Monday, 1 October 2012

UK Sectoral Balances and Private Debt Levels - Q2 2012


Q2 2012 Figures are out. Apologies for the delay in getting these up - it's been a busy week at Wilson Towers.

The figures are skewed this quarter due to the nationalisation of the 'Post Office Pension Fund'. This has been a massive £28bn transfer from the financial sector to the government sector. What it does show though is that it is possible to 'pay off' the national debt by nationalising pension funds (which are mostly Gilts anyway) switching them from an 'invested' basis to a 'pay as you go' basis.

Given that pensions are always a current production distribution problem, you have to wonder which genius thought that offsetting the 'paradox of thrift' for several decades was a good design for a pension system in the first place.

The five sector chart shows the pension transfer much more clearly.

And finally the private debt levels:

Households continue to deleverage very slowly, but private non-financials are still gearing up again.

Source: Office of National Statistics, tables RPZD, RPYN, RQAW, RPZT, RQCH, DJDS (Seasonally adjusted Net Lending/Borrowing per sector plus residual error) and YBHA (Gross domestic product at market prices, seasonally adjusted). Private sector debt based on tables J8XI, NLBC, NKZA, NNQC, NNRE, NNXI, NNXM, NNWK, J8XK, NLSY, NLUA, J8XM, NJCS, and NJBQ (Lending, securites and derivatives per sector, not seasonally adjusted) scaled by BKTL (Gross domestic product at market prices, not seasonally adjusted).

4 comments:

Anonymous said...

Ever since early 2000's non-financial corporations have run persistent surpluses, any idea why that is the case?

Neil Wilson said...

None at all. It is saying that NFCs are lending money to the other sectors rather than investing in their own sector.

Which suggests that it may have been more profitable to play with money than do anything real.

Magpie said...

As you say in reply to the question posed by Anonymous (i.e. "it may have been more profitable to play with money than do anything real"), the second chart (Sectoral Financial Balances as %GDP, Q1 1987 to Q2 2012) is indeed suggestive.

Have you tried graphing Private Non-Financial financial balance vs Gross Operating Profits and/or Gross Mixed Income?

WillORNG said...

Normally businesses borrow to invest and expand, but there's not the excess demand to drive that.

Isn't this part of the financialisation, the rents are crowding out profits from the real economy?

Given the high FIRE sector debt, wouldn't we want to see higher financial sector surpluses to liquidate the FIRE debt overhand, funded by bigger surplus government spending.

Even from Cameron/the ruling caste's pro-FIRE political funding this would make logical sense!