British economy is on the verge of economic collapse. Had been in the doldrums since 2008. Debt is at £900 billion. The Govt. never managed to control the massive corporate debt, which kept on rising, and with the current Eurozone crisis, there are grave chances – that UK as a economic powerhouse would soon cease to exist. And more importantly and for worse – the British economy may collapse altogether. This may trigger a EU collapse, followed by a US collapse, and a world Depression altogether.
The inherent problem lies in the British way of living. Whilst studying for my MSc at Oxford University in 2006-2007, coming from a middle-class background, never had any money. So me and my best friend used to spend less than 2 pounds for dinner every night. Its like spending 4 dollars for dinner. But had British friends, who used to spend thousands partying and in pubs every night. Whenever we enquired how they managed – their basic question – “Mate, what the fuck? You ain’t got credit cards?” I admitted – I didn’t have any. Lived on the paltry salary I was getting while working as a TA in Oxford and doing odd jobs (cleaning tables in cafes, working in a pub as waiter). Then, after finishing Oxford, moved on to work in a British firm in London. And then moved to a top IFA (Independent Financial Advisory) firm in Cheltenham in Gloucestershire. We’re working as financial advisors for the HNIs in the UK. Never seen such wastage of money in my life. A couple has 3 Bentleys – yet, want another Rolls-Royce. MercS class doesn’t suit the palate – thus, getting it customized was some of our client’s wish. And absolute wastage to invest in Hedge funds. Worth millions of pounds am talking about – with more often than not, with 0 ROI.
Every colleague of mine had minimum 10 credit cards. 1 for girlfriend, 1 for TV, 1 for expenses, 1 for partying with hot babes, 1 for dinner costs, 1 for car petrol and rest for blah! blah! Average household spending is worth thousands of pounds during XMas on items which are not needed at all, resulting in wasting billions on unwanted, useless gifts. I was like – wow! how do I get a credit card? Had an HSBC account in the UK, but was happy with my debit card. Used to sit home and eat popcorn and watch TV when had no money in my account 🙂
This brings us to the epidemic in the UK – uncontrollable borrowing from the market. The British economy is now reeling under individual & corporate debt worth billions of pounds (exact, £900 billion). And with the US economy also slowing down, the only way for Britain to survive is cutting jobs, moving them to either India, China, Vietnam, Thailand and others. I visited Dubai once and APAC region once – was stunned to see the number of Brits working there. Made friends with a few – all said, “Mate! what the fuck to do in UK? Its on verge of collapse. With the banks going down soon, the entire economy would collapse… Best time to get out!“… Thank God, the UK economy bailed out their biggest 2 banks which were going out – Llyods TSB and RBS, and thus, managed to bail out entire EU, for once.
This brings us to the question – Can’t the Brits change their lifestyle and invest or save? The answer to this question is very difficult and most probably NO for most Brits. When I had asked this to my friends at the uni – most had said, “For what? We are taught to spend from childhood. Money means – to spend. Investing and saving comes when we are 40+. Also, we don’t need to – since Govt. takes care of our basic needs. NHS and education and stuff. Plus, we have a minimum-pay-basic-safety-net. If we can’t make it big, no issues, Govt is there to pay us“. The result – reckless financial administration with completely no individual responsibility. Same goes for companies who invested billions of pounds on unwanted investments, property and other expenses with 0 ROI when the depression came.
Money is the only thing on earth – which by itself has no value. The power related to ROI on money has immense value. Thus, a proper teaching since childhood, on investment principles, savings, positive ROI etc. needs to be integrated into the schooling system. Otherwise, its all about the Govt. taking care of its citizens, and then when the Govt. collapses, people are on the streets.
This brings us to immigrants in the U.K. Definitely the worst hit. 2 of my German friends are still jobless since past 2 years. One of my Indian friends from Hyderabad, a IIT gold-medal postgraduate on Tier1 Highly-Skilled Workers Visa is cleaning tables in hotels since past 3 years nearly. More cases I can mention – feels so bad, better not to. Anyways, these have been worse hit. With no safety net for them from the Govt., it either means going back to their own countries or staying in the UK. Either way its a complete loss.
What next? As per analysts, these are the following 6 possibilities:
1. Greece will collapse by 2012. Which means an impending collapse for EU, starting 2014.
2. Greece will not collapse. UK economy will collapse by 2014. Which means, we go to point 1. EU would collapse, which means points 3 or 4.
3. US may slowdown further, but will weather the storm. BRIC (Brazil, Russia, India, China) will be affected, but not collapse.
4. US will fail to recover, and go into Depression. With the EU, UK & US collapsed, BRIC countries will fail one by one.
5. US will fail. BRIC countries emerge as economic powerhouses – most likely lead by China & Russia.
6. Greece will not collapse. UK economy will make recovery by 2014.
I don’t know which will happen. But if point 5 does happen, I would be sitting on my chair and crying out – “What the fuck?” This is the possibility that a guy called Leon Trotsky (who was later murdered by Stalin’s henchmen) had predicted about the Economic future – collapse of the older order (Tsars), rise of the new order (lead by UK/US), then demise of the current order, for a new order to rise again. This is called a ‘Troskyite continuum‘, wherein the 2 biggest superpowers in the world would be Socialist powers.
Image: British GBP continues sinking against USD. Bad days ahead!
Whatever happens – as of now, the best place to park your money is in Gold, Silver, Land or Life-Insurance (with returns after 20 years or so – meant for young people in early twenties or late twenties). Nothing else. There are 2 possibilities of ROI here:
1. We have Depression. You can sell off land at capital prices and survive. May not live like a king, but have enough to eat in years to come.
2. We don’t move into Depression. You have Gold/Silver/Land prices shooting up as always. Long-term life insurance will take care of your needs after 20+ years. Both ways, you win.
This is the best advice one can give.
Till then, good bye guys. And hope the British economy does not collapse finally. What a shame it would be!