I had to read in yesterday’s Guardian newspaper that my beloved gym, Fitness First, is in financial difficulty. The sports studio chain, the world’s largest, is in negotiations with its creditor banks to secure a reduction in the interest it pays on loans of over £600 million. Apparently, it is already struggling to meet the repayments. The report reminded me of the lifelong membership (access to all studios worldwide) that Fitness First offered in 2008 for the handsome fee of 4000 euros. Compared to the typical monthly subscription fee for established members of 80 euros, the figure seemed reasonable and, without taking foregone interest rates into consideration, subscribers would reach their breakeven after four or five years. (more...)
Posts Tagged ‘debt’
Lifelong Sport
Wednesday, January 25th, 2012Debt Cancellation III
Wednesday, December 7th, 2011UK finance minister, George Osborne, had to concede last week that the magnitude of the debt problems his country faces would likely mean five more years of austerity. Together with the two that the country has already endured, that will make a total of ‘seven lean years’. That seemed about right to me: a crisis of biblical proportions. It also got me thinking about a biblical solution to the debt crisis, namely, generalised debt forgiveness – a Jubilee Year. (more...)
Debt Cancellation II
Tuesday, December 6th, 2011Debt cancellation – a policy about which I would have serious reservations if employed indiscriminately – is nothing other than a political capitulation in the face of a seemingly unmanageable debt mountain. Yet such a policy is not as simple as striking a zero or two from the peoples’ bank balances, the positive as well as the negative balances. Indeed, if those balances represented peoples’ total wealth, the policy might not even be socially disruptive because each individual’s relative position would remain unchanged even as the wealth distribution flattened. (more...)
Debt Cancellation
Monday, December 5th, 2011I have been repeatedly asked over the last few weeks what could be the worst-case scenario for the eurozone debt crisis. It is not a question I like to answer; there are large number of possible paths the crisis could take, which means that there is no single worst-case, but many. And this ignores the effect of the government policy responses those paths would undoubtedly encounter along the way. I do not attach any meaningful probability to it, but when one thinks about any worst-case, it is easy to conjure up images of a total collapse of the economic system as we know it – money, banks, financial markets, growth-based priorities – and some kind of new beginning. (more...)
Dissonant Debt
Tuesday, August 30th, 2011A recent US academic study that showed college students feeling “empowered” by student debt has baffled many observers.[1] In an environment of over-indebtedness and increasing joblessness, one would have thought that a student loan would be perceived as a burden. But no, according to researchers at the University of Ohio, the greater the debt the higher college students’ self-esteem. (more...)
Labouring Under an Illusion
Thursday, June 16th, 2011US presidential candidate Tim Pawlenty’s plan for the economy is to “grow it (sic) by 5 percent, instead of the anaemic 2 percent currently envisioned.” If one earns one’s income from labour rather from capital, however, one could reasonably ask: “Why bother?” Especially since 2000, the share of income that has accrued to labour versus that accrued to capital has fallen dramatically during periods of economic expansion. (more...)
