The economic downturn

I caught a few moments of Robert Peston's program last night. It seems that some people did know that a "market correction" was coming, but did not realise quite how bad it was going to be.

The wonder is that so many people thought that borrowing more than you could afford from your current income would all come right in the end, because house prices were still rising.

But perhaps we should not blame individual consumers for believing what they are told, and should look at the people lending to them - the mortgage salesmen. Surely they should have known better than lending more than someone could afford. But of course, their income would have been based on mortgage sales, so we cannot blame them.

So perhaps the blame should lie with the people setting up the rules for who can borrow how much - namely the bank and building society boardrooms and technical experts who have over the years made it so much easier to borrow money.

Why apportion blame at all? Because we dont want this to happen again (at least most of us dont - there are a few who will have made a profit out of this). So finding a root cause to the problem is a good idea if it means we can do something about it.

The difficult bit is then coming up with something which will work. This may come down to the Bank of England or a similar body supervising the banks and other lenders much more closely than they do at present.