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UK’s debts ‘biggest in the world’

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It just get better. Reported on the BBC is the UK has the biggest debts in the world of all the big nations.A consultancy firm McKinsey had reported on it. There is a two-part documentary, called The Party’s Over, that will be broadcast on BBC Two at 1900 on 4 and 11 December.

 

According to the consulting firm, by the end of March this year, the aggregate indebtedness of the UK – that’s the sum of household debts, company debts, government debts and bank debts – had risen to 492% of GDP, or almost five times the value of everything we produce in a single year.

That compares with 481% at the end of 2008.

So the UK’s total indebtedness has increased, and is still the biggest relative to GDP of any of the big economies. That said, Japanese indebtedness is pretty much the same size – at the end of 2010, as opposed to the end of March 2011, Mckinsey says Japan’s debts were also 492% of GDP.

US indebtedness is less, at 282% of GDP by the middle of this year, down from 296% in December 2008.

In the case of America, government debt is on a steeply rising trend, jumping from 61% of GDP to 80% over the past two and a half years.

so whats caused all this

When banks stopped lending, and private-sector spending and investing collapsed, governments continued to spend, even though tax revenues were falling. So public-sector borrowing exploded.

…………..

government debt has risen from 52% of GDP, which at the time was pretty low by international standards, to 76% of GDP, which is more or less standard for the rich west.

But as you’ll know, UK government debt remains on a fairly sharply rising path (the government’s deficit is some distance from being closed).

One other slightly surprising and – perhaps – disturbing trend is that the debt of financial institutions has risen, from 205% of GDP to 210% of GDP.

 

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Looks Like Hungary is Next

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Don’t do it Hungary. 😉

As reported by Reuters, Hungary has asked for help from the IMF. The European Commission has also confirmed that is has received a request from Hungary.

“They have also indicated that their intention is to treat any EU support that might be made available as precautionary,” the European Commission said in a statement, adding that it would consider Hungary’s request in consultation with EU member states and the IMF.

Hungary said on Friday it had started talks with the International Monetary Fund and the EU about a new precautionary credit line to shield it from the debt crisis in the euro zone. Its Economy Ministry said at the time it expected to sign a new agreement with the IMF and the European Union early next year, but it did not expect the deal to entail new austerity measures.

That last sentance was hilarious, no new austerity my ass.

The Irish Independent went on to say that the IMF confirmed the request

IMF chief Christine Lagarde confirmed the move today saying: “The IMF has received a request from the Hungarian authorities for possible financial assistance. The authorities have sent a similar request to the European Commission and indicated that they plan to treat as precautionary any IMF and EC support that could be made available.”

Ms Lagarde said an IMF team currently working in Budapest would now return to Washington for consultations with the IMF management and board.

Hungary’s total debt had risen to 82pc of gross domestic product by September from 75pc at the end of June, recent official figures showed.

The government has levied huge taxes on various sectors to fill budget deficits and effectively nationalised €11bn in assets held by private pension funds since coming to power in April last year.

The outlook for Hungary is clouded, Standard and Poor’s and Fitch have warned and analysts predict that Hungary will have the lowest growth rate among the 10 EU newcomers with 0.5pc growth predicted in 2012.

Debt Crisis Has Spread to The Core

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Juergen Stark has warned today while speaking in Ireland that the sovereign debt crisis has spread to core of the eurozone. From RTE website he went on to say.

 “These are very challenging times… The sovereign debt crisis has re-intensified and is now spreading over to other countries including so-called core countries. This is a new phenomenon,” Mr Stark said in a speech to Ireland’s Institute of International and European Affairs in Dublin.

“The sovereign debt crisis is not only concentrated in Europe, most advanced economies are facing serious problems with their public debt.”

More on the subject can be found at ZeroHedge.

Naturally this is not news to anyone, and certainly not to European banks, which have seen their deposits with the ECB (or a safe haven for any cash within the European interbank system) rise at the fastest rate in years, if not ever, since the last MRO. It has taken just 11 days to go from €73 billion on November 8, post the most recent LT liquidity operation, to €237 billion. We expect the total to surpass the two years high of €300 billion in under 5 days.

 

MF Global – Who Knew Beforehand?

