Carryfast:
Winseer:
Some schools of economics reckon that the UK is in for a “Painful Adjustment” - something that Greece is a lot closer to actually starting right now than we are.
Painful is in that most of us have forgotten how to behave when poor. The powers that be have decided that you are poor NOT when you have no cash, but when you have little or no access to credit. This explains why a pensioner with £50k in their bank account is pulling what remains of their hair out worrying about tomorrow, whereas Mr Smarmy Pants starting a “suit” job in some office somewhere is acting ‘absolutely loaded’, because he’s had 17 credit cards thrown at him within a month of starting work!
Those that extend credit stand to lose the most if the public decide en-masse to stop using credit, and only use their meagre depreciating funds instead for all purchases. It is therefore the gameplay of those same extenders of credit to keep the public thinking that the “Emperor actually has clothes” for as long as possible, preferably indefinitely!
What happens though when people themselves cannot actually afford credit anymore?
This is known as “Terminal Debt” - That debt which your entire wages cannot cover the minimum payment on.
Either wages climb rapidly to make up the gap, or all this debt ultimately gets defaulted. The lenders don’t like the sound of either of these, so they’ve come up with the classic “Third Way” which is what you now see in the western world - You keep interest rates at rock bottom, pretending that they’ll rise any minute, but in fact won’t rise for perhaps a decade or more - a fact not apparent until we’re a decade or more into the credit crunch of course!
Granny carries on tearing her hair out, Mr YoungSuit carries on pumping his plastic, the lender keeps getting interest, and everyone’s happy - providing they’ve got a job.
Grandad now start pulling his hair out at this stage…
The UK has been in a ‘period of painful adjustment’ ever since the late 1970’s when Callaghan and Maggie came up with the idea of ‘wage restraint’ and then sacking all of our own workforce and importing everything that we could be making for ourselves.The fact is when the economy has finally come grinding to a halt because of the policy of more of the same it won’t make any difference wether it’s Mr. YoungSuit or the pensioner.Because credit is actually all that’s keeping the place afloat by being used as way to bridge the gap between the rising cost of living (because the currency is becoming worth less and less) and incomes in real terms.But the credit will finally run out when the ‘pensioner’ runs out of what’s left in their increasingly worthless bank account in which the level of interest actually reflects the true value of the currency.You only need to look at the difference between lending rates compared to saving rates to understand that the only reason why the banks aren’t broke yet and the currency not worth the paper it’s written on is all based on smoke and mirrors and rigged money markets and the few worthless pounds that the ‘pensioners’ have left in their bank accounts.Which just leaves the final nail of the issue of when those with debts finally realise that default is actually a better option than the so called ‘third way’ of more ‘painful readjustment’.Surprisingly the Greeks don’t seem to have been bright enough to realise it.YET. 
The ‘painful adjustment’ in this case just means chucking the economy down the tubes of the global free market economy which has made the Chinese richer at our expense. 
The treatment is worse than the disease. People are led into thinking that spending every last penny you’ve got on servicing debt is a good thing. It only lines the pockets of the government and the banks. Default was always the answer, but the media put this idea across that “default” is somehow a fraudulent, criminal act. Default they’ll say means you’ll NEVER GET CREDIT AGAIN which is totally not true. You might not get CHEAP credit again, but it’s not in the lender’s interest to shut anyone out of the market who might otherwise line their pockets.
Thing is, the credit crunch has effectively ended new cheap credit ANYWAY, so one is left asking the question “You’ve paid the price for (everyone elses’s) default, now why not reap the beneifts?”
I defaulted in 2004, and I’m already being offered plastic on a “same deal as everyone else” basis - ie not even “bad credit history terms”. Why? - Because they want my business and my money. All the time I refuse to borrow, they lose even more money than they did when I threw in the towel, after my short-settle offer was rejected back in 2004. It was the CAB that advised me (free) that making an offer that is seen by the courts as reasonable will result in me not having to repay a penny IF it were rejected by some idiot lender not knowing which side his bread is buttered on.
The same situation now applies to Greece. The Greek people “say” they want to stay in the Euro. This is like someone with cancer saying they want to keep on with the chaemotherapy, which as everyone knows is worse than the damned disease!
Germany use this desire to stay in to try and get austerity concessions which the Greek public have already said they don’t want.
Given a choice of being jobless & broke for a decade or more, OR going back to the Drachma which meant you still had a job, because cheap drachma fills up the holiday resorts. What’s better - All of a hard time, or half of a good time?
Eurobanks pretend that the sky will fall in IF Greece actually ends up doing the deed, but it’s a rather one-sided argument.
Russia defaulted in the 1990’s, and they are now RAKING it in - but those new revenues cannot be touched by the previous creditos BECAUSE the default has already drawn a line under it all! If you hang on and hang on about defaulting, your future prosperity - if and when it comes - will be nipped in the bud because some creditor somewhere will still lay claim to your new latter-day income and/or prosperity.
The time to default therefore is when you are actually broke, because then the creditors get nothing, and stay getting nothing for the crucial 6 year period during which they might have some redress via the courts. Once that period is up, there’s nowt they can do about unsecured debt whatsoever. The window has been and gone. They might even attempt to get debtors to flip their 6 year unsecured debts into 12 year secured ones - and THAT’S the point when your house finally becomes at risk.
People with credit card & unsecured loan debts need to realise that the only way to get rid of debt is to win the lottery or default it. This industry is NOT going to suddenly start paying top dollar enough for ANYONE to pay off a large debt, so why bother trying? Winning the lottery isn’t going to happen either - let’s be realistic here. Defaulting starts the 6 year clock, during which time the creditors will watch and wait hoping for the debtor to improve their circumstances, even
if that means an inheritance or other windfall, getting a new job, or otherwise coming into pretty much any large lump sums at all.
Get through those 6 years whilst deliberately keep yourself living frugally, and bingo - you’ve had nothing to take for the period, and once the time is up there’s nowt they can do anymore.
All those ads you see about “Reclaim your PPI” is no different to what we are talking about here. Defaulting yourself means you never actually needed that insurance in the first place. “Repay your debts if you die” they say. There’s no such thing as a negative estate. You can die penniless, but not minus - make no mistake!
People in heavy debt remain so because they still want to continue having access to more credit. Wean yourself off this tomfoolery, realising that a defaulter’s credit rating is the same as a person who’s never had credit after 6 years have passed. That’s 6 years without borrowing a penny. 6 years making sure your mortgage DOES get paid on time, even and especially if you don’t pay other debts to do it.
Rich coke users say that their “drug addict” status isn’t generally well known because they’re not standing on street corners weighing 6 stone because all the money they raise goes on their habit. The pop star gets more gear in out of the petty cash. The poor health apparent then in the typical drug addict is more a product of their limited means rather than what they are taking!
Either way though, you don’t “deal with the situation” by continuing to use (making payments!) and you can’t say you’re “clean” until you’ve both given up using (not taking or seeking further credit) and for a while (in the case of debt, 6 years).
The pusher will tell you they’ll let you have your next hit on tick, or “if you service this special client”, or 2if you perform this law-breaking task", or even be given some poorer quality merchandise instead! All of these options don’t get you off the dope, but they WILL bring you closer to the end of your life.
The same applies to debt - with the banks as the pushers.
I rest my case. 
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