BRITAIN ON THE VERGE OF BANKRUPTCY – In the last 50 years alone the public debt has continued to rise and now at epidemic proportions the British people need to re-examine their values or face a bleak future as never been seen before.
It was no secret that the last Labour Government left Britain under the mountainous debt of £700 billion of which the coalition Government have been trying to amend through the austerity measures and tax hikes; they’ve even tackled, albeit around the fringes, welfare.
Despite these efforts it is expected that our national debt will continue to grow and within five years David Cameron would have added a further £700 billion to our national debt; resulting in a staggering national debt of £1.4 trillion.
How does David Cameron’s coalition Government compare to the last Labour Government? The reality is that Tony Blair added £150 billion to the national debt whereas Gordon Brown further increased this by £250 billion.
The figures therefore clearly state that in the 11 years of the Labour Government rule it added £400 billion to Britain’s debt whereas David Cameron will, by the end of his fifth year in power, have added £700 billion.
With such a mountain of debt hanging over the public it is almost certain we are heading for a financial meltdown that could be significantly worse than those of other countries including Greece, Italy, Spain and Portugal.
What makes Britain different from other countries that have been declared bankrupt, such as Greece, Italy, Spain and Portugal?
The answer is that Britain hasn’t yet collapsed but that in no way should indicate that Britain is immune from bankruptcy.
When the countries above finally went into financial meltdown their national debt, that is money borrowed against their national income was staggering; in fact the following figures show you just how bad things got:
Country National Debt
Looking at the figures it is almost unbelievable how any country could sustain that level of debt; and indeed they couldn’t which resulted in an economic meltdown, riots on the streets, people being thrown in to abject poverty and finally being bailed out the other EU member states.
It all appears like utter madness and you are no doubt asking yourself how any Government could let debt spiral out of control to such a degree.
So what shape is Britain in?
The one piece of information that you won’t hear any politician reveal is the state of Britain’s national debt. If you think that the countries above showed no signs of restraint, in terms of what they borrowed, then it will come as a complete shock to realise that currently Britain’s national debt stands at a staggering 508% – yes a national debt that far exceeds any of the above countries in which their economies collapsed.
When we look closely at the national debt that Ireland accumulated of 663% and how their housing market plummeted by over 50% we could well of witnessed the future of Britain and nobody is completely sure when the economy will collapse – the only thing that is certain is that it will crash if borrowing is not brought under control.
You might actually be breathing a sigh of relief knowing that Ireland’s economy collapsed at 663% of its national debt with the idea that Britain currently at 508% has some way to go.
Unfortunately Britain’s national debt is only part of the equation. If you take into consideration promised payments and obligations, such as public sector pensions, then this debt swells to over 900%. Yes, Britain owes a staggering 9 times what its economy is worth.
If anyone is under the illusion that Britain is still a world power then they are completely and utterly delusional for the Treasury is not only empty it being kept afloat by accumulating more and more debt.
About now you’ll be asking why Britain hasn’t followed in the footsteps of Greece, Spain, Italy and Portugal; the answer to that lies within the current interest rates.
Currently interest rates are at their lowest for the last 30 years and it is only the cheap borrowing that has allowed Britain to stay afloat by being able to pay the interest on the debt it has accumulated.
So what would happen if the interest rates were to rise? There is no issue of ‘if’ it is more a case of ‘when’. Interest rates historically rise and fall and the next rise will almost certainly push Britain over the fiscal cliff.
When this time comes Britain will be forced, as with the other countries that have collapsed, to go running to the EU for a bailout – it is probably one of the reasons why the Government doesn’t want to pull out of the EU; it could well be the only chance Britain has of being bailed out.
We suspect that you are probably shaking your head and wondering how on earth could Britain, once the most powerful and richest nation on earth, ever find itself saddled with so much debt that a collapse would threaten its very existence and the way of life as we know it.
The Beginning of the End
It’s time for a history lesson and one that is vital in understanding how Britain has managed to sink so far into debt.
