I will always remember Jim Cramer on CNBC screaming 'This cannot be allowed to happen!' as the 2008 crash started- the key word in that sentence being 'allowed'.

The huge irony of people like Cramer is that for all their anti government rhetoric they maintain a child like faith in the power of Government to 'fix' the economy.

So the reality that the debt will not be paid back is not one the 1% seem able to accept- it's too painful. As a result we get an increasingly desperate array of policies designed to obscure this reality- like QE, ZIRP and the plethora of other gimmicks and tricks currently being deployed by Central Bankers everywhere.

Things they are not doing-for example- are dealing with the derivative issue, which massively amplifies the fallout of any defaults by spreading the pain throughout the system.

So at present I would argue that we are not past the 'denial' stage of the crisis- the powers that be still seem to think that if they just pump enough funny money into the system it will spring back into life and things can go on as before.

For most of the past couple hundred years, thanks to technology, the general rule seems to have been 'what the rich have today, the average person will have in a couple of decades time' In 1910, only the wealthiest had cars, by 1930, at least in the US, fairly average families could do the same. Same goes for heated water, electricity, television etc etc. At some point (ie when globalization reached the necessary level) the middle class started to be destroyed. If you applied the 'what the rich have today, the average person will have in a couple of decades time' observation in 1980, you would probably expect the average person in 2010 to have a swimming pool, yacht, helicopter, and a hoard of jewels. In fact, not only has that not happened, most the so called middle class are living paycheck to paycheck literately scratching to get by

We could have endless energy via nuclear, but a bandwagon has been put out saying this is dangerous without considering the technology advances safety as well as output.. We simply have decided to stop technology from assisting us to continue the 'what the rich have today, the average person will have in a couple of decades time'. How? Because productivity (via technology) increases at 2-3% a year, meaning all things being equal, wealth should increase. However, via deficit spending and unfunded pension liabilities, the government steals all this and more, meaning there has been zero progress in wealth since at least 1980.

The simple truth is the debt has grown too large, it can never be paid back, they rely on this elixir of growth, absent pretty much apart from minuscule increases for the last 5 or 6 years. In order for them to keep pace it needs to grow at 5 or 6 % a year to maintain the living standards to which we have become accustomed and that is simply not happening and is not likely too in the future.
In one way it goes some way to explain the relatively new government policy of privatising state assets and renting roads, health care ect back to the consumer so they have a ready made income stream.

The next year or two will be pivotal in how the UK rides this storm. Carney is due to take over at the BOE and is talking up abandoning the Governments 2% inflation target (not that they have taken much notice of it last few Months) in the interest of trying to kickstart growth. Whether he will or not depends on how the debate goes at Government level.

Clearly they are getting desperate though.

We were having a discussion in the office yesterday about this. None of us could understand why anyone would fall for an interest only mortgage?

At the end of the term you still don't own the house and could be quite a way off.

When I started my mortgage in 1983 I had to fight tooth and nail to get a bog standard repayment mortgage as they were going on and on (and on) about an endowment one, which I definitely didn't want. And I was subsequently proved right

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Lets be careful out there !

I took an endowment around the same time but was very careful to plan ahead... I cashed the endowment in around 1994 and paid around 60% of my mortgage off with it. (They did exceptionally well over these years).
The rest I converted to repayment and over paid it from time to time within the t&c . In 2005 I cleared it completely.

Interest only is simply renting property from the bank with having the huge liability hanging over you. Great little scam the banks managed to pull off.

If property values fall the mortgage holder is left holding the loss whilst the bank laughs all the way to the emm bank......

You will recall Government were pulling out all the stops to get the sheeple to buy into this..

I took a short term mortgage 10 years then I had a prepaid endowment mature, so paid up the remainder, and lived happy ever after (so far)

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Its not always the biggest and the bestest, its them that make the least mistakes.

That is an excellent analogy. The thrower knows precisely what the expected effect will be; and the results are utterly devastating for those on the receiving end.

If anything, a hand-grenade is probably under-estimating the situation. A doubling of interest rates could be likened to a Hiroshima-like atomic bomb in its final effect. The long-term fall-out will ripple on and on in ever-widening circles, drawing ever more people into its murderous clutches. First, some people lose their homes, then property buyers lose their homes and their investment, then businesses fail at an ever-increasing rate because of a falling spending rate, unemployment rises exponentially, more people lose their homes, etc. etc. Then the economy really is in a crash-dive, sucking in ever-larger number of victims until martial law is has to be implemented.

The central banks create money out of nothing and charge interest on the nothing they loan out at interest, with the result that the whole global system is drowning in debt. Is the answer for HMG to re-issue the debt-free Bradbury Pound? AND, why is whenever an MP is asked this question, the answer is a resounding and deafening silence?

A short video explaining the Bradbury Pound:
http://www.facebook.com/PositiveMoney/p ... 7543391125


The Bradbury E-book: http://www.ukcolumn.org/blogs/bradbury- ... -available

The last thing we need is a housing boom , not until the prices fall and stabilse
thats one thing that got us all in the mess in the first place
we need to have loans on a house capped at about 3 times salary , joint of poss
so we only get a morgage we can afford , and still be able to pay it on one wage , if children come along
It used to be like this , and over all , it worked

This financial crisis is unlike any other the World has experienced.

The debts are simply too large now to be paid back. A ponzi scheme relies on new blood coming in at the bottom to keep paying out those further up the pyramid...

New Blood = constant immigration..

Easy access to funds = Interest only mortgages when the multiples starting getting crazy = Constantly rising market.

It was the banks which buggered all this up in the pursuit of easy profit and bonuses aided and abetted by Government who opened the immigration gates. The fact the left got to rub the noses of the right in the diversity muck was icing on the cake for them.

I'm no financial expert but I reckon the rot set in when they allows these 110% mortgages. When I got mine I was only allows 2½ times my wages plus I had to have a sensible deposit. I also reckon this is how house prices were allowed to soar out of control.

Back in 83 my house cost £28k

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Lets be careful out there !

Supply, and demand, is the first rule, demand that was created, by the open door policy, more people that came into the country, was a disaster looking for somewhere to happen, demand shot up while the supply was static. It all imploded and will take decades to level out.

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Its not always the biggest and the bestest, its them that make the least mistakes.