Markets
My old house I bought with my ex-wife in 2000 was worth £70k eight years ago. It's now worth £210k.

What's changed? The roof? Nope. The doors and windows? Nope. The walls? Nope.

The only thing that changed was "the market". The reason "the market" changed was because more people could qualify for bigger mortgages because the rules changed. The banks and governments based their own loans and wealth on the value of these assets and loaned accordingly.

Meanwhile, mean incomes (adjusted for inflation) increase by only 25%. The difference is simply borrowing, nothing more. Debts were allowed to accrue a value far beyond their "real" worth and it's as simple as that, the amount of money available simply couldn't keep pace because earnings haven't changed significantly. It's the 1920s all over again.

Banks will of course react with shock and surprise - they after all made up the rules. We in the UK will have it particularly bad because the government cannot realistically push taxes any higher without having an immediate detrimental affect on the country's earning power. Meanwhile, the government hasn't stopped spending like there is no tomorrow. Government debt is paid by each and every one of you - you'll all find that your taxes (direct and indirect - prescription charges, fuel taxes, alcohol duties, taxes on energy and flights etc will all increase massively in the near term, your tax deducted from you salary will increase later) will rise higher for longer and won't fall as quickly as those in the US or mainland Europe. To my countrymen, the best advice I can give is to think very carefully about who you vote for in future. You might pay more attention to how your football team performs than how your government does it's job, but try to remember that the average Briton is contributing £12800 a year in taxes. That's a lot of money and it's going to get bigger. It's a lot more than your football season ticket costs.

However, it'll pass simply because that's exactly what economic trends do. It's a myth that opportunities dry up in times of recession, as some businesses do quite well. People will stop spending money on plasma TV screens and Porsche off-roaders and might get their old TV sets fixed and ride bicycles instead. There's still opportunities to be made.

Rightly or wrongly, this will sort itself out. The less profligate banks will survive and we'll see a return to financial common sense. And not a minute too soon.
(Bicycle Repairman "you're also a bit of a wanker", Tue 30 Sep 2008, 14:34, Reply)