Hi! It’s David Lee here. With the markets going the way they have been in the last 24 hours I thought I’d do this short video for you.
This is something that is foreseeable. I’ve been telling people at my public presentations for the last three years, at Passion2Profit, and before that, what was going on. Quite often people just go about their merry way. They do what they were going to do. They don’t see, in reality, what’s happening on the other side of the world. How it can affect them in their job, in business. And for many it’s very difficult to understand what’s going on.
I’ll just show you a few slides of what I’ve shown at my presentations over the last three years. Why the markets as they are, it’s inevitable what goes up must go down. Here’s one of the slides. We may be in a “recovery” in the United Kingdom, but as austerity was going on over the last few years, just take a look at the level of public debt. Now you may say, “Oh my God! Look at all that public debt. Look at how it’s spiked.” Well, that’s only the public debt. This chart is from 2012. It has come down a little bit since then.
You have a look at the level of private debt which is financial debt, like down in London town with all the financial services down there, which is so great. Have a look. That’s the orange bar. The non-financial sector which is business. It’s the business private debt. And then the blue bar is the household debt, the consumer debt. And that, if you look at that stage, it was 450% whereas I think about that time was 90% was the national debt, so it took it up to just over 500%. But the ratio was 450% private to 90% national. That is the Achilles heel for the United Kingdom.
And we can’t ignore that, except people can have their own personal opinion, what they read in the newspaper or watch on the TV where they get the information from, or you can follow what I follow which is usually not in mainstream.
Now, if I have a look at that, does that not make sense? As we get older we reach a peak as far as our spending within the household, as the kids gradually leave, we don’t have all the expenses bringing up the kids. And our spending patterns drop-off. In fact, we go from spenders to savers as we hit our 50s and move onwards towards retirement.
And as much is the governments would like to stimulate to create more demand to take us into more debt, personal debt, that’s why they are praying for inflation, it’s not going to happen. They’re fighting a losing cause because in the United Kingdom, especially in southern Europe, China, the United States…Australia’s not as bad, but a lot the Western countries are ageing populations. Trying to stimulate them to spend it’s not going to work.
Here’s an example just to show you why. Again, I go back, you can have your personal opinion what you think, you read the newspapers, you watch the TV, but you can’t rely on that source for information. So try to argue with this if you want.
There’s the immigration-adjusted births for the United States during the 1900s. Have a look between in there, 1939 to say 1959, early 60s. You see all those little babies that were born. Advance it by 65 years. Now, argue with that, if you would. They’re the people that are therefore exiting the workforce if they’re leaving at age 65. And there we are now between 2004 to 14 to 24, and that’s the problem that we’ve got. That’s the problem we’ve got in Europe. And you look at the signs, and it’s the symptoms we’ve got going on.
There, China one-point, what, was it a one-child policy? So that’s been in since the 1970s. They’ve also a declining population, as we can see here. I did this chart, guess what? From Google. 1960 through to 2010. The top one you see there was China where it was five point, I think about 5.7 children per household. It’s gone down to, I think about 1.5 and therefore that’s why the population of China is getting older and decline. Japan was the same thing. Now about 1.2-1.3 and over the next few decades they’re going to lose a third of their population and they’re getting older. The Japanese economy is more senior than the Western economies. Their population peaked. The baby boomers peaked earlier.
What else have we got there? The United Kingdom…Southern Europe, as I mentioned, Italy, Spain way down there at about 1.3. They’re not replacing the population and so you can’t re-stimulate that. Plus the levels of debt, plus all the loans that are going on. How they’re trying to stimulate the economies, and it’s just a matter of time.
So, that’s why I say this is not a surprise. Certainly not me, not to my peers. It’s been expected. What goes up must come down. And people do not like to believe it can come down when it’s right at that moment. They believe it’s going to go on forever. Like around 2007 they said what goes up must go up even further.