Credit crunch panic has been the main topic of conversation in the news for months now, if you believe what some of these commentators are claiming as our house prices continue to fall and inflation rises we´ll all soon be unemployed, evicted and pushing wheelbarrows full of our life savings up to the local spar just to buy a loaf of bread.
The main losers are supposedly the banks but they have a long tradition of passing losses on to their customers and sacking normal employees to ensure the fat cats responsible for this mess get their golden handshakes.
It all started when the US mortgage lenders decided to loan large sums of cash to people with no ability to pay them back and then acted surprised when they couldn´t afford to pay them back. That had a knock on effect causing a rising tide of panic which led to more stringent controls on who could borrow money and especially in the flow of lending between banks. The whole thing is a self fulfilling prophecy as confidence collapses and everyone stops lending and things get increasingly bleak.
Typically the super rich have been getting richer with the combined wealth of millionaires rising by 9% over the last year. You´ll also be glad to hear that McDonalds have declared themselves recession proof and are opening new restaurants and recruiting 4,000 new staff in the UK, of course that doesn´t represent much of an investment when you consider how low their wages are.
For most ordinary people the obvious difference is that credit is harder to come by and more expensive and their house prices are falling. All the panic about house prices falling doesn´t really mean anything unless you are actually looking to sell or re-mortgage but the scaremongers overlook that fact.
The banks are actually doing quite nicely out of this too, it´s the perfect excuse to whack higher charges on everything and lay people off. The Royal Bank of Scotland announced one of the biggest losses in banking history last week of £691 million but this is just a cleverly timed write off of debt, they actually increased profits over the last year by 9.2%. In fact RBS, HBOS, TSB, Barclays and HSBC made combined profits of £4.294 billion in 2008 compared to £3.808 billion in 2007. How did they do it? Simple, they just started charging us more.
It makes you wonder if our convoluted and inherently idiotic financial system might just be flawed as we are the ones stuck paying for the actions of greedy bankers, lenders and estate agents.