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When someone as big as MF Global then somebody is bound to know its going to happen. It’s just a case of who the choose to inform or not.

In the San Francisco Chronicle

Nov. 16 (Bloomberg) — Examiners from CME Group Inc., the world’s largest futures exchange, found unexplained wire transfers at MF Global Inc. and a $900 million shortfall in client funds during the weekend the failing broker was talking with possible buyers, a person briefed on the matter said.

CME, which was the overseer of MF Global, noticed the shortfall by Oct. 30 — about a day before U.S. regulators said they were told of the missing funds and the broker filed for bankruptcy protection, according to the person, who spoke on condition of anonymity because the review isn’t public.

the key sentence
Transfers at MF Global were made “in a manner that may have been designed to avoid detection,” CME said in the statement.
Also reported in the Huffington Post was another related article about the Koch Brothers who managed to pull out just in time.
A recent report in Reuters has described the billions of dollars of client accounts that were withdrawn from MF Global in the last few weeks before their collapse, including 8 accounts from Koch industries engaged in oil trade that were transferred to Mizuho Securities after years of a steady and profitable relationship with MF.
Both the Commodity Futures Trading Commission and the Chicago Mercantile Exchange were charged with overseeing MF Global, their clearing member. If we are to believe them, they had no idea of any difficulties within the firm before customer accounts went missing just a few days before the collapse. But someone clearly knew of the cratering positions and imminent collapse of MF Global, as billions of dollars of accounts were “coincidentally” withdrawn. And what do the Koch brothers say was the reason for these withdrawals? There’s been no comment.
Well you know what they say ” …it’s not what you know but who……”   😉

How to Fix The Banking Crisis, As Told by the Book – “The Wizard of Oz”

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Great documentary by Bill Still which explains how the banks run the system. Of course this was explained originally through the book “The Wizard of Oz” by L. Frank Baum.

Amoung some of the people being interview are Peter Schiff and Ellen Brown.

The world economy is doomed to spiral downwards until we do 2 things: 1. outlaw government borrowing; 2. outlaw fractional reserve lending. Banks should only be allowed to lend out money they actually have and nations do not have to run up a “National Debt”. Remember: It’s not what backs the money, it’s who controls its quantity.

There is A Way Out, Issue Debt Free Money

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Although it never is dicussed by our politicians, in particular in the US which has the private bank the Federal Reserve creating fiat money, the problem can be solved as outlined by economiccollapseblog

There is a way out of this, but our politicians are not talking about it.  As I have written about previously, if the federal government abolishes the Federal Reserve and starts issuing debt-free money, we could eliminate our federal budget deficits, cut taxes and improve the economy all at the same time.

But nobody is even talking about debt-free money.

Instead, all of our politicians are talking about “fixing” the current system.

Well, let me tell you, it is impossible to solve our problems under the current system.  If we insist on maintaining our current debt-based financial system, it will only end in a massive amount of pain.

France Downgrade on The Cards

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Is Moodys about to downgrade France’s AAA rating ? Well it has been reported in a number of sources including Irish Independent.

MOODY’S declared today that a recent rise in interest rates on French government debt – coupled with weaker economic growth prospects – could be negative for France’s credit rating.

The rating agency said the deteriorating market climate was a threat to the country’s credit outlook, but not at this stage to its actual rating.

Also a similar story has appeared in the Telegraph.

Worries about a high fiscal deficit and banks’ exposure to other troubled European sovereign debt have drawn France into the firing line of the bloc’s crisis, despite the government’s insistence it would do everything necessary to protect its top rating.

Moody’s announced in mid-October it could place France’s AAA rating on negative outlook in three months if the costs for helping to bailout French banks and other eurozone members overstretched the country’s budget.

Today, the rating agency said that a worsening in the French bond market – amid fears the sovereign debt crisis was spreading to the eurozone’s core – posed a threat to its credit outlook, though not at this stage to its actual rating.

“Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications,” Moody’s said.

The premium investors charge on French 10-year debt compared to the German equivalent was up around 20 basis points at 163 bps following publication of Moody’s report but remained well short of the 202 bps hit last week, a new euro-era high.

 

 

 

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