Britain showing signs of heading towards 1930s-style depression, says Bank


	Britain showing signs of heading towards 1930s-style depression, says Bank

JICWyllie

3-16-2009 6:51 AM

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tags:

economy, i-depression, i-risk, i-increase, i-forecast

JICWyllie says:

This is the nub of the trouble, both in the UK and the US.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/1b5cf749-80a5-494f-9614-dd38bd6775b5/CAD95010-72C2-4BD5-9F3D-3770594B530F/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.telegraph.co.uk/finance/financetopics/recession/4996994/Britain-showing-signs-of-heading-towards-1930s-style-depression-says-Bank.html" href="http://www.telegraph.co.uk/finance/financetopics/recession/4996994/Britain-showing-signs-of-heading-towards-1930s-style-depression-says-Bank.html" style="font-size: 11px;">www.telegraph.co.uk</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.telegraph.co.uk/finance/financetopics/recession/4996994/Britain-showing-signs-of-heading-towards-1930s-style-depression-says-Bank.html"><P>Although inflation is currently in positive territory, it is expected to 
  become negative in the coming months. 
</p> <P>
The Bank is worried that this may combine with high levels of indebtedness to 
  squeeze families further. 
</p> <P>
It says that families with high debts could fall prey to the debt deflation 
  trap. This means that the cost of their debts, which are fixed, would rise 
  compared to average prices throughout the economy. While inflation erodes 
  debts, deflation makes them relatively higher. 
</p> <P>
The Bank’s paper suggests that Britain is particularly at risk because there 
  is a high proportion of families with significant levels of debt, and many 
  of them are on fixed mortgage rate, which means they will not benefit from 
  rate cuts.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.telegraph.co.uk/finance/financetopics/recession/4996994/Britain-showing-signs-of-heading-towards-1930s-style-depression-says-Bank.html">Total personal debt has risen by 165 per cent since 1997 and each household 
  now owes an average of about £60,000.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.telegraph.co.uk/finance/financetopics/recession/4996994/Britain-showing-signs-of-heading-towards-1930s-style-depression-says-Bank.html">The Bank’s paper also says that consumers were suffering as banks keep the 
  cost of borrowing high, </blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.telegraph.co.uk/finance/financetopics/recession/4996994/Britain-showing-signs-of-heading-towards-1930s-style-depression-says-Bank.html">this is the highest personal debt level in the world. 
</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/CAD95010-72C2-4BD5-9F3D-3770594B530F/blog/" title="blog or email this clip"><img src="http://content7.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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