Monday, November 01, 2010

It's an ill wind...

(Please click on pictures to enlarge.)

Jesse's sidebar links to a website that shows national indebtedness, e.g.:

But this needs interpreting in the light of money owed both ways (the net international investment position, or NIIP), e.g.:

Recent ONS statistics show that as our pound and stocks devalued, our NIIP improved (if that's an improvement):

... so what counts as good news, and how badly-off are we?


Sobers said...

The trouble with the Net debt/asset position is that the debts and the assets are not equally distributed. If company A has massive debts, and company B has almost as much cash, company A will still go bust if it can't service the loans, despite the net position being close to zero. Equally if you have no mortgage and your neighbour is in negative equity, it doesn't mean he won't lose his house if he can't keep up the payments.

The UK has massive amounts of debt, predominantly in the private sector (though the public one is working hard to catch up). If the holders of said debt fail to service it, they will go bust/bankrupt/be reposessed however many assets their neighbours/competitors have.

James Higham said...

Yes, overall stats are only of limited value because of that individual bust factor.

Sackerson said...

Thanks, Sobers, puts it into perspective.

James Higham said...

From today's post:

Sackers tries to find a silver lining:

Recent ONS statistics show that as our pound and stocks devalued, our NIIP improved (if that’s an improvement).

Yes, Sackers but that relies on money owed, not money actually paid and as peanuts trickle in, they’re overwhelmed by all the foregoing. With the Fed and FOMC in those hands and China beginning to own the economies, let alone the foreign owned micro-economies you alluded to here, then what position are we really in? The City has always both owned the Fed and suffered any major storms from across the Atlantic, almost as if we’d been there.

More than once, this has been sheeted home to the “stage-managed incompetence” of the Fed, which we see in full cry today. What happens when not just a storm but a tsunami sweeps the world as a result of the series of events QE2 is about to set in motion?

Then there is the unevenness of the area of the debt, as Sobers said.

Wolfie said...

Rather assumes your creditors can pay, will pay.