The UK debt.

[joe-90]

Capitalism is a Ponzi scheme that needs endless growth to survive. That growth can't happen without cheap energy - and that's gone so a crash is inevitable.

 

[fiona20]

this country is a state...

 

[joe-90]

This country is IN a state.

 

[Biker1959]

It's all relative- you complain about having no shoes until you see someone with no feet.

None of us are starving!

 

[EddieM]

Devaluing the housing stock by 66% will leave banks exposed to the sub-prime fiasco again - and half the country in negative equity they can never repay. This will lead to total meltdown of the UK economy.

Well, i would agree, but the present situation is not sustainable either. there is no way out, that i can see.

 

[billyo]

6 billon people on planet all PAY £14 EACH and we got money in the pot start the machines we are back in biss

 

[ladylola]

Hmm, so I who didn't cause the financial problem am left £14 out of pocket but Mr banker who actually DID cause financial meltdown also pays just £14?

Flaws to this idea?

 

[billyo]

maybe the people who run our pension,s and all our pensioners are also bankers take take take, everyone pays one way or another me thinks though not all the same, just cause the ship hit the ice cant mean we dont get in the lifeboat, we can( eat the rich later) soon as the £14 is paid we may all have jobs. or bigger payout on the dole

 

[joe-90]

Hmm, so I who didn't cause the financial problem am left £14 out of pocket but Mr banker who actually DID cause financial meltdown also pays just £14?

Flaws to this idea?

The banks didn't cause the problem. Wealth is created by debt - without it there is no growth. Like I said before - the world economy is a balloon with a hole in it - no growth to inflate it - and it all goes pear-shaped.

 

[joe-90]

maybe the people who run our pension,s and all our pensioners are also bankers take take take, everyone pays one way or another me thinks though not all the same, just cause the ship hit the ice cant mean we dont get in the lifeboat, we can( eat the rich later) soon as the £14 is paid we may all have jobs. or bigger payout on the dole

Are you on drugs?

 

[ladylola]

The banks didn't cause the problem. Wealth is created by debt - without it there is no growth.

But the banking system created the debt by their lending of invented money and if "Wealth is created by debt - without it there is no growth" is true then the whole thing is one huge catch 22 , the system relies on growth to pay off the debt.
I think it was your thread about our flawed economic thread that made several very good points, capitalism has pasted the point where it actually works and is the root cause.
And how does the Country respond to all this debt, quantatve easing which is nothing more than creating more debt .
And the "bail outs" lending money to countries to help them out of their debt problems

 

[Paul_C]

But the banking system created the debt by their lending of invented money and if "Wealth is created by debt - without it there is no growth" is true then the whole thing is one huge catch 22 , the system relies on growth to pay off the debt.

That's the whole problem. The banks' fractional reserve system means that money is just "magicked" into existence by the creation of new debt, then the banks expect that debt to be repaid plus interest. Given that the largest portion by far (well over 90%) of the total money is in the form of debt, where can the money come from to pay that interest? Only by creating even more money in the form of debt!

The entire crazy system relies on total debt increasing at an ever-faster rate merely to stop itself from collapsing.


Edited for typo.

 

[joe-90]

Like I said - the world economy is like a balloon with a hole in it - only growth can inflate it - brought about by debt. When you run out of customers to lend to - they created debt with people that couldn't pay - sub prime mortgages. Therefore it can now never be resolved. Only infinite amounts of oil could give infinite growth - and that's now in short supply. Prepare for a crash landing folks.

 

[enyam]

When you run out of customers to lend to - they created debt with people that couldn't pay - sub prime mortgages. Therefore it can now never be resolved.

But that money is out there somewhere,Mr X owned a trailer park say for arguments sake containing a 100 trailers,Bill Clinton introduced some great social scheme where he made it easy for the trailer renters to buy their trailers,say at $10,000 mortgage each so Mr X receives his $100,000 and is happy as larry.
Now multiply this by say 100,000 parks owned by 100,000 Mr X's,and the mortgage company's and banks have a wonderful mortgage portfolio,but there is trouble ahead the buyers can't afford to pay the mortgage payment's after interest rises so the clever banks and mortgage company's sold the portfolio's to the dumb Banks like Lehman Bros and Northern Rock and the B&B who borrowed money to buy these superb mortgage portfolio's from the even dumber pension company's and bigger bank's, in the meantime the Mr X's still have their money so its out there somewhere.
This is why we are in the mire the banks and financial markets somehow twisted Brown's arm to bail them out and this is why more money is printed to keep them afloat.

 

[Norcon]

in the meantime the Mr X's still have their money so its out there somewhere

Do they?

I have a neighbour who sold a plot of land for a housing development a few years back.
Don't know the exact figure but it was several hundred thousand euros.
After the Irish cc hit he approached one of his banks (who were in difficulties) where a portion of the money was lodged, to make a withdrawal and the bank informed him it wasn't possible. His money was gone or to be more precise it never existed in the first place and the bank suddenly found themselves in a slight pickle.
The "magic" wasn't quite working this time.

So the bank made an arrangement in their desperation and signed over the three storey high street property they operate from and now the bank pays him a monthly rent.
Not as good as being handed say half a million euros in cash or the equivalent value in gold bullion but still a nice little earner and he now owns the bank.

The reality is that the property buyer went burst being unable to build any houses as no new buyers were available.
No one to create new debt in other words. Without debt no wealth just as Joe has pointed out.
No where is that more evident than here in Ireland with thousands of ghost towns littered all over the country!
Many awaiting the bull dozers.

The other big problem of course is that you cannot export land and property to other countries to gain real income so the Irish just kept blowing up each others balloons in the property market until they popped.