The United Kingdon of Subprime follows us into the Abyss

I've called the United Kingdom the mini brother of the United States of Subprime - the great idea of a financed based, credit fixes everything, housing bubbles are fun, service economy. Big credit to a series of articles Mish found - instead of just redirecting you to his site these are worthy enough to post in full. And don't forget Spain - their housing bubble actually (from afar) looks even worse than ours.
Some sobering headlines.... and these are the things I've been forecasting for the U.S. since the blog began last summer - remember state and local budgets are set mid year. I believe by this time in 2009 you are going to hear serious despair from local municipalities. In fact the outcries in certain states will be hot and heavy this fall at the education level. The tax revenue is shrinking (real estate and retail). And very few in America know how to save for a rainy day. So either taxes must go up, and/or services/salaries/benefits must shrink - since the foxes run most of the hen houses in America you can bet salaries and benefits for those at the decision making level won't be shrinking - so it will be layoffs at the lower end (peon class) along with higher taxes for everyone in the tax zone. We're early here. As always. Give it a year.
It appears Britian has become "Americanized". [Jul 2: Cook County, Chicago - Highest Taxes in the Nation: 10.25%]
Taxpayer Can Bear No More, Admits Alistair Darling

• Taxpayers are at the limit of what they are willing to pay to fund public services, the Chancellor has said in an interview with The Times.
• In his gloomiest assessment yet of the state of the British economy, Alistair Darling gave warning that the downturn was far more profound than he had thought and could last for years rather than months. (I'd appreciate some of that honesty in this country - Uncle Ben appears to finally be cracking and admitting the "recovery" might take into early 2009, after denying it all of 2007 and early 2008. Paulson? He'll be hanging 10 after January 2009 so what does he care - just keep reassuring us the economy is stronger than the number look, and fundamentally this is a growth economy hitting a few speedbumps - keep the sheep fed)
• He revealed that he told Cabinet ministers this week that there would be no more money for schools, hospitals, defence, transport or policing. (that's a problem - can I offer the American solution? Gas up Helicopter -> Print more money) He confirmed that the Treasury was considering revising its fiscal rules to allow more borrowing to deal with the economic problems. (aha! I see you are learning)
  
• He said that he did not believe that voters, already struggling with higher food and fuel bills, would be willing to pay more tax.
• “My judgment at the moment is that there are a lot of people in this country who feel they work hard, they make their contribution and they’re feeling squeezed. (hmm, in D.C. they have yet to figure this one out since the "aggregrate government reports show everything is honky dory" - in fact we are whiners per Phil Gramm) :)
• His disclosure came as latest figures showed that public borrowing rose by £9.2 billion last month, well above City forecasts of £7 billion and the highest for June since 1993, when monthly records began. Borrowing of £24.4 billion between April and June was a postwar quarterly record.
• Laying bare for the first time the Government’s assessment of the scale of the downturn, he said that Britain could still be suffering by the next election, expected in 2010. (now you're getting it)
• On the vulnerability of banks, he said: “The real problem we are facing today is a consequence of the fact that too many banks at a very senior level didn’t understand the extent of the risk to which they had become exposed.” (hmm, but these people are paid extraordinary amounts of money because we are told on these select few humanoids are smart enough to be CEOs, and hence should be compensated as such - I notice a disconnect)
• Total tax payments fell 1.5 per cent last month compared with the same time last year, against a Budget forecast for a 4.5 per cent rise over the full financial year. (6.0% variance - not good. Batman, to the Printing Presses!)

• The Treasury sank deep into the red over the past three months as the economic downturn undercut tax receipts forcing it to borrow record amounts, official figures showed this morning.
• Over the first three months of the new financial year, April to June, the Treasury had to borrow £24.7 billion - the highest figure since records began in 1946 and up by a startling two-thirds from the £14.7 billion total for the same period last year to an all-time high for this period.

• Brown's pledge to hold debt below 40 percent of gross domestic product is under threat as the economy edges towards its first recession since the early 1990s. The slowdown puts Brown at risk of breaching the two fiscal rules he created as finance minister in 1997, when he promised to borrow only for investment over the economic cycle and keep debt below 40 percent of economic output.
• Relaxing the rules ``would in essence offer scope for more spending and lower tax revenues, a larger budget shortfall in the years ahead and more gilt issuance, and it deals a major blow to the credibility of macroeconomic policy making in the U.K.,'' said Russell Jones, the head of global fixed-income and currency research in London at RBC Capital Markets. (but other than that, things are looking rosy)
• The slowdown is cutting revenue from sales tax, housing transactions and company profits.
• The U.K. budget deficit will reach 3.3 percent of GDP this year and next, the European Commission, the European Union's executive agency, forecast in April. In the 27-nation EU, only Hungary faces a bigger shortfall this year at 4 percent of GDP. The deficit in the U.S. is forecast at 5 percent of GDP and 1.9 percent in Japan. ``The figures were horrific, absolutely horrific,'' said Philip Shaw, chief economist at Investec Securities in London.

"Horrific, absolutely horrific" would be considered "deficit fighting" in the United States of Subprime. It's all relative baby. We seem so immune to deficits here no one even raises a fuss anymore as the national debt spirals onward and upward. Not to worry - just have more kids and grandkids - they'll take care of the mess we leave behind.
Now about that second stimulus plan....