Individual Insovency In 2009
Figures released today show a significant rise in insolvencies in 2009. The growth was slowing towards the end of the year but there were still 35,574 individual bankruptcies in England & Wales in the final quarter and 134,142 individuals were declared insolvent in 2009. A graph provided by the Insolvency Service shows a remarkable rise in insovencies over the last two decades and I have reproduced it below.
Something clearly needs to be done to reduce the numbers of people having to resort to insolvency. Whether it is careless borrowing,careless lending or simply bad luck and unfortunate changes in circumstances such as illness, death and divorce, for every individual counted in these statistics there will usually be a family attached.
There will be a period of possibly years of stress, financial struggles and health problems brought on by the stressful situation they find themselves in. Marriages will have collapsed, individuals will have turned to drink or drugs to blot out the problems and ultimately public resources will need to be the providers of homes and other support. Everybody loses in this. The creditor , the individual bankrupted and their family. We surely have to be able to provide a better way.
Supporting The Bankers
The government felt obliged to support the Bankers and the cost of this action is something we are only now beginning to see and start to understand. If the government had helped individuals, who are after all their employers, by even a tenth as much, the country would be more active, there would be more jobs and more people would be able to enjoy their lives rather than struggle to feed their children and heat their homes.
Meanwhile, according to the British Bankers Association £63.5 Billion of credit card debt is owed by UK consumers but the total cost of the bank bailouts in the UK has been estimated to be a massive £850 Billion by the National Audit Office.
The Bank of England has manufactured £200 Billion of virtual money by the process known as quantative easing. This would be enough to pay off the credit card debts of the nation three times over, but it has been used in a way that benefits the financial industry and the City of London, enabling bankers to make a lot of money and enjoy their huge bonuses. It remains to be seen what, if any, effect this has had on individual citizens of the country other than the fact we have to pay for it.
If the govenment and/or the Bank Of England had chosen to provide every adult in the country with a voucher that could only be used for the purchase or repayment of financial products, i.e. pensions, mortgage repayment, credit card repayments in a system rather like the child trust fund payments they could have given each and every one of us around £6,000.
All of that money would have gone straight into the financial services industry so they would still have benefitted from all this extra cash. The whole country would be feeling better off with fewer debt problems and boosted pensions helping protect them, their families and the country in the future. Business would be more active with more consumers able to afford to spend in the shops, employment would have been boosted by the additional activity which would boost the tax revenues for the government and the health service would have fewer stress related patients to deal with. Everyone would benefit.
Instead of which we are all poorer thanks to the debt, we face the prospect of a decade of austerity and higher taxes, whichever government is returned to power after the election. Meanwhile the financial industry continues to do well and pay themselves handsomely. It would seem that the only people who have benefitted from the financial crisis are the people who caused it in the first place.
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Comments
Really interesting post. The idea you have outlined above has really put into perspective just how badly the financial crisis has been handled! £6k per person in the UK is a LOT of money, and yes, that would have potentially helped out a lot of individuals. It angers me that bankers are still reaping such large bonuses.
The rise in the number of bankruptcies in the United States has been alarming. Combine that with the job losses and massive debt our government has grown and the road seems very uphill from here.