This looming crisis is related to the financial crisis of 2007, but it will be infinitely more dangerous. Outgoing Bank of England Governor ‘have a good guess’ Mervyn King- Economist- has urged successor Mark Carney not to spell out how long interest rates will remain low when he takes charge. The low interest rates have as I previously argued creates a false economy, but a economy that can be changed.
The very trillianaires, the tax avoiders, Bankers and speculators which some argue apparently are not the cause of the chaos , always refuse to care and put profits first and people have been way down in there priority list. But apart from these abhorrent groups, interest rates have been at the root of practically every major political argument in this country, and it affects every aspect of the way we live our lives.
Interest rates affect most of us either directly or indirectly. In fact, you will certainly see the consequences of this deep rooted problem unfold across the cities, towns and villages of Britain. No one will escape the fallout and pensioners and those vulnerable are likely to be the most affected. Our system needs to be repaired and much more than that we need to find alternative ways of living and a new system.
The same financial problems that have been tracked from bank to bank, from company to company for more than at least six years, have now found their way into the heart of our financial system which is in disarray. The next phase in this crisis could threaten our very way of life. We know that printing mountains of money – quantitative easing- can only end in disaster. And, unlike most of the presenters on TV and in the mainstream press, some analysts understand what’s really going on, but it is their interests to deceive us.
Of course, the most important part of this situation is not what is happening, but rather what we can do about it. In other words, will you be prepared when this crisis becomes a national emergency, as can easily be predicted. I fear that most people will not know what to do if banks fold and they are unable to withdraw their savings. They won’t know what to do if the stock exchange suspends trading. They will feel powerless, if their pension income dries up or if their home loses 70% of its value. We need to prepare and commence discussions in all our communities. We really do need alternatives to the current mainstream parties, who have made it difficult for others to challenge. Most seem corrupt, but we seem to accept it.
If the NHS is sold off and benefits are partially scrapped, the confusion will turn into rage and huge campaigns. By the next general election in 2015, our national debt is estimated to stand at almost £1.4 trillion. It’s clear: our public finances are in an enormous mess. And to some extent, some politicians will admit it. But add in our financial, personal and private debt and an even darker picture emerges. But more cuts will not solve all this.
Compared to the size of our economy, Britain is now one of the most heavily indebted countries in the Western world. That’s official. Our total debts stand at more than six times of what our entire economy is worth. Proportionally, that’s more debt than Italy, Portugal, Spain and almost twice as much debt as Greece. Those are four countries already in the throes of financial crisis. We’re the odd one out because we haven’t collapsed as yet. But things can’t stay that way for long.
The only countries that have more debt than us are Japan, where the economy has stagnated for 20 years and the stock market has crashed by 75% and Ireland, where the housing market has crashed 50%, and the government has been forced to accept a bailout. It could be said that India bucks these trends, unless you examine the underlying criteria.
That means the most important trend of the next twenty years is almost certainly rising interest rates and the way it affects us all and even those living in a world of denial.
We’re now facing an unprecedented crisis. As interest rates rise, our record debts will become impossible to bear. And what will happen to all those that purchased on a buy to let basis. When these events unfold, very few people will have any idea how to respond. Most will see any assets they have worked all their life begin to lose value, rapidly.
It won’t matter if you have £2,000 in the bank or £500,000. It won’t matter if you own a five bedroom house in Surrey or a one bedroom flat in Chelsea or costed into the bedroom dreadful tax fiasco. This crisis will lay waste to the wealth of anyone who isn’t prepared for it. And prepare we must- profits should not come first!
It’s essential we all prepare for these events. We can’t rely on mainstream commentators to help us. We need to start real debates around the country, to prepare for a new and non speculative system. We can really achieve this, so lets start the debate now.
Ivor Timson 