Following the news that the UK house prices are rising at rates in excess of 8%, it is today reported that credit card borrowing for September was the highest for any moth this year - and we haven't even reached Christmas yet!
The assumption is that our "recovery" is being fuelled once more by our flexible friends just as it was under Brown and Blair. The government decision to inject money in to the housing market is beginning to reap it's rewards. The trouble is that we will all ultimately be right back where we started in 2008 unless steps are taken urgently to curtail this madness. Like the plastic which underpins it, this "recovery" is false and thus the house built on dreams will not stand.
When Gordon Brown proclaimed an end to boom and bust, I hoped that his failure would serve as a reminder to everyone the folly of spending outside of your means. It seems as though people have short memories. More worrying still was the revelation that unsecured borrowing rose by its fastest rate since before the crash in 2008.
The pressure for the Bank of England to raise interest rates becomes more compelling by the day. Yet the new governor has rather shot himself in the foot on this measure since he has pledged to reduce the rate only when unemployment drops below 7%. Due to the appallingly high numbers of NEETS, the chances of this figure dropping below the magic 7% any time soon are slim to put it mildly. Meanwhile, the out of control economic rollercoaster will continue it's relentless path to another fiscal accident in due course.
I know we've been here before but you'd like to think that people's memories could do a little better than that. Granted, human nature will not change as people continue to be drawn in by the promises of the marketing men but it's no less depressing for all that. If you saw somebody reversing their car slowly in to a tree, you'd like to try and warn them before the damage was done. Sadly, I suspect that we can shout all we like at some people but it won't make any difference if they don't want to listen. It's still not too late to put a brake on things and it falls to our new Canadian Governor of the Bank of England to make a bold decision. If he doesn't, the future is starting to look depressingly familiar.
Come back Mr. Micawber, we need you now more than ever...
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