article here: http://blogs.channel4.com/faisal-islam-on-economics/budget-2013-george-osborne-zombie-britain/17958 and on C4 news at 7pm.

The_White_Horse

i've often said this is the case. most people these days have such high mortgage payments (or rent) despite the likes of Hamish telling us they have never been more affordable, plus high bills for utilities, high childcare costs, high food and petrol costs that most people I know (who are reasonably well paid) have no money left for spending on clothes, eating out etc. People have just enough to get by and no more.

the best thing Georgie boy could do on wednesday is reduce tax (income and VAT) and encourage people to go out and spend.

the other thing he should do is make banks put mortgage payers who have never defaulted (ie the good risks) on even lower rates - but not allow them to over pay - so they have more money in their pockets to spend. The banks may take a small hit, but they owe us.

grizzly1911

The_White_Horse wrote: »

i've often said this is the case. most people these days have such high mortgage payments (or rent) despite the likes of Hamish telling us they have never been more affordable, plus high bills for utilities, high childcare costs, high food and petrol costs that most people I know (who are reasonably well paid) have no money left for spending on clothes, eating out etc. People have just enough to get by and no more.

the best thing Georgie boy could do on wednesday is reduce tax (income and VAT) and encourage people to go out and spend.

the other thing he should do is make banks put mortgage payers who have never defaulted (ie the good risks) on even lower rates - but not allow them to over pay - so they have more money in their pockets to spend. The banks may take a small hit, but they owe us.

BOE rate is already on the floor to sustain those that are over committed

Reduce VAT and Income Tax and replace it with what?

Perhaps the time has come to face up to the problems. Perhaps people should start trading down and begin to live within their means. Stop chasing the consumerist junk in search of instant gratification. Why should anyone expect to be able to go out to eat.

Ditch the Chelesa Tractor and walk the kids to school.

PaulF81

We started with a 4x single salary and 3 years on,it's already down to 3 x salary. The problem we have is the economy took a massive jilt towards consumer retail spending, which is great for the short term sugar rush, not so good when you consider most of the stuff we bought during said sugar rush is now down the tip whilst the Chinese still have our money pocketed.

Until investment in industry and high tech manufacturing is restored, we cut the state pension and NHS and use the cash to invest in infrastructure and encourage private sector investment, we are up the gulley without a paddle. The problem isn't just the debt, its the lack of investment in both education for the go getters and iresearch that is the problem.

[Deleted User]

private debt could be dealt with easily,certainly cc debt,if they stopped churning and 0% deals,churners get 0% for upto 20 months while others pay 17% or more when base rates are 0.5%,its stupid and unsustainable
the way to do this would be for the govt to impose maximum interest rates for different debts,e.g 12% for cc,15% for store cards,18% for catalogues,10% for unsecured loans and pdl

Thrugelmir

You have to start from the position that the UK consumer like the US became a debt junkie. Other countries while in difficulty. Do not have the same problem to deal with.

To higher a % of UK GDP is derived from consumer spending even now. Hence the term rebalancing the economy. A good reason why any turnaround will be slow. Whatever politicians suggest may be the case.