The Guardian has reported tbhi morning that:
Deputy governor Jon Cunliffe told BBC radio this morning that he's concerned about families with high debt levels.
Cunliffe warned that some households have run up worrying levels of debts, which could drag them into a crisis if the economy sours, saying:
“(Household debt is) quite high by historical standards but (households have) worked hard to put those debt levels down. But within that there are areas that you do worry about.
“You worry about households that have high debt (and) could be badly affected in a recession.”
I am worried about the language.
“You worry”, he is saying.
But is that because he isn't.
And is that because he's all right?
Could it be that a member of the elite has inadvertently let his guard slip, and shown he leaves concern to everyone else?
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High private debt levels keep normal people’s heads down working long hours, help shift tons of plastic crap to consumers, allow bankers to make easy money and provide periodic opportunities for creditors to seize more real assets at knock down prices.
So a substantial clique of elite individuals in finance and big corporations worry about how to keep private sector debt as high as possible without it causing the end of neoliberalism. Since 2008 didn’t kill neoliberalism they’re confident nothing will.
It is the public’s fault ultimately – for 40+ years it has been a case of “give them (the elite) an inch and they’ll take a mile”. We have failed to stand up for ourselves and it has caused our elite to become over confident to the point of suicidal hubris.
A figure of speech perhaps? “you worry” can be a posh colloquial for “I worry” or “we worry” a bit like “one tends to be a bit concerned about such things”.
The ownership of concern becomes abstract or re-directed. I don’t know how that habit of theirs came about but it has done, long ago, and sometimes slips into more common (widespread) usage.
He needs media training
I delivered indifference instead of concern
And that’s a fail
(Said he sitting having a coffee in Brussels after a public interrogation)
I don’t think there’s a sure way to tell from the words alone. If somehow he got wages up so that people could live on what they earned, and they weren’t forced to borrow money, then we might be able to tell what he meant. And they’d be much more able to “put those debt levels down”.
I think to be fair Richard he was probably not using the word “you” as the second person pronoun, singular (i.e. that the BBC interviewer worried) or plural (i.e. that the radio audience worried), but as an impersonal pronoun. We used to use the word “one” but that is now considered a bit archaic and he was probably trying to sound groovy and in touch with the street etc. If he’d said “one worries”, we might have thought he was a bit of a git but we’d probably have a better understanding of what he meant.
Maybe…..
I think you are reading too much into this. Warnings should be given about personal debt and individuals should be accountable. The more someone doesn’t pay back their loan or mortgage the more it is reflected in an interest charge, as a kind of default risk premium, for everyone one else who takes a loan. I don’t see why you see this as the elite v the rest it’s just common sense.
I hope you are aware how much you communicate in so few words
You take a libertarian approach that assumes each borrowers acts with full information and total free will and that they can predict systemic risk and its impact on thjem even if the lender cannot
I suggest, very respectfully, you go and take a look at the real world
Nathan,
So bankers previously bailed out by the state create money out of thin air via a privileged position granted them by the state on our behalf and then they charge people for the privilege of using that money to purchase houses at artificially inflated prices and your immediate concern is feckless private borrowers?
You’re hopelessly deluded about reality mate.
Yeah you probably right mate..certainly not in your league academically..but do you work in industry? Does anyone in this board? Judging by the language it’s filled with academics.. is that the real world?
There are a few academics here
But maybe you need to read my CV. It’s very heavily real world
And as I read it, most here are just that – but they do use their noddles
I suggest you need to as well
Nathan,
If you worked in finance then you would know that the core purpose of the banks is to verify indivuduals’ creditworthiness and create money for people accordingly.
Of course since the Big Bang the paucity of regulatory oversight has meant that things have been twisted upside down. Since then the INCENTIVES originally designed to encourage bankers to fulfill that socially and economically useful objective have become the OBJECTIVE.
The attitude of bankers is if they’re making money and their customers agreed to sign their credit agreements then who cares what happens? Buyer beware and all that. Survival of the fittest, let the clueless numpties go broke – if they do it means they deserve it but if it happens to the bankers they’ll graft to ensure the state bails them out or some fool buys up all their hopelessly underwater credit agreements. It’s all about winning. It’s dog-eat-dog and everyone’s aiming to be the biggest, winningest dog.
For this particular type of wanker cynicism rules, there’s no such thing as society and actually, when they think about it, there’re no such things as other people. It’s just them and their own and the rest of us are merely gullible marks to be played for all we have and all the work we have in us.
Adam Sawyer says:
“If you worked in finance then you would know that the core purpose of the banks is to verify individuals’ creditworthiness and create money for people accordingly.”
Even you, Adam, give bankers more credit than they deserve. They don’t give a toss for creditworthiness, they just want the collateral that allows them to be paid for the risk which they are insulated from by guarantee.
I really don’t know why we allow it. The banks have a licence to both literally, and metaphorically, print money.
