UK is fooked. Massive personal debt, interest rates climbing.

[The once and future king]

Age the Universe started (Big Bang):
13,700,000,000 years ago - 13.7Billion years

UK personal Debt:
1,300,000,000,000 pounds 1.3TRILLION Pounds

94.89 pounds per every year the universe has existed. Scary indeed!!!

There is a perceived (false imo) split in partisanship on this forum between AC etc and statists.

I think they are both proxies to the true agent of power, the banking system. When all that money contracts, it is the banks who will claim a vast share of the concrete assets/wealth that the above liabilities are attached to.

Yes the state has a hand in fiat money but so does the market. One reason credit has been so cheap has been that bonds (CDOs) that can heavily influence interest rates/easy credit have been overly valued by totally independent rating agencies (that have a vested interest in over rating the bonds.)

This is one reason there was so much bad sub prime lending. The sup prime debt was sold on to another party, who then packaged the debt in with supposedly better quality debt at which point it was given a rating by a independent rating agency. It is turned into a financial instrument/derivative called a Collateralized Debt Obligations or CDO that can be traded by financial markets.

To cut a long story short the ratings given to these instruments have been marked down by many of these rating agencies in the last few days, and thus the values of the CDOs have fallen sharply, there is a fear of "contagion" into other markets as many large players have substantial CDO holdings and also CDOs losing value can lead to a credit crunch. It is one of the reasons the dollar is tanking. A fear in the UK is that pension funds may be heavily vested in these markets.

Anyway it is highly complex stuff, but I am just trying to illustrate how totally independent market players can have a hand in problems associated with fiat money and easy credit.

I allways ask myself who wins? When the chickens of the above debt comes home to roost, will Tony Blair/Gordon Brown and the 650 MPs of westminster come out as massive winners and have accumulated huge material wealth. I dont think so.
Someone will though as real wealth dosnt dissapear it just gets transfered.

It is who ever wins when the [censored] hits the fan that is pulling the strings of its two proxies the State and the Market, and we should be focusing our ire upon them.

[mjkidd]

If by "ire" you mean "guns," then I agree.

[adios]

[ QUOTE ]
This is one reason there was so much bad sub prime lending. The sup prime debt was sold on to another party, who then packaged the debt in with supposedly better quality debt at which point it was given a rating by a independent rating agency. It is turned into a financial instrument/derivative called a Collateralized Debt Obligations or CDO that can be traded by financial markets.


[/ QUOTE ]

Not quite. CDOs are over collateralized and thus it's not taking lower quality debt and making it higher quality debt. Anyway the WSJ had an article the other day about the rating agencys and the bonds they've downgraded as well as put on a ratings alert. There were no AAA or AA bonds that were downgraded or put on watch for a possible downgrade. Only a few A rated bonds were. Perhaps the CDOs from sub prime lending weren't over collateralized enough who knows. But yes many of the lower grade bonds have been downgraded as well as being put on watch for a downgrade. CDOs themselves aren't inherently bad (I'm fine with them and they do provide liquidity for loans) but the rating of the bonds may not be what they should be. I will point out that this happens to corporate bonds alot as well i.e. corporate bonds get downgraded and usually it's the lower quality bonds that get the most downgrades as would be expected. One more thing, the amount of money in sub prime mortgage lending in the US is a gnat on the wall compared to the totality of money that is lent for mortgages.