A few years ago unscrupulous bankers in America were overselling hedge funds and mortgages. This was big boom time and the markets were really boyant. Suddenly the banks started to crash because there was insufficient funds to keep up with lendings so their was a deficit. What happened was the banks could not fulfill their own debts and banks across the world started to nosedive and the international economy was unsustainable. Some banks had to be bailed out by their governments and that is why we have a worldwide economic recession. There was always going to have to be big savings made but at the same time keeping safe frontline services like schools, social services, waste management. The Labour Government were going doen the road of Kensian economics where by ‘you were spending to save’ or that the government was massaging the markets to instill economic updrive. The sense being that you build new schools, hospitals etc for people to be employed building them and working in them, a sense of massaging the economy. The new government disagreed with this and I feel that making all these huge cuts all at once will head us back to a double dip recession. Sorry its a long answer.
Basically the world debt problem started in America when the big banks began to lend too much money to people for morgages. As the worlds economy began to slow down the banks began to realise that many people couldn’t afford to pay back the money, this problem spread throughout the world and many of the large banks began to collapse. This led to many of the world’s governments having to help the banks to stay in business by giving them huge amounts of tax payers money….it’s a real mess!
We are in debt because when the economic climate was good the Labour Government spent all the money and didn’t save any, so when we had the banking crisis we has to borrow money to deal with it instead of using reserves. Its a short answer but it just about covers it. The moral of the story is don’t spend money you haven’t got and if you really need to borrow only borrow what you can afford to pay back. The Labour government left evryone in the country with the equivalent of £25,000 of debt i.e. £25,000 x 60,000,000 people!
A few years ago unscrupulous bankers in America were overselling hedge funds and mortgages. This was big boom time and the markets were really boyant. Suddenly the banks started to crash because there was insufficient funds to keep up with lendings so their was a deficit. What happened was the banks could not fulfill their own debts and banks across the world started to nosedive and the international economy was unsustainable. Some banks had to be bailed out by their governments and that is why we have a worldwide economic recession. There was always going to have to be big savings made but at the same time keeping safe frontline services like schools, social services, waste management. The Labour Government were going doen the road of Kensian economics where by ‘you were spending to save’ or that the government was massaging the markets to instill economic updrive. The sense being that you build new schools, hospitals etc for people to be employed building them and working in them, a sense of massaging the economy. The new government disagreed with this and I feel that making all these huge cuts all at once will head us back to a double dip recession. Sorry its a long answer.
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Basically the world debt problem started in America when the big banks began to lend too much money to people for morgages. As the worlds economy began to slow down the banks began to realise that many people couldn’t afford to pay back the money, this problem spread throughout the world and many of the large banks began to collapse. This led to many of the world’s governments having to help the banks to stay in business by giving them huge amounts of tax payers money….it’s a real mess!
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We are in debt because when the economic climate was good the Labour Government spent all the money and didn’t save any, so when we had the banking crisis we has to borrow money to deal with it instead of using reserves. Its a short answer but it just about covers it. The moral of the story is don’t spend money you haven’t got and if you really need to borrow only borrow what you can afford to pay back. The Labour government left evryone in the country with the equivalent of £25,000 of debt i.e. £25,000 x 60,000,000 people!
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