Back in the seat today after a whirlwind 10 days as part of the UK promotion of Juggling Dynamite just released there last month. Thank you to my Irish cousins for their warmth and hospitality as we made our way around the country with a lot of fun and a little Guinness all at the same time.
The old country is a world away from our young cities and towns in North America. It is nothing to have lunch in a pub that has been serving patrons for 500 or 600 years.
For me such visits always prompt a natural reflection on how the world has changed over the centuries and yet how, in many ways, humans are remarkably the same.
Of particular interest this visit was our first hand glimpse of the UK realty and credit markets and the country's economic prospects heading into slowdown 2008. The pound like our Canadian dollar has always been strongly core elated with the ebb and flow of global demand each business cycle, and like Canada, the UK economy has benefited heavily during this latest expansion 2002-2006. Now they too are starting to see that some of this cycle's gains will be fleeting. Not so commonly mentioned about the UK in recent months, is that its debt to equity and debt to GDP ratios are now in several metrics even worse than those in the United States. Over the past couple of years, UK residents had also forgotten about the realities of financial risk and the danger of money owed on credit. Now that the UK realty markets are in decline, soaring inflation and declining consumer spending are the familiar threats of the day.
Incidentally, the UK like much of the rest of the western world, is also suffering from an epidemic of obesity and, perhaps most regrettably, in their young people. The average person is literally burying themselves alive in mountains of refined carbohydrates, white breads, cakes, pastas and potatoes. All the while physical exercise has become almost obsolete. The exploding toll on the public health care system almost defies calculation. The health crisis in the western world is truly a related phenomenon and by-product of the cult of insatiable consumption which has swept our world in the past several years.
If there is an upside to these worldwide themes, it may be that we may have finally hit the wall for a while in our ability to consume. The past several months have seen consumers depending more and more on revolving credit cards to try and prop up their buying habits. This is obviously a short term prop that cannot go on indefinitely. In November credit card debt in the US jumped an incredible 11.3% in one month to an all time record now of 2.51 Trillion dollars owing. And all of this is above and beyond the record trillions now owing in mortgages. See Credit Card Debt Soars. Notwithstanding the dramatic spike up in credit card debt leading up to the Christmas shopping season, retailers (pretty much worldwide) reported December 2007 recorded the worst sales in 5 years.
Less spending and less eating really are key to restoring the financial and physical health of the western world. In this sense I believe that slowdown 2008 will ultimately (although undoubtedly with interim economic pain) be a step in the right direction.
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