'Things Can Only Get Better'

[Chil1234]

I know its easy to be wise with hindsight but here goes. The CB issue this week has highlighted how overcommitted a lot of families on relatively good incomes are struggling to make ends meet - and often personal debt in the form of loans, cards and hefty mortgages are cited as the reason. If they're struggling, what must be happening elsewhere?

My with-hindsight feeling is that, totally aside from failing to regulate the activities of the banks... the last government actively encouraged the explosion of personal debt that is now crippling so many by whipping up an atmosphere of 'things can only get better'. It's been 15 years since the last recession but they do come around eventually. Lenders behaved abominably, but it was also irresponsible of the last government to put it around that recession was a thing of the past.

Yes, banks wreaked havoc. But maybe it was also irresponsible of people to borrow loads of money beyond their incomes and not consider what would happen when interest rates went up.

Yes they may have been irresponsible but when they are bombarded on an almost daily basis by credit card companies telling the person they have been pre-approved with 0% for the first 6 months etc etc etc. It is easy to see how they fell into the trap, because that what it was. A cynical marketing ploy by the banks and credit card companies to lull the unsuspecting into getting their product. In a climate of boom and things can only get better, is it any wonder?

I don't think that it is the fault of any govt that people borrowed beyond their means. the credit was available and people took it. People like to have stuff. Thatchers years were famous for conspicuous consumption and "greed is good" as a flipside to everything else that was going on.

Overcommitted on mortgages - house prices have gone through the roof, rental is as expensive as a mortgage. For most people they have one debt, but that debt is a huge debt to their mortgage company. There wasn't any alternative but to pay up really, you get to an age / family situation where it becomes ludicrous not to have a home, and people have to stay where the jobs are.

Like the war in Iraq, this credit crunch, what has gone before - none of it would have been any different if the other mainstream UK party had been in power when they happened.

I mean look around Europe - quite different political systems between countries and with different "flavour" people in power - same outcome (to a greater or a lesser extent) all over the place.

We would be in exactly the same place if the tories had been in power for all that time, WRT the crunch.

Totally agree. DH and I spent the boom years of 2000 to 2007 pretty skint thanks to business failure, paying off debts that brought, maternity leave and tuition fees. Often felt a bit at how "loaded" our friends on relatively modest incomes seemed to be based on the cash they were splashing about during those years. All borrowed of course - biggest source of which was cashed in equity on their homes.

The structural deficit began in 2000, well before any international aspect of the credit crunch. Our position when that hit would have been VERY different had we been under an administration that did not run a deficit budget. It was definitely a Labour choice (selling off the gold reserves didn't help either).

Iraq war is rather a non-sequitur in this thread, but it was potentially avoidable - other countries chose not to support/participate. There was nothing inevitable.

You don't think governments set the tone of an age? Conspicuous consumption might have characterised the eighties but it wasn't (as far as I remember) financed through personal credit - more financed through the big reduction in personal taxation which left a lot more money in the back pockets of those in work. Harry Enfield's 'Loadsamoney' catchphrase wasn't 'look at my Access card' :) And it was polarised, of course. With massive unemployment in the early days, some remember the eighties as a time of plenty - others as a time of want.

I think the Labour government's 'Lady Bountiful' tendencies with the public purse contributed to a more universal feeling of entitlement. Add that to things like the Big Brother, X Factor, 'anyone can be a celeb' idea and you've got a really toxic 'I want it now' mix of borrowing over saving

Look at the culture now by contrast. People are paying off debt as fast as they're able. They're going another year or two without the new sofa. Shopping at Aldi is trendy. To be conspicuously wealthy is incredibly non-U.... And if that's not influenced by the politics of the day, I don't know what is.

Globalization and the free market economy is the cause, the last government did not manage the economy. Under a capitalist model, it is impossible to manage the economy.

Individuals have borrowed more than they could afford, who can blame the ordinary people from aspiring to the riches that their production has created.

The country's position would have been different as to the deficit under a different government, but I do think that the people who spent money they simply didn't have would have done so (influenced by magazines, television etc) anyway.

What will happen when we pay off our debts and start saving? If we don't spend, spend, spend then people will loose their jobs.

I don't know about you but I tend to buy stuff because I need it, rather than to keep someone in a job.... Having said that, interest rates are so pathetic at the moment that there is no good argument for salting away too much money.

I won't be buying anymore or less regardless of the overall economic climate. I have always, mended, recycled, bought antique or just plain old shabby 2nd hand. This applies to everything other than food and kids shoes in our house!

