British debt is much worse than Spain's. And more is on the way.

  Can it really be that, only seven years ago this month, a quarter of a million people, all dressed in white, encircled Edinburgh in the campaign to Drop the Debt of developing nations? It seems like a different world, now that countries like Britain are drowning in their own debts - which make the debts of African countries look like small change.

While Bob Geldoff was hurling expletives at the G8, Britain was indulging on the greatest borrowing binge in history. This wasn't just government borrowing, which rose to an unsustainable £155bn per annum in 2010. The real big spenders were you and me, the households of Britain, who embraced debt as no generation has ever done before. Household debt in Britain is now off the scale, at 150% of GDP – heading towards £2 trillion. There is no precedent for this in British economic history.

If you add in the debts of British banks, unfunded public sector pensions and PFI deals the debt mountain rises to 507% of GDP, according to analysts McKinsey and this has actually risen since 2008. Spain's total debt by the same measure is only 385% of GDP.  But here's the really scary thing: many economists say the only way to get out from under this massive debt burden is by spending more in the hope that this will revive the economy. And they are probably right.

Epitaph for the Age of Irresponsibility

     “An epitaph for an age of irresponsibility”, is how the Chancellor, George Osborne, described the Barclay's Libor-fixing scandal in the Commons last week. It was, he went on: “symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees”. If even a Tory Chancellor has finally got it, can we expect real action to sort out Britain's banks? Don't hold your breath.

The manipulation of Libor – the London Inter-Bank Offered Rate - has been common knowledge in financial circles for years. The Economist has been writing about it at least since 2008. The idea that the British Bankers Association didn't know what has been going on is laughable. Every barrow-boy in the City knew the banks had been fiddling their borrowing costs in order to disguise their distress after Lehman Brother's crashed in 2008 and interbank lending almost froze. By manipulating their borrowing costs, banks like Barclays were able to convey the impression that they were in less financial stress than they actually were.

Lords reform could be the missing link to devolution max

The SNP said this year's rebellion by Tory MPs on reform of the House of Lords was confirmation that “Westminster cannot be trusted on constitutional reform”. The only way Scots can ensure that the unelected Upper House has no say on Scottish affairs, they say, is to vote Yes to independence in 2014. Oh, and don't listen to all those promises from David Cameron and Alistair Darling that, if Scots are good boys and girls and vote No, Holyrood will be given more tax raising powers and many other goodies. Like Lords reform, this is destined for the long grass of legislative oblivion.

However, it's not entirely true to say that Westminster can't be trusted to deliver constitutional reform – it delivered the Scottish Parliament after all, and has recently passed the Scotland Bill giving Holyrood a share of income taxes, though few economists seem to think this scheme is workable. And with a bit of imagination in Westminster about the Lords, and its place in the shifting sands of the Union, they might be able to kill two constitutional birds with one stone: salvage the UK and give the Upper House a real role in life as an elected Senate.