There’s only one way to curb the current worldwide economic crisis, and that’s by dealing with the problem that started the whole thing in the first place.

Everything else is just a sticking plaster, and sooner or later the blood will just start to seep through the bandage.

For weeks now I’ve been saying to anyone who will listen (which hasn’t been many people, to be honest) that governments around the world need to slash interest rates and slash them quick. That’s it. And why? Well, because the initial problem was all those people in the USA who’d bought property with mortgages they didn’t really understand, which ultimately resulted in them defaulting on payments once their initial fixed rate interest schedules had come to an end.

As a result, all their homes were repossessed by the banks, who were then lumbered with thousands of worthless properties. They’d lent out too much, with too little research. They now had stacks of debt (or ‘leverage’ as pompous economists like to describe it as) with no way to cover the cost.

So, the way out of this mess is to make it affordable for people who are struggling to pay mortgages (in the US or elsewhere) to…er…pay their mortgages. And that can only be done with massively reduced interest rates. That way, the banks still get some money, no one becomes homeless (and a strain on the welfare system), and whole towns or regions don’t become ‘no-go’ areas in terms of finance, house sales, credit, and the general feel good factor.

Of course, there will always be those people screaming “Yes, but what about inflation!?” The theory being that reducing interest rates means that people have more money to spend, which then gets out of control as they go crazy in the high street, which then leads to higher prices due to increased demand for stuff. Well, to that I say this: cobblers. Those analysts are not living in the real world. The real world is a place where the shock of higher food prices, massive petrol prices, and soaring energy bills, has led to the public’s meagre spare cash staying firmly in their pockets. And that situation will stay like that for a while to come. Believe me, there’ll be no mad spending by anyone for months, if not years. 

And guess what? Bingo! The US reduces it’s interest rates to 1%! China cuts its rate by 0.27%, the UK rolls it back by 0.5% per cent, and even the European Central Bank is finally waking up to the ridiculously high Eurobor rate. But it’s taken ages to get to this point, which means that either I’m a genius, or that the financial experts in charge of the international financial system haven’t really got a clue. I regret to say it’s probably the latter. 

Don’t agree with me? Well, write in and say why. But only if you’re prepared to put your scrawny neck on the line, by making a prediction or two yourself...