STOCK MARKET WATCH -- Tuesday, 24 January 2012

[Ghost Dog]

8. It's a Mystery how Britain has kept its AAA rating - Evans-Pritchard, Telegraph

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9031478/America-overcomes-the-debt-crisis-as-Britain-sinks-deeper-into-the-swamp.html

... Britain’s household debt has dropped slightly from 103pc to 98pc since the crisis began. This is not nearly enough to offset the jump in government debt from 53pc to 81pc. "At the recent pace of debt reduction, we calculate that the ratio of UK household debt to disposable income would not return to its pre-bubble trend for up to a decade,"...

... UK Monthly debt payments are a third higher than in the US as a share on incomes, a remarkable fact given that two-thirds of UK mortgages are floating and base rates are near zero. What happens when they rise? Some 23pc of UK households report that they are already ‘somewhat’ or ‘heavily’ burdened in paying off debt.

Mckinsey adds financial sector debt to the total figures, explaining why Britain looks so awful. You could say that this is to mix up apples and oranges, since banks have assets to match their liabilities, but notice the nasty little kicker in the chart below:

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Britain’s banks have $359bn of exposure to the private debt of the GIIPS quintet of Greece, Ireland, Portugal, Spain, and Italy. If correct, this is greater than German exposure (sovereign debt is another story). This is no longer theoretical. Defaults are escalating fast.

Yet even if banks are excluded, Britain still has debts of 288pc, the highest level of any major country after Japan. It is a mystery to me how Britain has kept its AAA rating.

/... http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9031478/America-overcomes-the-debt-crisis-as-Britain-sinks-deeper-into-the-swamp.html


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http://www.debtdeflation.com/blogs/2011/12/31/debt-britannia/
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