Bank of england says uk in a great depression

Discussion in 'Economy' started by Neubarth, Mar 16, 2009.

  1. Neubarth
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    Neubarth At the Ballpark July 30th

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    BANK OF ENGLAND SAYS UK IN A GREAT DEPRESSION


    Britain is showing signs of sliding towards a 1930s-style depression, the Bank of England says today for the first time.

    The country is displaying early symptoms of being trapped in a so-called “debt deflation trap” where families find themselves pushed further and further into the red every month, according to a Bank report published today.

    The stark warning will cause serious concerns, since it was this combination of falling prices and soaring debt burdens that plagued the US in the 1930s.

    Britain showing signs of heading towards 1930s-style depression, says Bank - Telegraph

    The Bank is using its Quarterly Bulletin to highlight the threat posed to the economy by deflation – where prices fall each year rather than rise.

    Although inflation is currently in positive territory, it is expected to become negative in the coming months.

    The Bank is worried that this may combine with high levels of indebtedness to squeeze families further.

    It says that families with high debts could fall prey to the debt deflation trap. This means that the cost of their debts, which are fixed, would rise compared to average prices throughout the economy. While inflation erodes debts, deflation makes them relatively higher.

    The Bank’s paper suggests that Britain is particularly at risk because there is a high proportion of families with significant levels of debt, and many of them are on fixed mortgage rate, which means they will not benefit from rate cuts.
     
  2. Terry
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    Terry Shut the $%$ Up!

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    Well I would think in America many households with a lot of debt that are able to pay their payments now but if it gets worse here..how many will file Chapter 11? I see a big rise on Chapter 11 here in America.
     
  3. editec
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    editec Mr. Forgot-it-All

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    Screw the Brits.

    They ALWAYS think they're great. Hence their naming themselves "GREAT Britian".

    It's not all that great, now, is it?

    Besides, our depression is greater than their depression.



     
  4. wimpy77
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    wimpy77 Member

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    europe and asia are just now starting what he have had to deal with since last year.
     

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