A selected excerpt from Mervyn King’s speech last night:
For several years, the UK banking sector has been relying extensively on external capital flows, principally short term wholesale funding, to finance its lending activities. Those external inflows have fallen sharply - a mild form of the reversal of capital inflows experienced by a number of emerging market economies in the 1990s.
Which tallies with the Telegraph story that UK government borrowing is rising at its fastest rate since records began in 1946. And adds to a theme we’ve been noticing here on Alphaville - namely the over-leveraging of Western consumers and governments.
Fintag sums it up like this today:
Consumers are riddled with debt and so are governments. In 1946 consumers had virtually no debt - just hope for the future. This time it is very different. I expect personal bankruptcy to go through the roof and taxes to rise rapidly too. Why do we all believe that debt will help us escape? This is politics of fantasy and debt is what got us into this mess. This is the death of the West. Asia - it is your turn now.
Related links:
Banana Republic of the United States of America - FT Alphaville
An impaired Anglo-Saxon - FT Alphaville
New world (dis)order - FT Alphaville
