Michael van Clarke: Brown Bankrupts Britain

TPA supporter Michael van Clarke gives his view on the credit crunch:

Few people seem to fully appreciate the catastrophic damage 12 years of Gordon Brown have wreaked on our society. By 2010 Gordon’s debt bombshell will put the total UK housing market in negative equity.

The Broken Economy

	1997	2007	2008	2010
Personal Debt	500 billion	1.41 trillion	1.5 trillion	1.57 trillion
National Debt	348 billion	0.7 trillion*	0.742 trillion*	0.9 trillion*
Capitalised State Worker Pension Liabilities	325 billion	0.95 trillion	1.071 trillion**	1.12 trillion
TOTAL DEBTS	1.173 trillion	3.06 trillion	3.31 trillion	3.59 trillion
Value of UK Housing Average house price x 25 million homes	1.75 trillion 25m x £70.000	5 trillion 25m x £200,000	4.35 trillion 25m x £174,000	3.5 trillion 25m x £140,000
Equity in £	577 billion	1.94 trillion	1.04 trillion	- .09 trillion
Equity as %	33%	38.8%	24%	- 2.6%

Sources; BoE, ONS, IFS , *Includes off balance sheet liabilities including Railtrack, Northern Rock, PFI, **Hargreaves Lansdowne

Put simply – the average UK homeowner outrightly owned about one third of his/her home in 1997. The other two thirds were mortgaged by the owner or the government on their behalf. In 2010 the average UK homeowner will own nothing. His equity will be more than wiped out by Government debts and liabilities and their own excessive consumer borrowings.

The debts and liabilities the Government has taken on in our name in addition to the debts consumers have been encouraged to take on to allow Brown to keep taxing us stealthily, means the UK will be in negative equity by 2010. Each household in Britain will be left with average debts and liabilities of £145,000. More than the average value of a home by then. It will cost each household an average of £8,700 each year just to service the interest on this debt without paying down a single penny of it. These figures do not even include unfunded state pensions for all of us which make the true figure far worse.

Labour has vastly accelerated the poor financial management of recent Governments and is still in denial - blaming the credit crunch. It’s like blaming the mess you’ve created on a loan shark for not lending you any more money..

Make no mistake these are your debts. If you die before they are paid then your children and grandchildren will continue to pay them.

Gordon’s claims of successful and prudent economics is the biggest lie of our generation. He kept boasting about an economy growing consistently at around 3% year after year and how strong and resilient it was. What he didn’t say is that it was costing 8% of GDP in new debt each year. If you run a company, this is called ‘buying business’. It’s what amateurs and frauds do. They present a good topline to get the plaudits and bonuses whilst quietly wrecking the balance sheet. Unfortunately it will take at least two generations to repair the damage economically and socially.

In 2010 Total UK Debts and Liabilities as a percentage of GDP will hit 259% this is higher than at any time in history. The previous National Debt record of 250% was in 1947 after the country had been destroyed by the Second World War. Thanks Gordon.

Reforming financial institutions alone will not prevent a re-run in years to come. Government powers need to be curtailed by reforming the constitution. Why can a government, especially one voted in by only 25% of the electorate, not only raise taxes on income and spending in their term of office, but also spend our pensions, our homes, our childrens’ inheritance and our childrens’ and grandchildrens’ income through the debt and liabilities they are allowed to rack up? At the very least they should be limited to spending only a (smaller) proportion of current GDP income or spending from reserves?

Can anyone answer this for me?

Comments

[Freedom to Prosper]

Has this site gone back to dial up? Anyway I've said this a thousand times on various sites but I may as well say it again. Mortgages 3x ONE income and a ten percent deposit. Evidence of long term savings required. House prices would reflect local wages, couples could afford to start a family and there would be money left to spend and create real jobs.