Wealth Management Group Full Circle’s success is based on a stunning track-record of foresight. Their latest report makes for grisly reading.
I freely admit to having an interest in Full Circle Investment: most of the paltry amount of money I have is managed by them. Sadly however, they don’t pay me commission: I bring them to people’s attention because they are a Total Honesty Zone both high in prescience and low in drivel.
Over the last five years they have predicted the credit bubble, the economic downturn, the banking collapse and the failure of the UK’s private sector to respond without continued QE. Their main point now is that the Credit Age is over, and the Horn-Withdrawal Age is upon us. It holds water for me. Here’s why.
The Organisation for Economic Co-operation and Development has recently estimated that this year the UK’s private sector will run a surplus of income over spending greater than 10% of GDP. For the total post-war period the stock of private debt outstanding rose by a factor of nearly seven times to almost 350% of GDP. That is a U-turn of which the Oxford Regis Professor of U-turning would be justly proud.
Full Circle concludes:
‘If the private sector maintains its new self inflicted frugality, how will the governments resolve their extreme fiscal deficits? The answer is that they won’t be able to and, worse still as Mervyn King this week intimated, they will have to print and borrow more money. However, if they do that, it is only a matter of time before the UK, US and others suffer the same problems as Greece.’
As The Slog highlighted yesterday, the markets are already onto this.
The Establishment knows this perfectly well. Only Piers Morgan doesn’t, because he has the cerebral capacity of a gnat’s anus.
What the Mandelsons and Darlings and Browns don’t know is what the purple Ronnies to do about it.
The Conservatives (and other forms of Resistance to Mad Labour) can either demonstrate their understanding of this and go out on a limb to persuade the People that bankruptcy will happen unless we all wake up.
Or they will prove as morally valueless as the Government.