Is the Housing Market the cause of the Crisis?

The UK and US are putting the blame on the Housing Market as though there were no other major issues growing along side the Sub-Prime Market. Yes, it's true, that The Property Market has been a major valued market for the failing Banking finance and Capital System. But, does this explain how the UK and US Housing Market's have effected the rest of the world. No. So what is the extent of problems.

The world is waking up to the degree of debt hiding behind the overall finance systems and the warnings of over leverage. This link will explain how this works. Look at the diagram on the right for an explanation. The Uk Government are showing little interest in exposing the systemic issues by an exposed investigation and are neither interested in publicly investigating those responsible for the failures and the false economy gains since The Bank of England's independence in 1997 and the repeated international crisis and earlier warning in 2000-2 in the UK.

As well as the deregulated and poorly regulated finance systems in both the UK and US, among others. The previous economic problems and warnings were skipped over by the UK Government as well as other Governments around the world. With Credit and New House markets stimuluses and deregulated Government policies around finance practices, producing an inflated housing market and the expansion of individual debt, moving the issue of debt and over-leverage even further beyond control.

The development of Recession around the world and Deflation in the UK at present, again, this link will explain the symptoms and the character, whilst it may be bad news for governments and national markets, historically, it's not bad news for the banking system. Deflation historically give banks more for their money, as long as their present lending Vs asset value is covered by any default issues, as we see with the housing markets amongst other parts of the system i.e. Property, Securities and Insurance etc. were over valued. Many of these debts are spread around as investment vehicles called MBS and SIVand ABS, again explained in the links. These Investment Vehicles can be bought and sold over and over again, as has been the case.

Now, if the Housing Markets' condition are an example and indicative of the system's method of capital development and it appears so, the true value and risk of many assets exposed to debt are inflated to the point of explosion. We see evidence of this around the world in: Housing, Company values, Finance yields and Securities and Commodity levels of development etc. etc., the list goes on. This chased state of rational, by Capital Borrowing and debt, has exposed the Over Leveraged nature of the system. In a world were there is a finite limit of resources, the fuels that feed the modern system of living requires change. We need a revolution, on a par with the Industrial Revolution that took place in the later part of the 18th century following the Agricultural Revolution of the same century in the UK.

So, if I was to put a list of sectors being effected and the effects this Global Crisis is going to have on these sectors, it would be something like this:

House prices will continue to fall in the UK as elsewhere similarly, resting at about 43 percent below their present value, over the next two to three years. This will bring them back to their natural historical value of the 20th Century.

Oil will level off at $75-80 a barrel, to continue supporting the Arab development spending requirements, whilst oil prices still have to exist in the new recessionary global environment.

Far more over-leveraged institutions and Securities will have to fall, under the loss of bank support and poor refinancing packages, as companies are in debt and over-leveraged, as well as high risk in Recessional markets.

Whilst many governments can not understand or are unable to state the real outcomes ahead. Governments don't understand what the effects of these Bailouts to Banks, Insurance Companies and large National Companies are going to cost, in these crashing markets in the long term. With banks running for cover, with the money and Finance Markets and their clients, left to fend for themselves. The Finance Markets are exposing the issues, in real time. The FED has gone back on their promise to buy into a number of these toxic/depressed Assets and are now looking for private investors to take on these Assets.

Whilst governments are now agreeing with a Keynesian macro-economic approach to industry ownership and direct Government market involvement, even though Keynesianism was a dirty word to the Free Market ideology. I don't believe ownership of debt ridden industries is what Keynesianism actually meant, when the concept was envisaged. Governments are buying into these Assets, even though they are made up of toxic waste and debts and expanding this government policy. Also, with recession expressing itself in the future with inflation, which I believe will rise to at least as high as the UK in the 70s over the next 2 years, due to the Fiat production that is underway. You can not have an environment of collapsing industries, rising unemployment, huge debt servicing and extraordinary public debt rising and a negative environment for banks to trade in, failing currency value, without a major and long term recession. Looking at interest rate cuts and tax breaks and at a time when new debt will only increase the tsunami's effects.

The present collective position of the world in reality is now based around interest on debt, which looks as though it's threatening to overtake the value of the Capital System or profit ability. This means that there is a need for more borrowing to keep up with the servicing of the debt and the international crisis.