overwhelmed by perilous levels of debt when the inevitable rate hike comes so they're saying that even like a small rise to three percent would see over one point one million spending more than fifty percent of their income on their mortgage payment. well they are home equity line of credit yes the home equity line of credit or he lock this is what is the so-called recovery is based on people borrowing against their homes the homes are going up because george osborne or mark carney or whoever is pumping you know money or garbage money into the economy they only works if interest rates are near zero the long term trend in interest rates in the u.s. anyway seven percent even though at the current they're less than one percent in this country i would imagine they're close to seven percent so any rise at all in the ten year note in this country is now over three percent the the lock the home equity line of credit people or the stock equity line of credit people people

buying stocks on margin are getting it's lot of the going to get hammered because they're scroungers their true scroungers are the people who have been extracting equity from their home they don't work for a living they add no productive capacity to the u.k. economy whatsoever they just take money from their equity home lines of credit thanks to quantitative easing is games they call that a recovery meanwhile interest rates like night follows day must go up they will go up in the bond apocalypse in other words at some point you can hold a beach ball of low rates on a water indefinitely it pops up rates to resume their normal trend and a million this is a million people or perilous debt that's false if it's fifteen to twenty million the last number i looked at and this economy is primed to go completely into the gutter because i was born as a charlatan well yeah a million put into paralysed that now look with the same article goes on to say the warning comes as a survey carried out by which reveals that rather than paying off their debts around thirteen million people or twenty five percent of the population paid for

their christmas by borrowing overall more than four in ten or forty two percent use credit cards loans or overdrafts of father spending over the festive period which suggests that britons have not shed their addiction to debt and that is actually one of the coffee ads that the time. all for is about why maybe they were might be wrong about george osborne the clown of westminster being the man of the year because they say that household debt remains very terrifying and yet investment has dropped over the past five years by a quarter and real terms so this is don't want to invest in this country oh the clone the clone of george osborne scaring people to death by forcing them into buying and accumulating more debt is an apt description he gives a bad name to to economics. the party makes the tories look bad and that's hard to do in this country and now you know the police regarding these clowns and their

stephen king like clown outfits terrorizing various high streets around the u.k. they said to ignore the clowns just ignore them but it's very difficult to ignore. and now janet yellen and mark carney and george osborne is hard to ignore when you look at the start from zero heads here this is housing costs you see under greenspan they soared that this is the affordability basically at the real income to real prices of housing and you see now under bernanke in the real cost of housing a six point five times income yes that's correct so it's hard to ignore what the clowns are doing that's like them like scaring medicine staring menacingly into your window and terrify you when they're telling you just ignore it just ignore it just ignore it one of the so much of what we deal with in this modern world is the opposite of what we have come to expect so we now know that people who are in charge of economics know absolutely nothing about money for example none of their

economic models include money they just are modeling based on certain assumptions that don't include debt so in the u.k. economy as close to a thousand percent debt to g.d.p. inclusive a bank dead national debt household debt corporate debt that's a thousand percent what you iceland before blew up but i was born tells us this is a good this is a recovery this is good news and this to paper the times of london carries a story saying he's the britain of the year he's the clout of the year he should be getting the clown of the year meanwhile at the close association over there at the festival of red nose day one of the color comic relief they've they're out there actually investing in cigarette companies gambling companies energy companies they're the ones investing in the worst the worst of the worst in terms of companies so the real clowns are investing in death and destruction and this guy. it's not supposed to be a clown is out there doing a clown and getting people more into debt. well we have these million people in

perilous debt at a minimum but there's a small percentage of the population and yet we model policy towards these perilous debtors we model policy in the us towards the perilous debtors of j.p. morgan goldman sachs lehman brothers before it went down you know this is the too big to fail forget the fact that there's thousands or hundreds of other banks that could have survived the system well here we look at the next headline interest rate rise would make more people better off poll finds it could help david cameron to stay in downing street some thirty one percent of those questioned by you gov for that time said that a rise in interest rates would leave them personally better off against twenty three percent who said they would be better off with lower rates and thirty two percent who thought it wouldn't make any difference either way so we have more people who said they would do better personally then those who say they're in perilous day and need interest rates to stay at these low levels well this is the dirty little secret is that because. the numbers i've looked at recently say about

