I read a great piece in the Times Online regarding the impending (arrived) financial woes about to befall the UK along with the rest of the world this week and the knock-on effects that’s bound to have on the country’s economy.
This was the paragraph that really got my attention, from HERE
The economy is false. The economy is a lie. The economy is a fictional set of numbers cooked up during a boom period that is almost over, and six months from now nothing will add up.
Now I’m no master economist or anything but I have been telling anybody who would listen this exact same thing for the past 5 years. It should have been blatently obvious to anybody what was going on. From the Independent Online
UK borrowers account for one third of unsecured debt in western Europe. On average, a Briton has twice the debt of a European
Total consumer debt in the UK is at a record £1.3 trillion
New debt last year came to an unprecedented £215bn
Citizens Advice faced 1.25 million new debt cases last year – the figure is rising
I sold up my last property, my 3rd one, in 2006 because for the past 3 years I had forseen this coming, and frankly never thought it could take as long as it has.
It had just gotten into profit again and would let me out with about what I put into it 2 years before. It probably made the next buyer another £30k inbetween then and now..
..but did it?
Its very likely that property will soon be right back where I sold it at, and with rising mortage and ever decreasing chance of getting out without a heavy losses.
The only surprising thing about the financial scythe that is about to slash through British life once more, is how long we managed to prolong it’s arrival for.
The economy it would seem has been funded by credit, and by an illusion of property ownership equating to never ending profits. People looked at the alleged values of their houses, and wondered why if they are so well off, they can’t afford to go out for a meal, or put petrol into their financed BMWs to go out for the day..
“After all the house has gone up £100k since we bought it, we have loads of money, we just need to liberate a little of it from the bricks around us and we’ll pay it back later…”
The skyrocketing rising property prices have in most part been due to:
a) the banks willingness to up the mortgage ceiling over a few years from 3x single salary (or 3.5x joint) up to a whopping 6x single and the return of 100% mortgages again. (try and find one now)
b) super easy availability of credit, as always in the times that cause the trouble to come.
Just before I bought my first house in 1989 my friend and I got one of the very last 100% mortgages available and got locked into negative equity for about 5 years that time round.
The insane cost of living in the UK these days is a combination of everyone living on credit, based on (theoretical until you sell) house price rises and thinking they are richer than they actually are because of it, and hence can afford that stuff I want, I’ll just stick it on the old plastic.
But what comes now is the realisation for many that if the job goes, the next one may not be so easy to find, “the mortgage is huge, and I couldnt even sell the house for what I bought it for a year ago…”
“How am I going to pay for all this shit I don’t even need?”
Well I hate to say I told you so, but I fucking did, for years and years.