Broke Britain

This is from the Indpendent. Not only many in the US are having trouble but elsewhere the same problems are created for working people from not being able to make ends meet. Easy credit terms and advertising that creates a mass of consumer oriented people certainly helps create this situation. For capitalism to keep increasing production such consumers are necessary. Eons ago Herbert Marcuse wrote about this in books such as One Dimensional Man.


Broke Britain: millions face struggle to stay afloat as financial crisis hits home
By Martin Hickman, Consumer Affairs Correspondent
Published: 02 January 2008
Debt experts are predicting a record number of personal insolvencies this year as excessive Christmas shopping, rising mortgage payments and soaring food and fuel costs force thousands of people over the financial edge and into bankruptcy.

More than nine million individuals in Britain are now believed to be struggling to pay credit card bills and mortgages, with the average owed by problem debtors hitting £30,000.

In alarming figures to be released tomorrow, the accountancy firm Grant Thornton predicts the total number of personal insolvencies will jump to at least 120,000 this year, almost triple the equivalent figure in 2004, when just under 47,000 people went bankrupt.

Insolvency experts say people have been readily loading large amounts of debt on to credit cards and personal loans, despite the economic slowdown.

High-street shops and online retailers reported higher-than-forecast takings in December, while the new year sales have also been busier than expected. One commentator described the Christmas shopping spree as one last hurrah before a tougher 12 months ahead.

Although the economy is still vibrant and employment plentiful, the supply of cheap and easy credit that has revved the economy for years is being turned off as a result of the sub-prime lending crisis in the United States. Fewer mortgages are being granted to people in Britain with poor credit records. Credit card limits are being lowered and personal loans are becoming harder to obtain.

According to a poll conducted by Uswitch.com in November, 38 per cent of new applicants for credit cards and 19 per cent of applicants for new personal loans were rejected, while 6 per cent have had their credit card limit cut. With food and fuel prices also set to rise in the new year, levels of disposable income are likely to drop, deepening the difficulties of those attempting to repay debts.

Those already in debt will find themselves at the mercy of collection agencies more determined than ever to recoup money for clients. According to one industry journal, the coming crisis means that "debt collection agencies will need to adopt more sophisticated methods in order to deliver value back to their clients".

The latest figures indicate that 23 per cent of people – 9.5 million adults – were finding their current level of debt "unmanageable". Although the Bank of England cut the base rate of interest last month, an estimated 1.4 million people will still have to pay more for their home loans when their fixed-rate deals come to an end this year, costing an extra £150 to £250 a month.