Nathan says:
“Yeah you probably right mate..certainly not in your league academically..but do you work in industry? ”
Correct, Nathan. Not in the same league academically as some of the people on here who never advanced beyond ‘a’Levels.
Do you know how many people work in industry ?
About half of them ……. maybe fewer.
What’s interesting about a comfortably off individual like Jon Cunliffe is his need to “manage” public perception about his ability to care. Notably it never occurs to him that true caring from a person in authority like himself is to argue that a caring nation would monitor the income levels of its citizens and take steps publicly and privately to ensure they are always adequate. Such steps logically would therefore consist not merely of better targetting of government fiscal responses, in which I include taxation policy, but also ensuring better control arrangements by workforces of private enterprise capital so that income flows were more equitable in those enterprises.
Don’t worry i live in the real world not in a lecture theatre or a library..Again too much thinking into a play on words..live within your means, borrow what you can repay, why do you make an issue about everything?
Because I sussed you by doing so
All that you have provided thus far Nathan is a good argument against internet anonymity and being completely out of your depth is nothing to be that proud of. In the “real world” the level of household debt is not simply a personal matter (FFS), it affects the entire economy and everyone in it.
Here is a simple two-part test for you and it is quite brief.
The first part is here. It it is an historic chart of UK household debt from 1966 to the present (click on the button that says “MAX” in the bottom left hand corner):
https://tradingeconomics.com/united-kingdom/households-debt-to-gdp
The 2nd part is a business magazine article here:
http://uk.businessinsider.com/self-reinforcing-feedback-loop-mortgage-market-2017-6/?r=AU&IR=T/#the-context-british-people-are-still-carrying-high-levels-of-household-debt-its-not-as-bad-as-it-was-before-the-2008-crisis-but-it-is-heading-back-up-there-1
If you have read both of those and you still don’t get it then you do not and cannot have anything worthwhile to contribute, at least not until you bring yourself up to speed (should that ever happen).
@ Marco Fante
Thanks for the web links. The business insider chart showing the collapse in the social housing programme coincides with Jim Callaghan and Roy Jenkins being Chancellors of the Excheqeur in the Wilson administration. Both Callaghan and Jenkins were right-wingers. Rather than let the pound float Callaghan panicked and persuaded Wilson to slash public expenditure. Jenkins continued as a fiscal hard-liner. Callaghan when prime minister went on to borrow £3.9 billion from the IMF in 1976, of course a condition of the loan was to slash public expenditure (Sound familiar? Greece and the Eurozone!). Today with the hindsight of MMT theory we would regard Callaghan and Jenkins as monetary system illiterate.
https://en.wikipedia.org/wiki/James_Callaghan#Early_life_and_career
https://en.wikipedia.org/wiki/Roy_Jenkins
@Schofield
re Callaghan’s panic & Wilson slashing public expenditure. I came across a little snippet the other day. Tony Benn sent him a memo outlining an alternative approach, protectionist in nature, to which Wilson replied: ‘I haven’t read, don’t propose to, but I disagree with it’. I wonder how many others have done the same with ideas they don’t want to know about?
https://history.blog.gov.uk/2013/07/10/marginalia-in-the-prime-ministers-office-records/
@ G Hewitt
Thanks for the memorabilia. Benn’s formula:-
“import restrictions, high tariff barriers and selective aid to industry.”
Exactly the tactics pursued by China and now also in retaliation by the United States. Clearly the lesson to be learned by the world from all of this will have to be deploying a principal of balance in which new rules of defence prevent trade imbalances whilst encouraging partnering through foreign investment to raise know-how and therefore productivity in nations fallen behind.
Back to Keynes then….
Sussed..what a neoliberal or part of the elite? Laughable..
Your response just confirms all I said
Now go back to play with Tim Worstall
Nathan,
I have no idea if you’re a troll as Richard suspects. My reading of what you have said on here is that your knowledge is not yet up to speed to comment on a blog like this. When I first came to this blog I was completely ignorant of how the financial system really works, I was a victim, I suspect like you, of the neoliberal elite marketing that has been shoved down our throats constantly for 40 or more years.
It’s not easy to see things differently if that’s all the knowledge you have.
If you’re genuine and not a troll, my advice would be read Richards books at least “The Joy of Tax” to begin with, they are written for the mass market, people for like you and me. What I thought I knew with some certainty has proven to be wrong, we are fed lies and misinformation on a daily basis in the media and by politicians. Take some time and learn how the system really works then come back and make a comment worthy of this brilliant blog. Academics can come across as hard core to people not used to that environment and it can be off putting. Stick with it, you might just learn something of value.
Thanks
@ Geoff
Absolutely right about Richard’s “Joy of Tax” book. Richard has the great gift of being able to simplify complex matters. Clearly the arrogant Hooray Henry David Cameron never bothered to read Richard’s book before he publicly slagged it off. Now Cameron’s got his come-uppance from Danny Dyer and richly earned I think although it will do little I believe to change Cameron’s arrogant I know-it-all public school boy mind-set!