one hundred fifty billion pounds a year on mortgage. expense with these low rates you lose three hundred billion dollars a year in interest income on pensions and savings account at banks so the low interest rates are guaranteeing a hundred fifty billion pound loss of equity into the economy the lower they keep financial rates low during this financial repression is what it's called the technical term for it economically speaking the more you drain the economy of cash just serviced a few people who are going to windsor about their homes going up in value because they're scroungers because they use it for home equity line of credit they're not happy their house prices are going up because it helping the wealth of the nation they're using it to finance booze when you see people in all of this country drawing going to you know trying to figure out what country they're even living it is the money they extracted from their home due to quantitative easing to get plastered every friday saturday sunday monday tuesday and wednesday that's the average british person a drunk home equity line of credit loser scrounger boom thanks to george osborne

chief bomb now the clown association is saying that these scary clowns are scaring people off the normal clowns well in the bank robbery community the bank robbers that are the likes of jamie diamond and lloyd blankfein and the guys who own the banks you know the best way to rob a bank is own a bank while this plays out in this next headline bank robberies fall ninety percent as new security outsmarts thieves the number of robberies that u.k. high street lenders fell from eight hundred forty seven in one thousand nine hundred two to just sixty six in two thousand and eleven according to the british bankers association improvements in staff training more c.c.t.v. cameras and shutters which fly closed in less than a second are credited with the rapid decline but i posit that it's probably that the banks have already been plundered well before they ever there's the high street bank to go rob well there's i think there's a direct ratio the the difficulty in retail bank robbing is commensurate with the ease with which those on the inside of the interest rate apartheid wall can rob

a. bank that's why these banks are gauges b.c. and royal bank of scotland roebuck of scotland being a particular note here their ability to rob and steal and maim and kick and destroy a u.k. economy and u.k. citizens is never been easier thanks to low interest rates and absence of regulatory authorities well speaking of absence of regulatory authorities we're going to prove that the banks are robbed before you can even get to it off limits but blessed by the fed areas like electricity are generally off limits to banks because of the risks involved but with this june two thousand and ten letter the fed like j.p. morgan take an even bigger role selling electricity in california in the midwest saying the push would quote be reasonably expected to produce benefits to the public that outweigh any potential adverse effects three months later j.p. morgan traders began a scheme to manipulate electricity prices ultimately forcing consumers in those regions to pay more every time they flicked on a light switch or an air conditioner again if it's moral hazard turn into

a mutant hazard of morally bankrupt bankers who are manipulating every single socket they can put their fingers in causing shortages wipe outs brownouts blackouts and all kinds of mayhem to feed that veracious appetite for ill gotten gains are not greedy and that they want to make a lot of money they base money not on the aggregate soames they've collected but the amount of money you've got through questionable means the questionable money means. i mean other people may have made more money you know outright but the questionable means of money you've made that's the key that gives you the winning waving rights down at the you know new york stock exchange luncheon club they could walk in and say a question we made more money than anyone else are we going to see later. i can now stay to have a second i have a whole lot more. on

their way to antarctica the crew of the i can to make sure the face many challenges . here you have to look out for yourself crashing on to rocks trapped in pack ice in extreme conditions anything can happen antarctica always comes up with surprises you have to keep your eyes open because there's always something going wrong the ship carries huge reserves of water food fuel as well as helicopters and people able to survive extreme conditions they're ready for anything even an apocalypse she's really an incredible ship calling all antarctica stations this is academic a field of radio check please respond. choose your language. we can.

choose the the consensus you. choose the opinions that you. choose the stories that impact the life choose the access to often. leg. length. they just leave the economic up and downs in the final months they belong to the new york sang i and the rest look like it's going to be taking a little baby every week long slender legs. legs it was terrible to say the i'm very hard to take on the legs again the longer the

club has never had sex with her right there are no limits to the above. list the i'm living. a. mother. leg length.

