Are Western economies beginning to tank?
By admin | Posted in Living | No Comments
The credit crunch that is wiping out the US economy is spreading. It is hitting the UK. The UK is generally 6 months behind anything the US does: cinema, PlayStation release, latest MacDonald’s burger. You get the point. So why is it “tanking”? Basically on several fronts:
Housing prices are massively overvalued: The US has hit Sub-Prime crisis. People have been trading houses like Monopoly shares in the past 4-5 years, completely distorting any perceived value in the face of a quick buck. Now the bottom of the ladder is falling apart, and the top can’t sell, the middle gets stagnation, so the pyramid begins to wobble under its own weight and ultimately crumbles. The central banks simply had interest rates to low for to long…they fell asleep at the wheel.
Consumer spending. Western economies are built largely on credit, customers on average have a few credit cards, some have one for each day, plus several store cards. The UK alone owes over a trillion pounds.
Oil Prices: $100 a barrel.
Banking crisis. Unscrupulous lending practices. Bank of England recently bailed out a major UK bank to the sum of some £54bn. Will this get paid back? Yeah probably through tax.
