The Guardian Unlimited reports ("Fears grow for British economy as panic over Northern Rock spreads") in tomorrow's edition that:
"US Treasury Secretary Hank Paulson flies in to London tomorrow to discuss the worsening global credit crisis with Chancellor Alistair Darling, as fears intensify that the lending squeeze could be the last straw for Britain's buy-now-pay-later economy."
What is Mr. Paulson going to advise? He represents the world's leading buy-now-pay-later economy. Our economic growth has been predicated on debt for years. It's how we sustain the illusion of middle-class expectations and upward mobility. You get to pretend you own stuff and that you have earned stuff, in exchange for accepting all sorts of systemic injustices and thwarted opportunities. It's our national devil's bargain.
What can the British possibly learn from us? Perhaps Mr. Paulson will advise how to calm the sensibly alarmed Brits with some rhetorical strategies tying economic stability to consumer spending and attitude.
Even now, credit card companies are ramping up sales pitches to subprime borrowers, while cutting back on offers to good credit risks.(source) They can make so much more on people who carry a balance and accumulate late payment fees. In this financially twisted environment, it's good business to lend to people who have little to no hope of paying back their debts. It's 21st-century servitude to a monstrous and invisible master.
Welcome aboard good people of Britain. Teach us that panic may be a reasonable response to fiscal irresponsibility.
Showing posts with label Britain. Show all posts
Showing posts with label Britain. Show all posts
Saturday, September 15, 2007
Brits have a bank run
What is the a logical outcome of unscrupulous mortgage lending practices in Michigan? More foreclosures? Yes. Sagging house values? Yes. Tightening global credit market? Yes.
A good old fashioned bank run in Britain? Well, by extension, yes. The bank's problems are blamed on the ongoing global credit crunch that has its roots in subprime lending in the U.S.
BBC reports today that over the last two days, Northern Rock customers have queued up and waited for hours to withdraw funds from bank locations across the country.
"Banking sources suggest that on Friday alone clients pulled out £1bn - or 4-5% of retail deposits."
That's $2 billion in one day.
A good old fashioned bank run in Britain? Well, by extension, yes. The bank's problems are blamed on the ongoing global credit crunch that has its roots in subprime lending in the U.S.
BBC reports today that over the last two days, Northern Rock customers have queued up and waited for hours to withdraw funds from bank locations across the country.
"Banking sources suggest that on Friday alone clients pulled out £1bn - or 4-5% of retail deposits."
That's $2 billion in one day.
Sunday, September 2, 2007
Mortgage Defaults in Britain Create Micro-Markets of Decline
Michigan may be one of the top states for residential foreclosures, but now even the Brits are getting in on the miserable action. This morning, the Guardian reports that Brits are facing "micro-markets of decline." That apt phrase may well describe the real estate situation in southeast lower Michigan and Detroit.
And this sounds extremely familiar:
The Royal Institution of Charter Surveyors "believes the trend will continue in 2008 as interest rates bite for homeowners whose fixed-rate deals have come to an end. It predicts repossessions will exceed 45,000 next year, a figure that would translate into 125 repossessions per day."
Britain's population is about five times that of Michigan, but 125 repossessions per day will affect tens of thousands of families and children.
Adjustable rate mortgages do not help people "afford" homes. Here, as in Britain, ARMs are at the heart of a default crisis. ARMs defer the moment of truth when a borrower must face the real limits of income and expenses, cash flow and variable interest rates.
Even a British accent cannot take away the sting of default and repossession.
And this sounds extremely familiar:
The Royal Institution of Charter Surveyors "believes the trend will continue in 2008 as interest rates bite for homeowners whose fixed-rate deals have come to an end. It predicts repossessions will exceed 45,000 next year, a figure that would translate into 125 repossessions per day."
Britain's population is about five times that of Michigan, but 125 repossessions per day will affect tens of thousands of families and children.
Adjustable rate mortgages do not help people "afford" homes. Here, as in Britain, ARMs are at the heart of a default crisis. ARMs defer the moment of truth when a borrower must face the real limits of income and expenses, cash flow and variable interest rates.
Even a British accent cannot take away the sting of default and repossession.
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