Comments on: Could England be headed for a “sudden stop?”

By: Bob4232

Bob4232 — Mon, 23 Nov 2009 14:50:10 +0000

One reason that the UK consumer has not begun to deleverage is that unemployment is not as high as in the US. Also, since the “safety net” has more and denser webing than in the US there is less incentive to do so.

By: Rolfe Winkler

Rolfe Winkler — Sun, 22 Nov 2009 20:51:02 +0000

Ian….here’s a line from the VP report that may help explain the difference:”New consumer lending in the UK continues to contract at a rapid click, reflecting a reluctance from overleveraged consumers to borrow (as well as a preference from chastened banks not to lend). Consumer debt, however, is only 15% of household debt.”

By: Michael Moore

Michael Moore — Sun, 22 Nov 2009 20:41:16 +0000

Broader Measure of U.S. Unemployment Stands at 17.5%DAVID LEONHARDTPublished: November 6, 2009For all the pain caused by the Great Recession, the job market still was not in as bad shape as it had been during the depths of the early 1980s recession — until now.With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level in decades. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.TELEGRAPH 12.11.095.7m and climbing: the real unemployment tollBy Edmund ConwayThe labour market figures published this morning were pretty encouraging, showing that the the number of people out of work is, if not falling precipitously, then at least rising far more slowly than previously. Indeed, look beneath the headline figures which showed a 30,000 increase in the number of people out of work between July and September to 2.46m and you can see broad based signs of improvement.But it is important not to lose sight of the scale of the problem. Weve all heard plenty about the youth unemployment issue (rising to around 20pc of people under 25 now) but the problem is far broader than that. In my column a few weeks ago I mentioned that if you add up all the people who would like to work but for various reasons cant get hold of a job (something Chris Dillow looked at last month), you actually get the rather more alarming unemployment figure of 5.6m.The latest figures show that this is now closer to 5.7m, (over 15pc of the working age workforce) and is reaching the peaks it hit in the early 1990s. To clarify, this measure of unemployment includes: official unemployment, those classed as economically inactive who actually want a job and part time workers who would rather be working full time. Here is a chart showing you just how sharp the increase in this category has been over the past year or so.

By: Ian Kemmish

Ian Kemmish — Sun, 22 Nov 2009 19:15:31 +0000

Two observations:1) Sadly, you don’t quote the sources for your debt graph. The BBC have been fairly regularly reporting on the extent to which households *are* paying down debt. So it seems reasonable to assume that there are some measures by which it is decreasing and some by which it isn’t, with journalists picking whichever figure supports the chosen angle of their story.2) Those tracker mortgages are good news – they don’t all reset at once (which would indeed be a “sudden stop”) but will naturally reset in a staggered fashion over a few years (ideally leading to a “soft landing” slowdown in household expenditure).

By: f belz

f belz — Sun, 22 Nov 2009 16:36:05 +0000

It is still the same thing happening over and over. A country can only create wealth when people own properties and businesses without having large debts and mortgages. These businesses must also produce products that benefit people. To keep people in debt has never worked for any country. Yes, it keeps the company store going and keeps a few people rich, but that does not work either. You cannot have growth with heavy debts and poor people.The strength of the United States was built because people were able to grow businesses. Recently we have lost our way due to poor teaching in our colleges and universities and poor government decisions.

By: H Hashimi

H Hashimi — Sun, 22 Nov 2009 16:10:03 +0000

That is one possibility. However, the fiscal policies of the UK is far stronger in a country of 65 million. On the other hand the Uk has a tendency to throw somewhat bad news in a cyclic manner to adjust the currancy exchange rate in a way to enhance their exports. this is seen every time the Sterling exhibits a tendency to climb above expectations, which helps the UK ride any fiscal crisis in a resilient manner. Note also that the biggest European banks are UK based (HSBC & Barclays). They were allowed to refuse government aid & to indulge themselves and diversify with the help of cheap & endless Middle Eastern funds, a very clever lateral thinking in the midst of the global crisis. The US however, adopted a too little too late policy.

By: Mark G.

Mark G. — Sun, 22 Nov 2009 16:08:31 +0000

And there’s this:Swiss personal tax rates are as low as 20pc and there have been reports of UK-based executives being offered a 10pc tax rate as the government steps up its drive to entice high earnershttp://www.telegraph.co.uk/financ e/newsbysector/constructionandproperty/6 624407/High-taxed-City-workers-looks-to- the-Alps.html

By: sangellone

sangellone — Sun, 22 Nov 2009 15:59:24 +0000

Just a couple of thoughts. Yes, Gordon Brown has destroyed British finances but unemployment is lower in the UK than in the US ( though that might be in large part to Brown’s expansion of public sector employment) and the pound has fallen significantly in relation to the Euro ( again due to Brown’s spendthrift ways). Still, because of the falling pound, some European manufacturers are shifting their production into the UK from European plants so remaining outside the Eurozone does have some advantages for the UK that Ireland or Spain, e.g. do not have.The interesting thing we may see resolved by the UK’s problems is whether QE and massive fiscal deficits lead to inflation or deflation. Liam Halligan and Ambrose Evans- Pritchard at the Telegraph make convincing cases for either outcome and, as the UK’s situation mirrors that of the US in many ways, seeing which way it breaks there will be likely show our own fate.

By: H Hashimi

H Hashimi — Sun, 22 Nov 2009 13:11:07 +0000

It is also plausable that the UK is trying to ease the resistance to their exports by cyclical publication of recurrent bad news. This would, they hope, to weaken the sterling and enhance exports.

By: pravin

pravin — Sun, 22 Nov 2009 13:01:00 +0000

The Japanese are savers and the govt merely borrows from its own citizens, not Arabs, or Russians, or Pakistanis who have enormous sterling denominated savings parked in UK banks… Japan needs to “raise rates” in order to persuade its citizens to spend, rather than save.. BUT convincing “ivory tower academics” of this solution is futile… As for the UK, I for one am betting against the pound, expecting to repeat “Soros run” of 1992… While GBP/USD has been stubbornly rallying around the 1.65 level with support from Barclays etal.. I doubt if such efforts are sustainable as the “tax man” drives ever increasing “non-Brits” to slowly withdraw and park their moneys elsewhere..

By: Jeffrey

Jeffrey — Sun, 22 Nov 2009 05:42:50 +0000

An excellent post and a more excellent reply. Goodbye, Britain, and America, good luck.

By: Dan Hess

Dan Hess — Sun, 22 Nov 2009 05:25:30 +0000

Excellent post.One of the big developed economies will have to have a major debt crisis to knock some sense into the others.We draw way too much comfort from Japan, which “proves” that government debt can be handled at much higher levels. It is kind of a fluke of history that they have been able to run such huge deficits for so long without inflation. They have been uniquely awesome exporters pouring world class products into a massively growing world economy. The car is to exporting as the 100m dash is to sport, a pure test of prowess attempted by all the big economies, and they have been the best.

By: Jo

Jo — Sat, 21 Nov 2009 23:34:28 +0000

‘England’!!!!What is this – like, the 1930s or something.Britain or UK thanks.

By: JMKeynes

JMKeynes — Sat, 21 Nov 2009 20:59:55 +0000

Substitute U.S. for U.K. and Treasuries for Gilts and the piece places well on the other side of the pond.

By: globalguy

globalguy — Sat, 21 Nov 2009 19:23:10 +0000

I find variant perception to be very accurate and timely information..pls keep ip the good work..question still remain in the household debt to GDP and whether anything in the earopean /UK can be sustained ..I believe the situation becomes very dire in 3 yrs out or more based upon their current path…