welcome back to the kaiser report time now to turn to david blanchflower he's a professor at dartmouth and a former external member of the bank of england's interest rate setting monetary policy committee from june of two thousand and six to june of two thousand and nine welcome to the kaiser report david blanchflower great to so she last day so if britain's economy their plan if it's working why are british people worse off than they were when the coalition took office your thoughts. well it's hard to really argue that it's working what we see is a small burst of growth in the last three quarters ok actualize it as you would

a mascot a race and the u.k. economy did a pretty fast lap sadly it was lap four times by most of the competitive countries what we see is all stares at your post on the economy outputs about five percent lower than it should have been if also and haven't actually implemented this oh and the good example really when white people aren't feeling good is it g.d.p. per capita cheer i'm compared to q two two thousand and ten is up point four percent so i shit that rate it will take fifty years with current policies to actually goes back to the starting levels so far so i'm really recovery this is been the worst most disastrous mapper economic policy in a hundred years the slowest recovery in a hundred years and we are seeing this little sliver up but this is been a disaster now let's let's point out that george osborne the chancellor was named

britain of the year for returning the u.k. to growth so meanwhile there's a lot of placards are circulating that say britain isn't eating kind of a swipe going back to the old our labor tory conflict going back a ways where labor isn't working if every member that was there the rallying cry for the tories here's one is called britain isn't eating so how do isn't there a huge disconnect because you can say that the growth of that growing fast enough arse not growing that all but you're still talking about growth whereas in this economy in britain there's a whole a whole portion of the economy now that's just sinking into homelessness and poverty and it's really really splitting apart your thought well we certainly have seen growth over the last couple of cool sizzles three quarters actually that's comparable to the growth that's. the year the government inherited in two thousand and ten or if you remember when it cameron actually at that time said the economy was bankrupt so what we have here is an economy that's growing slowly driven by

house prices food that the chancellor has created it's helping people in the south of england but now we have to look at how is this feeding through media. we can only wages are actually fully normal and the real terms we see in the bedroom tax and trying to get benefits down to what this is ended up doing is it's created a crisis of food banks that are going to try to ignore and you're right there's been a poster which says britain is an easy thing we see in the trussell trust so that having huge numbers of people this had to feed and her food banks are also going to say that the tory m.p.'s and in the debate will they could do was actually laugh at the fact that people weren't able to eat and find enough food including people in work crisis has actually brought out a study showing polis this is on the rise again so if there is some recovery the

question is what is it a recovery for and the problem is it certainly doesn't look that it's the recovery for the figure like the man or woman on the clap of money bus it's not something that's feeding through to the average person hence with all this tory spin saying how wonderful things are how come the poll ratings haven't moved people support of the coalition hasn't moved at all and when you say do you think the coalition is good for you it hasn't moved into half years so this is not feeding through to the people it's not feeding food through the polls i mean crispier the government looks desperate its ears at the people who are losing out because of their terrible policies i had a let me ask you something because of your expertise as a monetary policy committee adviser and you're really heir central bank and sign. atter i really have a great familiarity with interest rates interest rate policy we may tick some comments on the show and i get your take on it as being somebody who's actually got

a front row seat in the whole workings of central bank it appears to me what i call interest rate apartheid so we have a situation where if you're an insider and you've got great connections you can borrow money through you know one percent or less than one percent if you're speculating and make a bad bet you get bowed out by the government if you're not part of this appear on the wrong side of the interest rate apartheid wall you know you go to a payday lender and they're charging five thousand six percent so isn't our interest rates are they being used in a way to create you know a form of bastardized bateson if you will or segregation in the economy is that a fair characterization your thoughts well i think first of all we should put it in context when we go to two thousand and seven two thousand and eight it was absolutely clear to me i studied those of a rate cut a year ahead of everybody else because it was quite clear to me this was all me so called me was basically went over a cliff and preventing it preventing the debt spiral well cuts in interest rates

and eventually they hit zero and i had to do something and we had to do quantitative easing and what ended up being fat being many many doctors spine guilt because that's essentially what happened in the u.k. in the us legal and yes it's my mortgage backed securities law that ended up doing is money was going up there as you say for those who credit ratings who have access to capital and access to credit they could get very easy access to money the problem in some degree of the mortgage holders have to use in the u.k. people who have a variable rate law reached their interest rate payments that fall in as well and let me let me jump in there for a second because when you talk about the savings people have on the mortgage rates with the lower interest rates there was a study put out by bank of england last year and they looked at the amount of money saved their lower interest rates. mortgages versus the amount of money lost and savings accounts are pantin accounts and they figure that for every pound gain in a interest on a mortgage they're losing two pounds in savings or roughly to two hundred billion

