Ten mind-boggling statistics from the credit crunch

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It’s been a year of mindboggling statistics and silly money, of soaring debts, collapsing stock prices and astounding events.

When Northern Rock collapsed last year, did you think, “We’re going to have to nationalise the rest of them too”. No, me neither.

I also bet you didn’t work out that the part-nationalisation of our banking sector would cost you at least £8,000 in taxes. And this is just the beginning.

Here are some other surprising, dispiriting and utterly disturbing statistics from the financial credit crunch which has ravaged our financial sector, broken the back of our economy and produced a recession that could be the worst for many generations.

1. £500,000,000,000

…or around £8,000 each. £500 billion is a conservative estimate of what taxpayers, you and me included, are paying for Gordon Brown’s plan to bail out the UK banking system. The three-part package includes committing up to £50 billion of taxpayer funds for a part-nationalisation of Lloyds TSB, HBOS and Royal Bank of Scotland (RBS), which is now 57 per cent owned by you and me.

The Bank of England will pump at least £200 billion into the money markets to encourage banks to lend to each other again, which should help lower the costs of new mortgages. And the Government is also making a further £250 billion available for banks over the next three years to guarantee medium-term debt which is of dubious quality. This should also help restore confidence and get banks lending to each other again.

£500 billion is a staggering amount of money, equivalent to 4,000 brand new hospitals (at £125 million each), 16 new high speed rail links between London, the north of England and Scotland or 37,000 Jamie Oliver-approved free school meals for each and every pupil in the UK. Instead, they’ll be eating turkey twizzlers.

2. £20,000,000,000

This is the amount of taxpayer cash that has gone into the coffers of the Royal Bank of Scotland, a bank which was the pride of Scotland until the suffix “troubled” was permanently attached to its name. This is the equivilent of £333 each. You have Sir Fred Goodwin, the former chief executive of the much-maligned firm, to thank for this. Royal Bank of Scotland made £7.5 billion in net profits in 2007, the year before the banking bubble popped. Last month Tom McKillop, chairman of RBS, apologised for the right royal mess the firm was in.

3. £1,800,000,000,000

£1.8 trillion is the cost to the global economy of the credit crunch. Such a vast number is difficult to grasp, but in the same report, the Bank of England valued the UK economy, the fifth biggest in the world, at £7 trillion. So it has so far cost about a quarter of the value of our entire economy.

4. 0.4 per cent

The drop in retail sales last month compared to a year ago, according to the British Retail Consortium. This doesn’t sound like much, but a predicted fall next year of just 4 per cent will produce the worst conditions on the high street since 1965, according to research by Verdict, a retail consultancy. Major retailers are collapsing into administration, including Woolworths, Pier and MFI, and more are expected to follow in the next 12 months, as consumers shut their wallets, bury their purses and consider making half their Christmas presents.

This won’t just create less choice on the high street. The retail sector employed 3.2 million people last year, so problems on the high street spell huge problems for the economy at large.

5. £50,000

This is the amount which will have been wiped off the value of your house by the end of next year, according to the Centre for Economics and Business Research (CEBR), an optimistically-minded think tank. It predicts that average prices will fall by 25 per cent and not return to their peak until 2013. The average home in the UK, which hit £200,000 in August 2007, will fall to £149,000 by 2009. Capital Economics, the consultancy, has said that prices could fall by 35 per cent, peak to trough, although it also forecast a tentative recovery in 2010.

6. £50,000,000

Executive pay at the five biggest banks exceeded £50 million in the last five years, according to a report by the Labour Research Department. Sir Fred Goodwin, the head of RBS, was paid a basic salary of £3.5 million last year. Between 2003 and 2007, Goodwin got £15.5million in basic pay and cash bonuses. Eric Daniels, of Lloyds TSB, pocketed £10.2million and HBOS chief executive Andy Hornby earned £6.9million, according to annual reports.

Another number to remember is 59.9p: the lowest share price this year of Halifax Bank of Scotland, 92 per cent less than the highest point in the year. Stocks in the embattled mortgage giant, which is set to be taken over by rival Lloyds TSB have plummeted since trading at almost £11.60 last year.

7. £2.5million

The cost of celebrating Christmas at Britain’s nationalised banks. Lloyds TSB, which is accepting about £5.5 billion from taxpayers to shore up its broken balance sheet, is to spend around £2.5 million on Christmas parties for its 100,000 UK employees, or around £25 a head. Meanwhile, HBOS is hosting a “luxury dinner and dance” at the Birmingham NEC for 1,500 mortgage workers, with free hotel rooms thrown in. Meanwhile, Royal Bank of Scotland (RBS) is spending £1 million on parties for its 100,000 staff. RBS also spent more than £300,000 entertaining 40 senior employees and 30 partners recently.

Alex Neil MSP, an SNP member representing central Scotland, reflected the mood north of the border when he said the bank was “playing with fire”. He added: “I don’t want to be a party pooper, but spending £1m on Christmas parties when so many pensioners have lost their savings as a result of the RBS share collapse is obscene.”

8. £1,500,000,000,000

This is the amount of debt which Britons have to pay back. £1.5 trillion is the amount we owe in the form of mortgages, credit cards, personal loans and store cards. This equates to roughly £4.5 billion washing machines or 7.5 million three-bedroom houses.

The average household in the UK with personal, unsecured debt, such as personal loans or credit cards, owe £22,190. If you include mortgages, the average household debt is £59,715.

However evidence suggests that we can’t afford to pay it back. About 120 properties were repossessed every single day in the UK last month and the situation is expected to get worse as growing numbers of households struggle to meet their mortgage commitments. The Council of Mortgage Lenders says 200,000 homeowners will have missed at least three mortgage repayments by the end of the year.

Auction houses are reporting a huge jump in the number of repossessed homes on their books. Allsops, one of the largest, recently held an auction with 996 lots, compared to 227 in the same month last year.

The bad news continues. The number of homeowners trapped in negative equity is expected to soar to 2 million by 2010.

9. $2,900,000,000

Last year’s pay cheque for George Soros, the second-highest-paid hedge fund manager in the world. Mr Soros is the chairman of Soros Fund Management and was estimated to be worth about $8.8 billion by Forbes magazine last year. This could clear the credit card debt of almost 300,000 struggling Americans.

The average American household owed $2,966 on their credit card in 1990 compared to $9,840 in 2007. The average American male earned $32,000 last year, according to figures from the US Census, and last month more than 533,000 Americans lost their jobs, the largest amount in 34 years.

10. $52,000…

…every minute. This is how much cash GM, or General Motors, is losing as a result of the economic meltdown in the US. Note that this eclipses the average annual American salary. This collapse in profitability has forced the world’s biggest carmaker to go cap-in-hand to the US government and it has been joined by Ford and Chrysler, which are facing similar loses. The US carmarkers are asking for £23 billion in taxpayers cash.

By James Charles

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