Banks allow us to trade, and by trade we can create wealth. Banks offer us to travel and trade even futher afield. banks help entrepreneurs start a business and so give a chance to create even more wealth. And for others, it helps us start homes and live a better life, but cogniscent of the fact that they must pay back which is in exchange for a better life.

there is an excess in the market, but stop this fear and loathing of being 'Malthusian' as the world has not enough resources for itself: houses, cars, gold, oil etc.

The 'moral imperative' is at hand, and many will lose out, probably the house: so go live with your greater family (parents, brothers and sisters) because they have to in China. Yes, the demand is great, but not the ability to pay for it, so BTL's will find cash flow will become negative, for most.

So put your investments into things that will provide for a real need: energy security like green energy, nuclear power or reduce power consumption.....Gold?

Gold finger, Gloucester, Uk

In such cases as large run downs conventionally we hear that the fundamentals have not changed and therefore situation is temporary. It's often true but there is one very disturbing possibility that remains. Those voices in the wilderness that have been carefully disregarded for years may have been correct. The fundamentals were *never* as good as promulgated.
One argument for the utility of widespread verses narrow prosperity is that is more difficult to fake and one must feel a great sorrow for those among us who have waited for thirty years and never seen a drop of the trickle down economy.
Vietnam was paid for in the 70's, the potential cost of Iraq staggers the mind.
And finally for the circumstances of the past decades to happen a systematic removal of talented people from decision making both in politics and business has been required and so now who can we turn to when the best have been destroyed?

glenn schaefer, holbrook, USA

Has not a war been the typical medicine for this ailment in the past and there is Iran just waiting for the off.The clearly transparent rhetoric that led to Iraq has begun we just await the "big lie" to set it off.

mitch, Wolverhampton, England

So how come I and my son are both still unemployed 3 years on?
It is because neither of us want to work at the min wage 16 hours a week and claim benefits - we both wn at proper jobs to pay our own way in the world, as does everyone else. But most employers are only offering part time pension-less work. Not really a stable economy, actually.

Sue Doughty, Reading, UK

Steve from France is absolutely right, from Brown's position
he should have called the election on November 1st, he
would have won with a reduced majority, but would have had
five years to turn things around. However it's good news for
Britain that he did'nt , because he will not make the tough
decisions needed. The British government needs to clamp
down on it's spending and allow most of the growth in the
economy to go to tax cuts to revive the economy. Tax cuts for
the working poor (10p starting rate of tax) who are up against
it and cuts for wealth creation to keep us competitive - ie:
corporation tax, capital gains tax, inheritance tax. sometime
soon we will have to reclaim our borders from the European
Union to slow down immigration and get Britains 5.4 Millions
back into work and use the money saved to stop borrowing
and repay some of our debt. It's a big job....TOO BIG FOR
BROWN.

Roderick, Hampshire, England

George:

"...and lawyers..." ?

Lets be serious here. The problem has been caused by bankers and poor quality and poorly educated financial services 'professionals' . That is the long and short of it.

I can't wait until after Clementi they take on legal work. Boy oh boy...

Pete Balchin, Solicitor , Bristol, UK

"...core inflation remains low." That is to say, excepting the rate of inflation for food and oil, inflation remains low.

Hmm.

Kerry Feltham, Los Angeles, CA

Nice to read that Irwin has left fantasy Island for a few minutes and entered the real world. Pity that he is still swallows the party line about job creation and increasing income amongst American workers, probably does not effect him anyway? Inflation Irwin is caused by printing too much money thereby spilling over into asset inflation and finally consumer inflation. (econ 101) the real inflation rate in the US is somewhere north of 7.5% except for those people who don,t eat, drink, drive, own houses or do what most normal people do. Recession coming? I politely suggest that it is already in the US and ready to spread to the UK.

gordon, auckland, nz

A 30% fall in the nominal (asking) price of houses in the UK is already baked in the cake.

No bubble in history has ever quietly subsided. They pop. This one is already. Want proof? Go find a local agent who organises property auctions. You'll be amazed. I've seen 30 new build flats in Birmingham that sold for £225k off plan in 2006 be auctioned for £150k each in the past month.

Its SO over.

A tidal wave of BTL investors offloading their "portfolios" next year will turn the slowdown into a crash. This is 100%, gauranteed.

Those who do not learn from history are doomed to repeat its mistakes..

ANDY

Richard Jones, Gloucester, GLOS

We got into this mess because interest rates were reduced to ridiculously low levels to keep the "party" going - the last thing we need to do is to repeat the mistake by reducing interest rates again to perpetuate an inherently unstable economic environment. I fear if we do so the eventual hangover will be very unpleasant.
Everyone says that the problem is related to complex securities which are impossible to value because they contain a mixture of good and bad debt. One sensible course would be to reverse this complex bundling and separate out the good debt from the bad. It would then be possible to value the good debt and sell off the bad for whatever it will fetch from the open market. This to be seems an eminently more sensible approach rather than fllooding the market with liquidity which will probably end up in the wrong place and help create another inflationary bubble.

