Debt is the latest obsession of the newspapers. That is hardly surprising. Journalists tend to write about what journalists know about, and even before the current ten-year credit boom (or Margaret Thatcher's creation of a mortgage-paying democracy) scribblers were almost as well known as any of the professions I have been involved with for debt.
Debt, at a national or a personal level, can be a good thing. Managed properly, borrowing gives us opportunities that we would not otherwise have. However, failing to face the consequences of borrowing, or hiding it from oneself or one's administration, are inevitable primroses on the path to the bonfire.
In the USA, this is all too apparent. The US has been ignoring or obfuscating its growing slow crisis of debt for some time now. The Clinton administration set the country on a repayment platform that could have seen it nearly eliminate its national debt, for the first time since Andrew Jackson's presidency, by 2013. This would have enabled it to fund social security of the minimal US sort or even a more generous scheme for nearly sixty years without one single rise in America's federal taxes, which are low by European standards anyway. It would have also allowed Americans as individuals to borrow more, and if accompanied with regulation would have turned the sub-prime crisis into a poverty reduction programme. Of course, what really happened was that the Bush administration and Congress started spending the money like drunken sailors.
In Europe, states pledged themselves to the so-called Maastricht criteria, where debt would be only 60% of GDP. The UK, which did not join the Euro, agreed to the criteria, and trumpeted its adherence whilst its partners fell behind. British governments congratulated themselves on not being Italy, which at almost any time in history bar about one cumulative century out of the past 3000 years was just silly anyway
Britain's official national debt looks like the graph I have placed above this blog from the national statistics online site here.
However, this figure does not take into account PFI schemes, by which the government funds large and small public spending projects. These involve what is effectively borrowing disguised as investment.
Nor does this figure take into account personal debt in the UK.
Nor, of course, can this figure take into account the lost benefit of, for instance, government mis-spending, the bargain-basement sale of half our gold a few years ago, or currency shenanigans.
When all the figures that can be quantified can be taken into account, UK debt is almost as high as the American, past that of Italy, and borrowing is way above where the official figures say it is.
We need (as I need in my personal life and you may too, unless your are luckier or more sensible than most in this country) to get that borrowing and debt in order. Either we buckle up now, or we face a monumental slump soon. Debt is compounded by interest for states as well as people. It leads to cuts and requires deflation as much as it makes printing money tempting. To an extent, the government here has been doing that by slipping thirty billion into Northern Rock at interest rates lower than those of the market.
Gordon Brown once had a reputation as a competent economic manager. He is going to suffer, as we will all suffer, the consequences of that being proved to be an empty boast unless he and his administration start thinking now about deficit reduction and debt repayment and before the public panic and deflate this economy like the Japanese did theirs in 1990. The only people talking about this, sadly, are the Conservative Party. At any given time, the British Conservative Party should be assumed not to mean a single word it says.