This would have been unthinkable just a few years ago. It's really pretty incredible. http://www.nytimes.com/2009/04/15/business/economy/15pound.html?hp Harder-Edged Warnings About Britainâs Economy By LANDON THOMAS, Jr. 46 minutes ago Published: April 14, 2009 Britainâs deteriorating public finances may require the government to seek International Monetary Fund aid. Former employees of the U.S. car-component company Visteon stood on the roof before ending an occupation of the plant in north London on April 9. LONDON â In the dank gloom of the factory floor that he and his fellow workers had just occupied, John Horscroft recalled a time 30 years ago when strikes and industrial unrest in Britain were an everyday occurrence. âIt feels like those days again,â said Mr. Horscroft, who together with 226 colleagues, was laid off when a car parts factory in North London was shut down last month after its American parent company, Visteon, put three British plants into bankruptcy protection. âWe are all together now, fighting for a cause.â As job losses accumulate here and the governmentâs debt burden climbs to fight this recessionâs ravages, Mr. Horscroftâs nostalgia has been joined by harder-edged warnings â from no less a critic than former Prime Minister Margaret Thatcher â that Britainâs deteriorating public finances might require the government to seek aid from the International Monetary Fund, just as it did back in 1976 when the countryâs economy was on its knees. As unlikely as that might be, it underscores the financial bind Britain is in and it represents another humbling comedown for a country that provided the worldâs primary reserve currency for more than two centuries. Speculation that Britain may once again seek I.M.F. assistance â and become the first major western European country to do so during this crisis â rests upon a crucial, uncertain assumption: that the combination of its steep debt and wounded banking sector will bring too much pressure to bear on its currency, the already wobbly pound. The numbers are worrisome. Britain currently runs a budget deficit of 11 percent of its gross domestic product â compared with 13 percent forecast for the United States this year. Analysts say they expect that without severe spending cuts and tax increases, government debt will jump to 80 percent of the overall economy in the coming years from todayâs level of about 40 percent, a ratio that approaches that of troubled economies like Greece and Italy. So far, investors have been willing to finance Britainâs debt at relative low interest rates â unlike the situation in Hungary and Latvia, whose reserves have been drained, leading them to turn to the I.M.F. for support. Last month a failed bond auction in London ignited some fear, but subsequent debt sales have been successful. That could change, according to Simon Johnson, the former chief economist of the I.M.F., if those now holding British assets lose confidence in the governmentâs ability to pay its debts and start abandoning the pound in droves â as they did in 1976. Contrary to some of its troubled European partners like Ireland, Spain and Greece, Britain did not adopt the euro and is thus more vulnerable to a run on its currency. If the situation worsens, turning to the I.M.F. may be the best alternative, Mr. Johnson said. âIf you have a budget problem and a banking problem, the bottom line is that you need to make adjustments,â he said. âAnd an I.M.F. loan can make Britainâs life easier, not harder. They may have to do it.â Mr. Johnsonâs views are decidedly in the minority here and even he considers the likelihood that Britain will face such a situation is remote. Still, he and the financier George Soros â who made $1 billion betting against the pound in 1992 and who has cautioned of a similar outcome â have attracted considerable attention. Their views signal a growing fear that Britain, like some other countries that spent and borrowed from abroad with abandon, might be hit with a bill that it would have trouble handling. Ireland has a deficit of 10 percent of G.D.P. and a banking system that is in worse shape. Greece has the largest current account deficit in Europe at 12 percent of G.D.P. But Britain is the only one with its own currency to defend. The British scoff at the idea that they might need help from the I.M.F. At the Group of 20 summit meeting two weeks ago, Prime Minister Gordon Brown of Britain said his Labor government had no plans seek any such assistance. The 1976 I.M.F. agreement was not only seen as a national embarrassment, it also remained a symbol of a country that, under various Labor governments, effectively lost control of the economy to militant trade unions, resulting in spiraling debts and rampant work stoppages that brought down Britain. So it is no wonder that Mr. Brown would reject any comparison to Britain in 1976. Kathleen Burk, a historian at University College London, one of the authors of an account of the crisis in âGoodbye, Great Britain,â argued that the economic situation today might well be dire but it bore little similarity to the Britain of that period when, as she recalled, even the grave diggers were on strike. While Mr. Horscroft and his fellow Visteon workers may look wistfully to the days of nationwide worker revolts, the numbers tell a different story. This January, the British economy lost seven days to work stoppages compared with a combined 2,966 lost employee-days during the same month 30 years ago, according to the Office for National Statistics. But Britainâs situation will probably to get worse before it gets better. âIt is not that debt of 80 percent of G.D.P. is unsustainable,â said Gemma Tetlow, an economist at the Institute for Fiscal Studies, a nonpartisan research group. âIt is that without fiscal adjustments the debt could grow indefinitely to 100 percent and beyond. And the evidence suggests that the higher your debt,â she added, âthe more your borrowing costs increase.â Still, as the lesson of Britainâs crisis in 1976 demonstrates, good intentions by themselves are not enough to offset a loss of international investor confidence. Before the 1976 agreement, the Labor government of Prime Minister James Callaghan had already taken difficult steps to curb public wages and bring down the deficit, which at 5 percent of G.D.P. was about half of what Britainâs current gap is. But for foreign investors, fed up with years of government excess, this was not enough and they unloaded their sterling holdings, starting the run on the currency that would drive Labor into the arms of the I.M.F. At the time, Mr. Callaghan delivered an assessment of Britainâs finances that resonates even more today. âWe have been living on borrowed time,â he said. âWe used to think you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candor that that option no longer exists.â Then, turning to the I.M.F. was a final option. But now the government is expected to present an especially austere budget to avoid seeking outside aid. âThis would destroy the Labor Party,â said Ms. Burk, the historian. âIt is one thing if you are Hungary or Zambia. But the idea that the United Kingdom is so weak that it cannot support itself without going to the I.M.F. would be system-shaking.â
When you watch British football stadiums are packed. Is this what great depressions look like? 50000 people spending 100£ to watch a game of soccer?
That's why these morons clamoring for European style socialism drive me crazy. These countries that already have this style of government are in just as much if not deeper sh*t than we are. These types of bubbles/corrections/depressions are only made worse by governmental spending and engineering.
Don't make the mistake of assuming that everybody has prosperity as their top value because many (most?) people do not. There is a large group of people in the USA that consider other factors to be of more importance, such as "fairness". In their eyes, a poorer world where people are more equally miserable is preferable to one where everybody is better off, but some are much better off than others.
Not too go too far off the subject here but,what is it with the Brits and bad teeth? It's not just some sort of bad sterotype...its a bad but true stereotype.
You can rest assured that America completely outclasses the UK when it comes to fraud and deception.But our leaders are doing their absolute level best to keep pace with you.The global political class are merely puppets of the elite.Hate to sound like a conspiracy nut,but it is the only way what is happening makes any kind of sense.I would like to hear just one plausable explanation why they are bankrupting the rest by handing our money to the very people who deliberately engineered this crisis. Amazing how AIG are 'too big to fail' but an entire country isn't. Or maybe i have got the whole thing wrong and those nice banker people and politicians are gonna pull out all the stops to make our lives better.
You see, Brits didn't evolve from apes, but rather ManBearPig. Their bad teeth are just one of many distinguishable evolutionary traits. Now, this gives you a whole new insight, not only into their physical characteristics, but also behavior. The following video illustrates my point perfectly. http://www.youtube.com/watch?v=m-J9ZpQYW8s