“The recession, joblessness and instability you see right now is only the first stage of it. Many people think the slump we’re in now is as bad as it will get. But the truth is, it’s only the start.” Money Week magazine.
This is the full version of the article from WesternEye’s October publication.
If you haven’t watched it yet, the Money Week video The End of Britain makes for shocking viewing. However, it has been dismissed by the national media as a fear mongering scam to get people to subscribe to the magazine. Although it seems extreme, and the figures used may be somewhat subjective, I believe that the message it presents is relevant to our society.
By accepting a welfare state and coming to expect the Government provide us with a financial safety net, we have handed them more power than should have ever been allowed. We have literally put our purses in their pockets.
Allowing the increase in University fees but still funding the majority of students to study means that spending functions on a premise of hope that will not encourage wealth, as debts can rarely be paid back (up to 85% of students will never pay back their loan). Not only this, but if we continue to buy cars, computers or TVs on finance, and continue to gamble on the markets with wealth that does not yet exist we are balancing our economy on a promise rather than solid, hard cash. This creates a void of money. Through spending, this black hole is being increasingly widened and our economy relies on the total unpredictability of stock market fluctuation. Now we all know this, so why are we still not thinking about it in sustainable terms?
We have fallen into a trap. Any government which applies actual cuts will be voted out of power but as the electorate, we are not thinking about the long term costs. We cannot continue this pattern of spending money we do not have.
If interest rates on Government borrowing rise by even 3% our debts will cost us three times as much to upkeep, which in terms of billions of pounds, is unaffordable. This is our generations’ problem now. Something has to be done. Selling off Royal Mail (at under-priced shares!) was the first step. What will be next? Pensions? The NHS? Student Finance? We need to choose what we value most. Government borrowing interest rates currently stand at 2%. Rates cannot physically get much lower. They can only go up, and when they do, we are screwed. I am not an economist, I do not particularly understand money but I know from my own personal finances that getting out of the debt trap is impossible. It is time for us all to take some responsibility, we cannot keep expecting to be bailed out. There was a time when debt was a dirty word, now it is commonplace.
We cannot all get something more from our government then we put in; it’s simple maths. If foreign investors and lenders realise the extent of Britains’ financial problem, it will dawn on them that they are unlikely to ever get their money back. Investors will pull out, trashing our stock market and lenders will compete with interest rates to get as much of their money back as possible. Banks will collapse, the public will panic to get their money out, imagine the Northern Rock crisis times 1000 as it will be every bank on the high street and the government does not have the money to bail banks out. The housing market will crash, as mortgage payments will rise while houses will be worth less.
There is a very real and very severe threat of social breakdown.
Make the banks pay? Who should? How? They can’t afford to, we have to do this ourselves. We have elected Governments on the flimsy promises of a better life for all. The banks, although not innocent, are being used as a scapegoat for our own greed.
In the 1970’s inflation was at 28%, by 1976, Britain had to beg the International Monetary Fund for a bailout of 10 billion pounds, they only received four. Jim Callahan gave a warning that we cannot spend our way out of a recession and this idea only results in inflation. We did not listen and now we are in an even worse state.
All our hard earned assets will be worthless. This could potentially lead to people making more risky investments with their money. Mainstream media are lulling us in to a false sense of security- distracting us with images of Miley Cyrus’ bottom and the subsequent sociological debate surrounding “twerking”. Who cares? Britain is Broke!
According to the MoneyWeek, our debts are higher than those of the USA during the Great Depression. Also to consider, at its worst state of hyper-inflation, the Weimar Republic was in debt to the extent of 913% of their economy. According to Money Week our national debt is at 900%. Now these figures could be totally untrustworthy, and probably are, but if its enough to kick people in to action and think about their own personal finances surely it can only be a good thing. If you can’t afford something outright, don’t buy it.
Our political leaders are going to create desperate policies. Sapping as much from our personal shallow pockets as they can. Our personal wealth is the governments last pot of cash to spend on extortionate costs. It is crucial though, for us to realise, this is our fault. And therefore it is us who can change it. Want a scare- mongering fact? According to sources working with Reuters, there are draft contingency plans for 83% income tax, nationalisation of private pensions and cross- border checks to ensure you are not physically transferring your money. All of which will be controlled by the Euro- zone politicians with no reservations for special circumstances in this new global economy.
The only conclusion I can come up with is that not thinking about it or dealing with it is the only thing that is keeping our economy afloat at this present time.
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