Thursday, January 22, 2009

The financial crisis in the UK

With the UK financial crisis set to become worse than it is now, I wonder how much the individual is to blame.

During the 60's and 70's, people did not have the debts that they have now. If someone in your street had a new car then the neighbours would look down on them as it was probably bought on the “never, never” or HP as it was known, there was a stigma attached to buying on credit.

The situation is now reversed. People go out for a meal with friends and pay with pride when they produce their gold or platinum credit card. Paying for a meal out on HP would have been frowned upon a few years back.

I hear people saying that because they have a low income they could not survive without a credit card. I would argue that because they are on a low income they cannot afford a credit card! The credit card may allow you to have the washing machine repair carried out at £100 when it breaks down and you do not have £100 to spare, but should it not be the case that you should have saved £10 per month for that eventuality? If you don't then you will need to find £10 per month after having the machine repaired so that you can pay off the credit card, and the total sum paid could be nearer £180 when the debt is settled. This means that the low income family will pay out much more by having a credit card.

There are plenty of documentaries on the UK TV at the moment about people who cannot afford to pay their mortgages, or even afford to feed themselves, but why does the presenter never ask how they can afford to smoke, or how they afford to feed the two big dogs that they own? I cannot understand how someone cannot afford the basics in life, yet they seem to have unnecessary expenditure all around them.

Moron Brown, the British PM seems to have the same understanding of finances. He is borrowing more and more, yet spending small fortunes on wars in other peoples countries. He is pledging money to ailing nations that squander it themselves. Should we send aid to Gaza, who have brought destruction on their people by firing rockets into another country? It could be argued that the devastation there is their own doing.

Is it a good idea for the UK government to let sterling slide? The government keeps telling us that it is good for exports, but then they tell us that this is a global recession, so who will be buying? As the UK imports so much then a falling pound will lead to massive inflation, can this not be seen by the bungling Brown government.


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