The debt contagion

I was joking when I said a few weeks ago that Gordon Brown spoke about the recession as if it were the SARS virus. But at his press conference this morning, and just now at the press conference with Sarkozy, he has used a new phrase: “stop the contagion”. Contagion? If it is, it was incubated in 11 Downing Street as he pumped the economy full of debt, in the hope that he’d never be found out and rates would not rise. The contagion kept touting dangerously underpriced debt until the average British household had borrowed 172 per cent of its income – twice as much as even the Italian household. The contagion from No11 also used debt-concealment mechanisms to disguise £110billion of PFI debt and £600 billion of public sector pension liabilities and even international aid. The contagion from No11 pumped up official state debt during the boom so it went from £14,500 per family in 1996/97 and to £24,300 per family now.