(( Crunch Time !! ))

So we are almost done with September and what a month it turned out to be. With all the uncertainty surrounding the economy and the impending global recession it seems almost inevitable that something had to give regarding the whole 'credit crunch' scenario. So as the USA copes with the virtual wipe-out of all its major banking stock, here in the UK we are being a little more laid back with our financial outlook. It would appear that our government leaders have squarely put all the blame at the door of...yes you have guessed it; the USA. However I'm not quite so sure that is a fair thing to do. After all, here in the UK we have for many years been spending much more than we earn. It has been very easy to borrow money from banks and taking out a new credit card became a doddle thanks to the liberal way in which they were given out, leading to many people having five or six credit cards on the go at the same time. Also we can add to this, the very cheap imports from abroad, which meant that local productivity slowly dried up. We as a country now import much more than we export. The economy rests on a finely balanced knife-edge and even a small nudge off-balance could send the whole proverbial pack of cards tumbling down. This has now happened, but why?

Well basically people have been spending much more than they can afford. They bought larger houses and took out bigger mortgages for a better home, they spent money on nice things to put in these houses. They wanted the nice shiny car, which of course they bought on credit. The only problem is that now they are finding themselves unable to pay back the money they owe and so begins the so called 'credit crunch'. People cannot pay back the cash they owe, so the banks suffer. Also people can no longer buy new things, so the high street shops suffer and small businesses must close forever. If that was not bad enough, the house market is now suffering too, with nobody wanting to take out a new mortgage and banks being reluctant to give them, so there is little need for new houses to be built. Already we are seeing builders being laid off from their jobs and housing projects being scrapped. So we wanted the good times and we had them, but now there is a price to pay for those sunny years. The word to look out for is RECESSION.

I think the lesson to learn here is simple. If you do not have the money to buy something, then do NOT buy it! Sadly the 'live for today' mentality has come back and bitten us all squarely on the ass. Well almost everyone. Fortunately for me I was living in China and because of that I did not get sucked into the 'buy now pay later' mentality. I do not have any credit cards. I have no mortgage. I have not been tempted to borrow money from anyone and the (Very) small amount of money I have is safe under my bed. I have never been a materialistic person and I do not consider myself as a person who always wants. As a matter of fact I can count all the things I own on one hand. Sadly the want-want way of thinking in the long run will only bring you pain-pain!

The next few months will be very interesting indeed, with the forthcoming Presidential election in the USA and our own faltering government here in the UK. From an economic point of view the so-called developed countries will have to get used to a very different way of living and one that they are very much not used to...Living within their means! Tough times await, of that we can be sure!

Sorry this has been a little too serious...I promise to lighten up!

(Misterduncan)