and income from pensions a savings account because of the artificially low interest rates and that is that why in a poll in britain recently the a majority have asked or said that they would like to see interest rates go higher and i know we've tweeted about this back and forth a little bit talk a little bit about it this account well well fortunately fortunately interest rates are set by what people think in the polls you're right a course that through all of this they're happy winners and they're happy loses obviously the concern actually once again if you take it back is if you start to raise rates now will know how about zero pullback yuin are no doubt a very big effect on house prices and on people's incomes and presumably back on the banks again so obviously that's a concern through time and i remember the first time at the bank of england the letters that the bank of england would get with hugely disproportionately from

savers saying you wrong people you you must raise rates because i need you know i mean i'm living off of sixteen calm at the moment the one her use the really the worry are actually about borrowers you can't raise these rates the u.k. economy is interest rate sensitive but actually the story about the savers those savers are done pretty well on a couple of fronts many of them do well from the house prices first that we saw in the two thousand and then second if they were sensible they should to realize that the bank of the moon and the central banks around the world were boosting asset prices and this was going to be very good for equities and so if they didn't go into equities it's not the job of a government or a central bank to help people have a bad investment decision it was blindingly obvious in two thousand and nine that there was going to be a huge. so sorry they made a bad decision. now but danny you have a situation where on one hand we're talking about how the austerity measures are

generating widescale duress in the u.k. and on the on the same token we've got a situation where those who are benefiting from the asset prices and quantitative easing are then engaged in programs like home equity loan origination schemes are pulling out money from the asset prices they're getting a free stipend there though they're the scroungers they're the ones who are getting free money from the government so they're the ones who are pregnant being the government through the stock i quote a loan that they're pulling out of a home equity loan so how can you square that circle because there you've got a group that is essentially gaming the system and benefiting by this at the expense of everybody else. well i don't disagree with much of that but that's why actually i don't pose and i have been arguing for about two and a half years that what the mistake the bank made was actually simply going and buying guilty didn't have to do that when i was thirsty on that night we actually

warps billy and in corporate ass it private sector assets we didn't actually get to vote on and the person who stood in the way of that was mervyn king and the armies you couple other stuff and we have been revealed we sat and talked about well what could you buy we could have bought i mean we could have bought anything because a book companies who could have all foreign exchange are going to war all sorts of things and basically learning king refused to do that well in a big fight without imposing but let's take an example i might do it one possibility of it being well firstly you could buy things in the mortgagee and then that in the housing market but a lot of this possibility would be to issue something like a small firm loan bond and bids cable and others that supported it and then he would have been able to start to get money to the places that you needed which is the small firms are a classic example of what you said you can get access that cash big firms got little's of money sitting on it and not using it and small firms can't get many of them tell me you know what the owning going to sell to the bank because they're

worried that the bank will impose additional charges on them and reduce the loans that they've already got so you're right what's happened is that the way that this is work just by putting treasuries that's actually just made lots of distortions but i don't put really the blame centrally on the game for that he was the one who stood against it even though the bank actually has commissioned permission from alice the darling to buy private sector assets and on the on the books today george all school continues that they have permission to do it they haven't done it and they must take probably responsibility for not doing so and people like me and pose an alarm that they should have done it so we're not a million miles away from you well there isn't a question of making the wrong economic policies or as a question of being pressured by. lobbyist's because the choices that were made and you laid out some choices that could have been made that were not made and however the choices that were made have remarkably benefited the same folks that are being benefited from the same policies for decades now and they are of course have huge

lobbying pressure that they bear in the city of london and on in wall street we'll have ten seconds left just a very quick question you talk about two thousand and eight let's compare it to twenty thirteen twenty fourteen is the debt in the system higher today than it was then. what we are seeing in the. new house. ok ok well i mean i think the answer is and we can tweet about and follow us on twitter for a follow up but i think the answer is the debt the debt the debt levels are are epically higher than they had been in two thousand and eight so we've got to go back and really examine the policy makes and who is doing what to whom but we're out of time danny thanks so much for being on the kaiser report hope to have it on again soon to see it. ok and that's going to do it for this edition of the kaiser report with me max kaiser stacy herbert i'd like to thank our guests david blanchflower if you'd like to get in touch tweet us a kaiser report it's a lifetime bio.

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