From: Seb 
Newsgroups: uk.finance
Subject: Re: credit implosion
Date: Thu, 14 Oct 2004 19:02:58 +0200

M Holmes wrote:
> sPoNiX  wrote:
> 
>>On Thu, 14 Oct 2004 14:45:41 +0200, Seb 
>>wrote:
> 
> 
>>>From the talk that's going on, the UK (and even more so the US I 
>>>presume) is in danger of a consumer credit implosion when many of the 
>>>people who borrowed to go on a spending spree have to declare 
>>>insolvency. How does it affect people who have net savings? Besides some 
>>>devaluation of the Pound.
> 
> 
>>Also, what is the best way for Mr Average to survive such an
>>implosion?
> 
> 
> It depends how pessimistic Mr. Average is. if he's moderately
> pessimistic then he gets out of debt and sells as many assets as he can
> comfortably live with, and spreads the cash around various banks,
> government bonds, and gold so that his cash survives and prospers in
> deflation and he's ready to buy up assets at the bottom. If he's very
> pessimistic he does the same and puts it all in Gold in a Swis bank
> account. If he's extremely pessimistic then he assumes the currency
> won't survive and therefore runs as much debt up as possible and buys
> gold, guns and food to get by for a while.
> 
> Personally I've bet we'll muddle through more like Japan than Argentina,
> but hey, I've been wrong before.
> 
> FoFP

 From the looks of it a few of us are savers?
Japan didn't muddle through all that successfully, I think. Even now 
with an upturn there's lots of bad corporate debt. It seems to be harder 
to deal with than consumer debt. I tend to agree that if you're quite 
pessimistic then you can exchange your assets for gold futures (or 'safe 
have' currency like SFR)--if UK assets fall in value systematically then 
gold with rise against Sterling. Whether there's reason to be that 
pessimistic is another question.

Seb