- 01 Oct
$700 Billion US Banking Bailout
At the moment the US are renegotiating the proposed $700 billion bailout of the US banking sector which has been broadly heralded as essential to return to stability. Bank lending to US borrowers that couldn't afford it (the "credit crunch") is widely attributed as the cause of the current situation.
My concern for the UK market is what about the large amount of unsecured debt that has been amased over the last few years? There seems to be little mention of this and it would seem even more risky than lending secured against property.
Recent figures suggest in the south east of England the avererage unsecured debt is something like £26K - and there seem to be plenty of examples around of people that are struggling to pay, going into bankruptcy etc.
Everyone wants to live the "Beckham" lifestyle and it is worrying that eventually the merry-go-round of borrowing to fund that lifestyle might stop leaving the UK with a huge hole in its bank lending.