I am worried about world poverty though. I can't see how it can be ok for Goldman Sachs to set a price for crops from poor farmers, the price stays regardless of good/bad crop in any years. Banks are now threatening food security and causing world poverty. This and the last government seem powerless to stop this madness. Or are they? Seems that democracy and economic management are just window dressing. The real economic desissions are not in the hands of politicians. After all who pays into the party coffers?

Yes of course the govt sets the tone of the country - which is why I said that if we had been under the tories for all of this time it wouldn't have made no difference to the borrow and spend of the last decade or so, or the subsequent global credit crunch.

I mentioned the Iraq war as something else that would have happened if the conservatives had been in power.

Some of the big stuff will happen whichever side are in power at the time. Are people suggesting that a conservative govt would have regulated banks and stopped them offering easy credit? Of course they wouldn't. And people would have taken it, whoever was in charge.

i think stuff like this (the really big global stuff) goes beyond the (mainstream) political.

Gawd was istening to DD and got distacted.

Re the tone - yes of course which is why i referred specifically to the credit crunch in my post. Lots of other things would be very different.

The borrow and spend was referring to individuals. I remain unconvinced that the tories would have reined in during the good times - I think they would have shared the prosperity in different ways (tax cuts etc).

Things are most certainly NOT going to get better if you are planning on going to university in the next few years... unless of course you are the kids of Cleggeron and Osborne.

ISNT: the Conservatives did not run a deficit budget (and neither did Labour in the first 3years when they promised to adhere to Tory budget plans - that changed sharpish in 2000). There would not/not have been spend and borrow, as the Conservatives did not plan budgets like that.

Personal over-extension really came in to its own with the boom in the early 2000s - that's when the vast multiple mortgages started appearing. That was probably following the US late 1990s move into sub-prime mortgage lending - globalization is a factor here.

You're right: personal over-extension is at heart a matter for individuals. But UK as a whole could have withstood the fall-out from banks, companies and individuals getting it wrong had it itself not had a debt-addicted, deficit laden administration.

I read this morning that Clegg has visited the London Oratory. The same catholic school Blair sent his sons to. A selective school. Bloody great, one rule for them, one for us.

But how can anyone possibly know what a conservative govt would have done when v cheap credit was dangled in front of its nose. There are plenty of things that tories like to spend money on - army/defence, tax cuts and breaks, incentives for businesses to set up here etc etc.

You can't know that things would have been particularly different.

Sub-prime Mortgage market created by Golman Sachs, packaged up and sold onto the ordinary high street banks. I don't think the coservatives could have seen this coming any more than labour.

Globalization and the free market economy rules the world, political parties, democracy, elections, all window dressing to keep us compliant.

Labour has effectively created a dependent client state over the past 13 years.

It artificially suppressed unemployment through the mechanisms of increasing public sector jobs and uni education. It encouraged consumption by pushing public sector pay and pensions out of line with inflation and providing benefits (tax credits, HB) to families already earning more than the average household income.

The combination has pushed up the cost of living (house prices, rents) making the UK far less competitive. It has left swaths of uni grads with large debt and no graduate jobs. Its created a huge structural deficit that is now made worse by the cyclical impact of the global downturn.

A large proportion of the country is now so dependent on the state that its very hard for them to change.

Did Labour do this deliberately in the knowledge that the state junkies they created would have to vote Labour? Perhaps.

I wonder if the torries are prepared for the huge rush on welfare payment.
They can make cuts to the benefits paid to each family, will these saving not be offset by the increase in claimants?

Less money in my pocket, means less demand for goods to be produced, equals no demand for someones labour. The less we spend, the less job security for someone else, here and abroad.

The Tories are already backing away from cutting back as much as they initially wanted.

Retrenchment of public sector workers costs a fortune in redundancy payments due to poorly designed contracts. Cuts are also going to damage aggregate demand. It's very questionable whether the private sector can really offset the damage.

That's the problem with addiction to debt. The withdrawal symptoms might hurt you as much as carrying on with the spending spree.

But if we do cut back at least it'll be us taking the pain, rather than carrying on borrowing against our children's future.

Let's wait and see on that shall we Siasl.

They are backing down a bit. Are they surprised by the response to the child benefit proposal or have they seen the light. Some economist are saying that we are headed into a double dip resession. Maybe Osbourne and Co have realised that the private sector will not grow and employ redundant public sector workers in the near future.

They have not seen the light. They will do that "burying bad news" thing that they are doing already. So the speeches referencing benefits cap was pushed aside as everyone talked about child ben. The budget they put about it was going to be awful and then they didn't do much (I was a bit about it TBH) so everyone is so relieved they forget to look at the detail. they are doing the same with this spending review.

They have seen the light? Hahahaha seriously this is all ideologically driven. This is what they would be doing even if there were no recession / defecit / etc.