Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bankrupt Bailed Out Banks Bankrupting Britain as Debt Soars

Economics / UK Debt Sep 22, 2009 - 01:22 AM GMT

By: Nadeem_Walayat

Economics

Best Financial Markets Analysis ArticleBritain's debt as a consequence of bailing out the banking sector continues to mushroom towards unprecedented levels as the amount the UK government borrowed for August 09 came in at an eye watering £16.1 billion, already at 65.3 billion for the first 5 months of the financial and heading for £185 billion for 2009 as the original analysis of November 2008 warned of (Bankrupt Britain Trending Towards Hyper-Inflation?).


UK Public Sector Net Debt is on track to achieve the projected £185 billion for the calendar year 2009 or an eye watering 14.6% of GDP with little sign of any government attempt at closing the gap between revenue and spending this side of the General Election and therefore is in line with my analysis of May 2009 of the Labour delivering the next Conservative Government a Scorched Earth Economy.

Bankrupt Banks Sparked Depression Bankrupting British Tax Payers

The tax payer bailed out bankrupt banks have been busy rebuilding their balance sheets by over charging retail customers penalty interest rates as the gap widens between rates charged for mortgages of 4.5%+ against the base rate of 0.5% and the interbank rate of just 0.57% which gives the banks a huge profit margin and is a sign of the near total collapse of market competition between the banks which are getting fat on tax payer cash and returning to paying out obscene bonuses which is the reason why the Labour Government deserves to be thrown out of government at the next election for total disregard for the electorate.

Meanwhile the tax payer liabilities continue to grow as I have warned several times over the past 12 months in that total liabilities are growing from £1.75 trillion at the end of 2007 to more than £3.9 trillion by the end of 2010 as a consequence of the £1.5 to 2 trillion of liabilities of the bankrupt banking sector being ceremoniously dumped onto the tax payers in addition to the public sector deficit spending of £600 billion over 3 years in the lead up to the next election on which the country will have to pay interest which worsens the fiscal situation during each subsequent year hence the risk of an out of control debt spiral and inflation.

Way back in April 2008 when the Bank of England first gave tax payer cash to the banks, I warned that this could eventually lead to a loss of as much as £200 billion to the tax payer, a huge sum of money by any measure, however now collectively Britain could stand to lose as much as £500 billion to the banks, that can only be covered by printing even more money to monetize the debt and hence leads to inflation and probable investors balking at government debt issuances.

Therefore we are looking at £600 billion of deficit spending PLUS £500 billion of bankrupt bank losses leading to a near tripling of Britians debt towards 120% of GDP, whilst total liabilities project to more than 350% of GDP.

UK Debt Fueled Economic Bounce

UK GDP contraction has hit the target low of -4.75% on an annualised basis in the second quarter which suggests continuing recovery in Q3 and Q4 that signals that the UK economy remains on track to be out of recession by the start of 2010 with probability favouring Q3 being positive at +0.3% and Q4 in the region of of +.6 as per the analysis of June 2009 (UK Economy Set for Debt Fuelled Economic Recovery Into 2010 General Election) which is marginally ahead of the original forecast of February 2009, and compares against the OECD which appears to be way off the mark-

Telegraph - 3rd Sept 09

Britain will be the only major economy not to return to growth by the end of the year, the Organisation for Economic Co-operation and Development (OECD) said yesterday as it downgraded its 2009 forecast for the UK

He said the OECD was actually slightly less gloomy about the UK than it was in June, when it expected the UK economy to contract by about 0.4pc in the third quarter of this year. It now expects a smaller fall of 0.25pc. It was predicting a fall of about -0.1pc in the final quarter of the year, it now predicts flat growth.

Whilst the OECD and other mainstream organisations / press have been busy in recent months revising their economic forecasts, my forecast remains the same as per Feb 09 and continues to project towards post general election tax hikes and deep public spending cuts that will in my opinion trigger a double dip RECESSION, even DEPRESSION 2011 to 2012 as illustrated by the graph.

To find out what I expect to transpire over the NEXT 10 years subscribe to my always free newsletter to receive this in your email box.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-09 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in