Oh dear...

Things aren't looking too bright on the economic front, are they? The media is full of tales of gloom and doom. Inevitably, I start with house prices - the national obsession - now the picture no doubt variies from region to region but the general scenario seems to be that they are going south at a startling rate of knots. Further and faster than the headline figures suggest, I rather think. I talked recently to someone I know who is in banking in a serious way - 'down 35-40% over the next two to three years' she said. This has causes and consequences. The cause is well-known: the huge losses made by the banks with the collapse of the sub-prime market. Consequently, banks don't trust each other - let alone the punters - and the supply of mortgage finance dries up. I heard on the radio the other day that a couple with a 5% deposit wanting to make a first time purchase had onlly a year ago a choice of literally hundreds of mortgage products. Now they have two - and both are apparently bum deals. So the pool of people able to buy diminishes rapidly. So people having to sell drop the price and drop the price but still can''t sell. When they eventually do the discounted price sets a new benchmark.

Of course, even if not buying or selling, the property crash still impacts on people's perceptions. London in particular is full of people who have for years lived on the feelgood factor of having literally hundreds of thousands of pounds of equity simply by being an owner-occupier (subject to monstrous mortgage). The financial security blanket contracts or even disappears at a rate of knots. Feelgood turns into feelbad,

There are a couple more goodies in the pipeline: Firstly, in October the Government guarantees to the banks runs out if not renewed. Tax revenues must be plummeting and government finances under severe strain. Secondly, you will all have noticed the building sites with banners outside 'a development of 32 (or whatever) luxury apartmments by Spivco'. I always look at them and think 'I bet you wish you so hadn't bothered!' No doubt they do and many have been mothballed but a lot are beyond the point of no return and no doubt there will come a point when the developers cut their losses and dump the huge collection of identical two bedroomed apartments on the market. Watch this space (as it were)...

And apart from that, how is the wider economy? Well, 'apart from that' doesn't come into it. The whole thing is interlinked but the economy, while heading for recession, is also highly inflationary - petrol, fuel and food prices all rocketing. The Bank of England can't reduce interest rates because its primary duty is the control of inflation and the Banks wouldn't take much notice if it did. Sales of top of the range cars are through the floor as are sales of organic 9and therefore expensive) food. Personal savings have halved and a million people have dropped out of personal pension schemes (not that I blame them - they are a load of old rubbish). The only people who are doing well are apparently the discount supermarkets of the Lidl variety.

It's the Chinese curse - may you live in interesting times.

Someone said to me - why not nationalise the banks? Well that's so not going to happen but his argument was that we all need finance - we have a money and not a barter economy - so it's a kind of social service. Except it isn't a service and the only people who make money out of it are the clowns who award themselves stupefying sums of money by way of salary and bonuses for getting it about as wrong as can be possible.

Come the revolution, they'll be first up against the wall.

Okay, time to lighten up. Whatshername Palin has an unfortunate fringe known in the hairdressing trade as an Adolf Hitler. Like the late unlamented Fuehrer, she also has brown hair. With hat tip to Jailhouse Lawyer, imagine my shock at seeing this. Such disrespect!