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The global recession will hit everyone but not equally. The extent of the pain will depend on how much debt you are in. Too many of today's young Londoners are members of what the think-tank Reform calls the "iPod generation" "Insecure, Pressured, Over-taxed and Debt-ridden" and they are looking terrifyingly vulnerable.
The household debt ratio in Britain for all ages is 169 per cent: for every £1 of disposable income coming in, the average household had £1.69 of debt to service. Even the Americans, whom Gordon Brown is so keen to blame for all our troubles, do better than that.
Last August, consumer debts in the form of mortgages, loans and credit card bills overtook the entire gross domestic product of the country. To put it another way, the British owed more than the output of every office, factory, farm, quarry, fishery and mine in the land.
Averages conceal as much as they reveal. The think-tanks are right to worry about the young in particular because they are carrying so much of the burden.
I recently met a woman who might have stepped out of the pages of Dickens or Thackeray. She and her husband wanted an executive home and all the trimmings so they took a mortgage on 10 times their salary - from Northern Rock, naturally. They sent their children to private school, and took a business loan for their dental practice for good measure. Her husband, who is not a cautious man, as you may have gathered, then had an affair with a dental nurse. Their hopes are dying as divorce and bankruptcy beckon.
They have no one to blame but themselves but I cannot overemphasise how much trouble responsible young people may be in. The property bubble was a transfer of wealth between the generations. Pensioners who took a windfall profit sold on to young or youngish couples who saddled themselves with enormous loans. The mortgages did not look extravagant when the property market was roaring ahead and they could dream of selling on, too. After the crash, their debts have turned from investments into shackles.
Most households in France and Germany can roll with the punch of a recession because they have savings. Too many British borrowers are strung tight on debt. A wife loses her job, a husband loses his overtime, and they will snap.
Soon they will have to cope with tax rises, too. Labour has already run up government debt to levels that make Northern Rock seem like a paragon of responsibility. Alistair Darling will have to borrow more to see us through the recession. Borrowing is a tax on the future, and today's young will have to pick up more than their fair share of the bill.
I wonder what they will think when they take over the country. I cannot believe that they will have the same easy-going attitudes to debt and taxes my generation displayed.
Shallow satire left me cold
Once again, I tried to understand why the Coen Brothers are the darlings of Hollywood. George Clooney is among their many celebrity fans and No Country For Old Men so inspired him that he took the part of a cheesy, cynical adulterer in their latest, Burn After Reading. Credit to him for not insisting that he plays only romantic leads but, unfortunately, his role is not the only cheesy and cynical part of this soulless drama. Everyone cheats on everyone else. Everybody's motives are shallow and nobody learns from mistakes. The Coens think they are satirising the idiocy of modern existence. Their films show that they are a part of it.
Wrath of the Rothschilds
You do not need to be a master detective to understand why George Osborne is at the centre of a scandal. He not only embarrassed Peter Mandelson by blabbing about private conversations at Nathan Rothschild's party in corfu. He also embarrassed his host. Furious that a fellow member of the Bullingdon Club had broken the unwritten rule that what is said in private stays private, Rothschild sent his devastating letter to The Times. Nathan's ancestors would be proud of the retribution he has exacted. Years ago, Simon Schama told Christopher Hitchens how Victor Rothschild invited him to study the banking dynasty's archives. It was a marvellous coup for a young historian and Schama gratefully accepted. But as the work progressed, arguments grew. Finally, his benefactor could take no more insubordination. "Do you happen to know the Rothschilds' family motto?" he asked. Schama confessed he did not. "Our family motto is Service," said Victor, "and, by God, we get it."
Reader views (4)
Burn After Reading doesn't look very good. But No Country for Old Men is a fine piece of cinema - about as far away from the 'idiocy of modern existence' as you can get. And to tell the truth nick, i don't think that even the most 'zany' Coens film is an attempt to satirise this apparent 'idiocy'.
- Steve Wilson, london, 24/10/2008 11:44
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Nick was arguing in these very pages for a huge reduction in inheritance tax not that long ago, which seemed a very fair way to equalise income across generations.
- Matthew, London, 23/10/2008 17:10
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Recession more like Depression. Wait for 2010.
- Get Shorty, Bognor, 23/10/2008 16:58
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Well well
- Mel Barrows, Tenerife Canary Islands., 22/10/2008 20:17
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