In January 1909 the British Government devised a plan to redistribute taxes for people in their old age. This was the birth of Government Pension Plan and one that would set Britain on a course to disaster.
There are many historians who will tell you that this was the birth of the welfare state and something that would eventually plague British society.
When the Government announced the birth of the pension scheme it was met with rapturous applause from the public – this was a time when the Government appeared to care about its citizens and therefore the pension plan was greeted with overwhelming public support.
Looking back at the Governments pension scheme it wasn’t actually a bad idea and in fact cost the Government very little as legislation was enacted so that only those over the age of 70 would be eligible – the average life expectancy of a working man in 1909 was just 48 years of age and therefore little money was every really handed out.
Another factor to the Governments thinking at the time was that Britain indeed had a booming overseas income from its Empire; the crippling cost of World War One had not yet come about and with the economy continuously on the rise nobody really thought that Britain’s economy could ever be harmed.
After the Second World War welfare became far more widespread and was seen by Government as a way to win over the peace and therefore retain a civilized society – the last thing the Government wanted was to fall foul to the ideologies of fascism or socialism.
There has never been, in all political history, anything more effective at winning public votes in an election that promising to provide welfare to the people – something politicians quickly latched onto and as a result set about a chain of events that is now almost impossible to break.
From Cradle to Grave
Essentially the welfare system that is in place today takes the average citizen from cradle to grave and yet few of us have ever questioned the morality of welfare let alone the costs.
We’re quickly approaching the 2015 General Election and already we are seeing signs of what will be the individual party’s manifestos.
Listen carefully to what is being offered and you will quickly realise that most of it is welfare related.
Yes the current Government has and intends to reform welfare but what they take away with one hand they will give with the other so that voters don’t abandon them at the ballot box.
A good example of this is David Cameron’s ‘Earn or Learn’ scheme in which unemployment benefits are to be significantly reduced or indeed removed if those on unemployment benefit do not either go back into education or refuse to accept unpaid community work in return for their benefits.
Yes, something has been taken away but to counteract this and soften the blow David Cameron also announced the ‘Help to Buy’ scheme in which banks will be forced to provide mortgages to first-time buyers with a deposit of just 5%.
The Government intends to provide a ‘guarantee’ of 15% of the purchase price to the banks so if a homeowner defaults they will only have lost their 5% deposit. So who pays the 15%? The answer to that is obvious; the taxpayer for the guarantee will be paid by the Treasury.
Counting the Cost
Welfare, in its most basic form, is not a bad idea. Unfortunately the public expected more and more from successive Governments and the only way to secure the public vote was to increase the number of promises on welfare.
This very ideology took the British public from a working nation to a nation of entitlement which has culminated in the vast debt Britain now has.
Telling the Truth
It is both amusing and sad to watch the British public call upon its politicians for the truth for whilst they think they want the truth those in Government are fully aware that nothing could be further from the truth.
Britain has developed into a nation whereby their citizens demand that the Government provides for its every need without ever considering the economical consequences.
It is time the British public realized the cold hard truth that any attempt by the Government to control spending by reducing welfare often results in out-breaks of rioting and violence.
Look back to the days of Arthur Scargill and the Coal Miner Strikes that plagued Britain. At the time Margaret Thatcher was labeled as the devil reincarnate and yet the cold hard truth was that the coal industry was costing the taxpayer an unsustainable amount of money to keep operational.
Yes, this is clearly just another form of welfare where the people expected the Government to sustain jobs regardless to the cost to the economy.
The Bones of Modern Welfare
The introduction of the State Pension was only the beginning of the end. Roll on over 100 years and we now not only have an aging population but people are also living much longer.
Our aging population is now putting a massive strain on the NHS; yes another welfare system and one that teeters on the brink of the abyss year in, year out and yet any move by this or any other Government to alter the way it is run would be met with a furious response by the public.
The cost of running the welfare system today runs into the billions. It is interesting to note that when the British Empire was in full swing in which we controlled a quarter of the planet it was run by a total of just 4,000 civil servants.
