The Ignorant Investor

LONDON (AFP) - The number of British households declaring bankruptcy because of an unmanageable burden of debt hit a record high last year, according to official figures.

The total of 67,580 bankruptcies was 45 percent up on 2004 and the highest since the statistic began to be recorded 45 years ago.

Analysts warned the figure could hit 100,000 in the current year, a new rise of almost 48 percent.

What's the reason? Household debt levels grown too big to manage, including both mortgage debt and surging credit card use.

What's the significance to Americans? The British economy is, if you can believe analysts, about six months ahead of ours. It was roaring ahead but has recently slowed. So this story on bankruptcies gives you a taste of what's coming should we not maintain the pace we've set for ourselves here in America, where the personal savings rate is now less than zero. Banking on the good times lasting, both British and American consumers went into debt to finance their pleasant lifestyles. Now the British look to be faltering, and everything here in America depends on our economy continuing to hum along. One false move: BOOM. American debtors fall behind in their payments, and the harshest of harsh financial penalties kick in and ever greater payments are required (the ancient laws against usury were gutted years ago to increase economic efficiency, you see).

Next stop? Oh, man. It's too horrible to imagine. I'm going to drink a beer now to calm my frayed nerves.