Apples and Apples

If you're going to compare things then you've got to compare like with like: there's no point in comparing the weight of a pencil to the length of a pygmy, it just doesn't tell you anything.

When we start getting into economic statistics it can often be a bit more difficult: for people often aren't aware that they are comparing unlikes. As today:

Be not sanctimonious. Debt, both personal and public, is what the United States and the United Kingdom now share far more than a mere common language. The American government owes a little over £4 trillion. Yet the Centre for Policy Studies recently estimated Britain's true national debt as £1.3 trillion (more than its GDP).

Those two numbers are not comparable. The American one is the national debt: the bonds the government has outstanding. The UK equivalent of this is some 38/39% of GDP, or some £550 billion or so (very roughly).

The report for the respected Centre for Policy Studies think tank says the official Treasury figure of £487 billion wrongly excludes the cost of public sector pensions liabilities, the hidden costs of Labour's flagship Private Finance Initiative contracts and debts incurred by Network Rail.

(Hey, my 550 billion was pretty good for back of the envelope: especially as the debt has grown in the two years since the orginal report.)

No, I don't know what the US government equivalent number is but we can tell it's larger than the reported £4 trillion: they're just about to add Freddie Mac and Fannie Mae to their admitted, as opposed to implicit, liabilities for example.

Banks these days are indeed busy losing the loans themselves, while neither Brits nor Yanks have any "husbandry" left to dull. The average annual savings rate in America is now a paltry £200, not much more than the value of the coins that fall yearly into the cracks of the average sofa.

Hmm, I'm not all that sure this is in fact a problem. Your lifetime savings, if you can manage to plan things just right, amount to nothing. The money runs out just as you die. So you spend a large part of your life saving for those years when you won't be earning, true, but when we sum up the entire population we're going to have pretty much a zero saving rate.

No?

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