Yes, a total of just 4,000 people were responsible from managing one quarter of the planet and yet today the Government employs nearly 500,000 people to run what is little more than an island run and dependent on welfare.
Is there a way out of the debt?
Many experts believe that Britain is now too far over the edge to save it. Our problems are exasperated by Foreign Aid, the EU and the influx of foreign immigrants that simply want a handout.
It’s not just the fault of others, indeed when you look closely enough the problems we face today all have been created through our own inextricable belief that our Government is here only to provide for our needs.
If, and it’s a big if, Britain is ever to stand a chance to avoid a complete financial meltdown then the public needs to start taking responsibility for what has transpired and wake up to the unavoidable fact that welfare doesn’t work.
As hard as it might seem we will have to seriously consider privatising the NHS, drastically reducing family allowance, unemployment benefit, child benefit and indeed every other aspect of our welfare system – some feel that welfare must be eradicated altogether if Britain is to stave off bankruptcy.
How bad will it get?
This primarily depends on how interest rates rise in the future. These could in fact rise marginally over time therefore slowly but surely asphyxiating the economy.
The worst case scenario is that interest rates will rise suddenly making it impossible for the Government to keep up with interest payments on the debt; therefore defaulting.
This is turn would cause a panic on the London Stock Exchange sending ripples around the globe – those institutions that currently hold Britain’s debt will in turn then demand payment and such a scenario is not only possible but some feel inevitable.
When this does happen you can forget any form of welfare – there simply won’t be any money. A financial meltdown will also result in tens of thousands of business going bust; putting the population on the unemployment line.
If you know anything of history then look at the 1930’s recession in the U.S – this will be a walk in the park compared to what Britain is facing.
If you are one of those people who has managed to save over the years your money will be instantly lost as the Banks scramble to repay the debt on the Government bonds they hold. Even if you could get your hands on your money it is certain that hyper-inflation would have set in making your money worthless.
Think post-war Germany when it was cheaper to paste money on the walls as decoration than it was to buy wallpaper – this is just a glimpse as to how bad things will get.
For those who have a mortgage this will be a time of financial devastation like you have never witness. As the economy goes into free fall the housing market will collapse along with rising interest rates. You home, your investment, will sink into the depths of negative equity and selling any home under these market conditions will be simply impossible.
The most devastating aspect will of course be the breakdown of social harmony – we witnessed this with the riots in Greece and other countries that went bankrupt.
All a little too far fetched
There are no doubt many who will consider our assumptions as nothing more than fantasy and that the British economy could never collapse – of course in the early 1900’s there were those who thought any decline in the British Empire was complete folly.
If you are one of those who thinks this whole scenario is simply ridiculous then we suggest you take a history lesson. Do a little research on Argentina and you will quickly determine how a once rich nation can change so quickly when Government borrowing becomes uncontrollable. History therefore clearly shows just how quickly fortunes can change and in the wake cause civil unrest on an unprecedented scale.
If you need further evidence then look back to Britain in 1976 when Jim Callaghan’s Labour Government were humiliated in to having to ask the International Monetary Fund to bail out Britain.
Again this was the result of uncontrolled public borrowing and yet despite this fact we seem to have forgotten the lesson.
“We used to think that you could spend your way out of a recession and increase employment by boosting government spending… I tell you that this option no longer exists; and so far as it ever did exist, it only worked on each occasion by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.” Jim Callaghan’s, British Prime Minister, Labour Party, 1976.
You really would have thought that such a statement coming from a fierce supporter of socialism that successive Government’s would have learned that you cannot spend your way out of debt.
The time, if there is any, is now upon us. We must at all cost acknowledge that the welfare systems of Britain simply have no place in modern society at the current levels and certainly our perceptions of ‘entitlement’ must be eradicated.
We must now do what is necessary which is to finally ask our Government to tell us the full truth, face up to it and then allow them to take measure to reduce spending and the accumulation of debt.