I was amused, I admit
I think you’ve nailed an important point. Other than maths language is the main means of communication for most of us, and around the words we choose are all sorts of harmonics – about us, about our thought processes and about the messages we impart to others, both at the conscious and sub-conscious level. He may have been using a metaphor, but it’s a metaphor that says “detachment”.
One of the “triumphs” of Thatcher and neoliberalism has been the capture of the language and the metaphors – we were discussing this the other day – and we should be on our guard not to accept these lazy descriptions and to challenge them.
You got what I was saying, precisely
G Hewitt says “One of the “triumphs” of Thatcher and neoliberalism has been the capture of the language and the metaphors — we were discussing this the other day — we should be on our guard not to accept these lazy descriptions and to challenge them”.
I don’t think we should challenge their language, because that is fighting them on their ground.
We should invent our own language and let them challenge us.
I mentioned “Self-funding government expenditure” in a post about NHS funding the other day. This is an example of the sort of language we should be bandying about.
Once the neoliberals start to challenge our language, we’ve won the debate.
That is one I will try to use
As I recall that phrase was first articulated and made famous by Larry Summers and Brad Delong this article. Its right there in the abstract at the top of the first page:
https://www.brookings.edu/wp-content/uploads/2012/03/2012a_delong.pdf
Some dopey neolibs have already expressed their misgivings:
https://www.cps.org.uk/blog/q/date/2013/06/03/the-beguiling-idea-of-self-financing-spending/
G Hewitt says:
” Other than maths language is the main means of communication for most of us,…”
What !!
Maths ? Maths is about the most arcane form of communication ever invented.
There’s not one person in a thousand has even the most primitive grasp of what maths communicates.
Just edit out ‘Other than maths….’, and you have a sentence there that makes sense to the majority of human beings for whom language is quite emphatically the main means of communication.
It’s been very warm here north of the border and we’re not used to it. Stay in the shade, G 🙂
I was accused by a wife of talking maths
Some of us do….
I think it’s fair to say we are a minority
Andy Crow says: “Stay in the shade, G ”
I’m trying, Andy. Having just come in from the cold, I think I want back out again. Phew, wot a scorcher!! Graham
“You worry about households that have high debt (and) could be badly affected in a recession.”
I don’t think he does, except vaguely and in theory. Essentially he’s personally fireproof (he thinks) and the BoE doesn’t give a toss because Phil has just handed over the keys to the treasury.
Faux concern at best, I’d say. That he’s bothering to say this at all indicates that it isn’t ‘a’ possible recession but ‘the’ inevitable recession he’s referring to. Strictly speaking it’s an ‘evitable’ recession but he knows, the government knows and we know nothing will be done to prevent it so it becomes de facto inevitable.
Nick H says: “We should invent our own language and let them challenge us.”
Yes, I agree with that and I like your example. But when Thatcher said “TINA” I don’t remember anyone challenging her, if only on the point of logic. Or take the more recent example: “Dad’s nose, Mum’s eyes, Gordon Brown’s debts.” Or the “Household” analogy. These tropes lodge themselves in collective consciousness and imho need to be challenged, deconstructed and refuted otherwise “you can’t just throw money at it” will trump (sorry) any alternative explanation.
G Hewitt says:
On ‘Krystallnacht’, 9-10th November 1938, the German Nazis shifted the ‘Overton Window’.
We need to do it with rather more subtlety, but similar effect.
Sorry. Missed a bit.
G Hewitt said nothing of the sort. It was me that said that with reference to changing the parameters of the debate.
An interesting development from the Swiss
https://www.independent.co.uk/news/business/comment/swiss-vollgeld-referendum-money-supply-private-public-a8393166.html
This has been extensively discussed here already
Sorry, I missed that blog.
I write so many I could miss some of my own!
@ Marco Fante:
You said:
“The first part is here. It it is an historic chart of UK household debt from 1966 to the present (click on the button that says “MAX” in the bottom left hand corner):”
There was a massive increase in this ratio between 2000 and 2010 – which government was in power over that period and what were the consequences of that?
A neoliberal government
Next silly question?
Why is that a neoliberal question?
The most rapid increase occurred under a Labour government and there was a declining trend with s small hump under the current Government.
That doesn’t fit the rhetoric though, does it?!
I think I said it was a neoliberal government
I was being critical of it
But that doesn’t suit your arrative does it? In fact you’re so prejudiced you did not even spot it
Dennis, dear.
That was (is) a problem throughout the Western world and Richard is right, the housing/ household debt bubble are a result of financialisation and financial de-regulation. As such they are a symptom of the neo-liberal ascendancy- a bipartisan ascendancy where all participating parties and governments are culpable.
This whole tendency among some people to think that everything can be reduced to some simple Tory vs Labour slanging match gets really tiresome and there are times when it is hopelessly inappropriate. This is one of those times.