Domo Arigato Messrs. Darling and King

That’s right, the British are turning Japanese too according to Bloomberg:

Lending to companies fell by 4.6 billion pounds in September, sending the 12-month growth rate to its lowest since records began in 1999, the Bank of England said on Nov. 18. Many firms reported continued concerns over access to finance, the central bank said.

“If companies are heavily indebted and face uncertain times, the demand for borrowing will naturally fall off sharply,” said Geoffrey Wood, professor of economics at the Cass Business School in London and a former Bank of England adviser on financial stability. “I’m not at all surprised that bank lending to companies is down. Firms are trying to pay down their debt.”

Companies paying down debt?  Don’t tell Tim Geithner.  He’ll have none of it.  Geithner is hellbent on drowning borrowers- already up to their eyeballs in debt – with even more of the stuff.

But anyways, back across the pond:

“It is very important that each and every bank knows that there is someone looking over their shoulder,” Chancellor of the Exchequer Alistair Darling told journalists on July 27. “We will work intensively at chief executive level to make sure the availability of loans is maintained.”

Oh snap! Looks like Darling caught a mutant strand of H1N1: H1G1.  You know, the Geithnerized swine flu.  I wonder if he put his pinkie up to his lip a la Mike Myers as Dr. Evil after he said “shoulder.”  Or “maintained”…

But try as he might, Darling can’t make borrowers borrow more.  Maybe this has something to do with it:

British consumers, shouldering a record 1.46 trillion-pound debt burden, slightly greater than the country’s 1.45 billion pound annual gross domestic product, are also curbing borrowing. Consumer credit fell for a third month in September, by 262 million pounds, the Bank of England said on Oct. 29.

Forget about the oversight in fact checking/editing (I’m sure it’s GDP of 1.45 trillion, not billion), this is debt/GDP over 100%.  Nobody on Earth can borrow ad-infinitum and last time I checked, I don’t think God ever needed to borrow a penny.

To me, this seems to be part of a very painful learning process for a lot of people.  Some people didn’t learn that you pay debt down by actually sending payments in that cover more than the interest charges.  You have to repay the principal.  Rolling debt over is not the same as paying it off and I just don’t think a lot of folks got that idea until all of this hit.

So there you have it.  The British are showing signs of turning Japanese now, just like us.  Richard Koo’s book argues that expansionist fiscal policy by government is necessary and is the right move to make.

Frankly, I keep looking at this chart and I just don’t agree:

[Via http://professorpinch.wordpress.com]