James, NI, UK

Yes Mr Stelzer

You expect a very deep depression this time.

Peter, Orlando,

Have you noticed how the so called sub prime market (composed of real people who could not cope wth huge interest rate rises) have been blamed for this crisis?

I always knew that the money that was being lent did not actually exist; it was jsut an illusion like a pyramid scam. Its a tragedy that its those who face losing home, livelihood, health and family are being labelled delinquents.

The real delinquents are those who created, partook and failed to regulate the system of selling on 'securites', which were in effect signatures to bonded slavery. Trouble was it got too tough for them and they could not work hard or long enough to pay. Thus exposing the global credit scam.

jane, oxford,

I think we are heading for the mother of all recessions. With an economy based upon consumer expenditure derived from mainly the finance of property it's starting to look like a very fragile economy. It is clear many of your readers feel the same, a deep sense of unease about the future, also a view which may also be shared by many a bank manager.

charlie, wolverhampton, UK

The last recession never really ended, Brown gave us unrealistic low interest rates and juggled the capital gains tax so as to kick start the property market with buy to let amateurs. This has caused overdemand and forced purchase and rental prices to unsustainable levels. The same low interest rates have killed endowments and pensions policies and encouraged an unregulated market to lend money regardless. I didnt have Mr Browns exclusive education but I know that when interest rates rise from an almost unknown low of 2% to a more normal rate of say 5% the morgage repayment has not risen by 3% but has more than doubled. Browns economics will return to haunt him. If he makes it to an election he will be lucky but has no hope of becoming elected prime minister.

kenny livitt, hove,

The irresponsile bankers and lawyers who facilitated the coming depression should donate their bonuses to mitigate their banks' and customers' losses. Is that likely? As likely as your house price increasing in the next 3-5yrs.

Greg Gasiorowski, London,

At the beginning of the year, commentators were citing the pressure on inflation caused by the ending of the "China effect" as one of the main worries. As the relentless fall in the price of most manufactured goods slowed, it would increasingly fail to mask foodstuff and energy inflation.

Now that the dollar is dragging the Renminbi down with it, presumably Western countries other than the US will experience a rejuvenation of the China effect. Is this enough to keep them going? Is it enough to keep the world going?

Ian Kemmish, Biggleswade, UK

The most scary thing about what is happening is that the most powerful man in the world, George Bush is presiding over this unfolding disaster. What help is there for any of us with this man at the helm ?

Diddly Do, Liverpool,

The prudent and those skilled in balancing needs, wants and resources may welcome a return to a more symmetrical if historic paradigm, with greater stability of reward replacing temptation to gamble (at least for a period).

Those who look for a dynamic balance in nature between contrasts, whether they be hill and vale, light and dark, yin and yang – whatever – could be reassured that the concept of cycles remains alive and well, in spite of recent appearances to the contrary.

By contrast, those who perhaps overdid things or went to excess in the recent past may be glad of the chance to rest, regroup, or even take a well-earned vacation.

Such turning points offer lifetime opportunities for learning, career change, reinvention of the self or belief systems and any manner of make-over, albeit sometimes without other option.

dr venables preller, Warminster, UK

It's just too funny to talk about year-end bonuses.
You're going for $600 to $800Billion of writeoffs. How does that compare to the cumulative profits in the sector since the repeal of Glass-Steagel in 1999?
In other words, does the finance sector actually produce any wealth at all?

And if, as I expect, the answer is no, why talk about bonuses?

John Cleary, las Palmas de Gran Canaria, Spain

Mr Brown should have called the election on 1st November.His best chance now is to hang on until July 2010 and pray.The inflation target may be breached by then though if the BOE don't raise rates in the new year.

steve, Eure, France

Well, its got to be expected. The economics of the West have been based on a ballooning mountain of credit debt for quite a few years. Consumer buying on the High Street is fuelled with Credit Debt, so it cannot last forever. the Bubble will have to burst for markets to fall back to 'natural' levels. The problem is this will make the US, UK and possibly EU economies vilnerable to slow-down. Whether there will be a full scale downturn like there was in the late 1970s and early 1980s remains to be seen.

Whatever happens, I reckon that the UK unemployment levels will start to rise through 2008 and into 2009. House repossesions will also probably accelerate with those who have remortgaged their home and first time buyers loosing out as interest rates rise to try and keep inflation down.

Fuel and food prices will rise, and this will cause the NU Labour government a real headache as we go towards a General Election in 2009/2010. Things don't bode well for Mr Brown on several fronts.

B Clarke, Chelmsford , UK