On holiday in Spain and we have hired a car. Didn’t get a choice and was given a Kia something, it’s a half breed. It’s also absolute shite. Shit to look at, shit build quality, shit drive. No wonder they’re cheap. I’ll stick to paying the extra and keep buying BMW
Like pretty much everything nowadays credit is king and the motor trade is a good example of it supporting every stage. The end user takes out a loan, PCP or lease, the banks themselves raise cash by lending from other banks & institutions, the leasing company or dealership take out loans to bulk buy from the manufacturer at wholesale prices and the manufacturer takes out loans to fund operations. All so the government can charge a higher luxury car tax to pay off the loans they use to run the country. It's gonna end in tears....
Every loan is also an asset. If you owe me £1, to you it's a debt but to me it's an asset. And the debts equal the assets. Writers moaning about debts, government or private, are really keen never to mention the corresponding assets. Debts are only a problem when they are BAD DEBTS, i.e. unsecured debts which the borrower cannot service. Then the corresponding asset disappears. Stating that a sum of debt exists tells us nothing. It's the level of bad debt, if any, which is important
That's a purely abstract way to look at it and certainly a flawed way to analyse the Government's position. Debt is a massive problem when you are the debtor and the cost of servicing it is so high that it is compromising other budgets and/or spooking lenders. The UK is currently paying £130bn PA on debt interest alone and is having to borrow money simply in order to make those payments. That sum has gone up under Labour and gilt yields are and have been for some time, much higher than they were even at the height of the Liz Truss debacle, although that is rarely mentioned. That's no way to run a railroad and Burnham's "Champagne for everyone!" rhetoric, coupled with being held hostage by his backbenchers vis a vis welfare cuts, plus his own people-pleasing personality and profligate ideology strongly suggest that position is only going to get worse. Then gilt yields will rise even higher, meaning even more money will need to be found to pay the coupon and the whole thing turns into a death spiral.
Avoidance of mentioning assets, or distinguishing good from bad debts. What mainly worries me is the loss of public assets, in the form of the corrupt alienation of valuable infrastructure, businesses, land, stock in trade, etc by Thatcher and her successors.
What's done is done. No point crying over split milk. What certainly doesn't help the public asset position is stupidly leaving £165bn worth of those assets buried in the ground along with pursuing daft and expensive boondoggles because the political and cultural elite are in thrall to a deluded and dangerous ideology.
It is not stupid to preserve assets by leaving them in the ground, where our successors can find them. It is stupid to give them away for ever.
That is true, debts are assets, but it's the sheer complexity of the interconnectivity of these assets that brings concern. If we use the example of the car market it may not take much defaulting on personal loans etc or more buyers reluctant to sign up to an(other) asset that reduces income sufficiently to tip an asset farther up the chain into a bad debt e.g. dealership or leasee. This can been seen with the Chinese car manufacturers who are aggressively selling in overseas markets because their home market has massive over capacity and demand has slumped (round 20% in the first half of the year). And they need that cash flow to service their own considerable liabilities e.g. Jaecoo have an ~80% debt to asset ratio which is way bigger than most western car manufacturers.
Oh come on. You can't seriously believe that. What would our successors want oil and gas for when they'll almost certainly have harnessed nuclear fusion or some other thus far unknown producer of energy, such as Dyson Spheres? That would be like neolithic people leaving a few sticks unburned for our benefit. Nobody is considering "giving away" the remaining oil and gas. New licences can be sold or the govt could contract with survey companies to find it and drilling companies to extract it.
