The credit crunch: worrying trends...

Flipping through the news to find the latest stories on the credit crunch is revealing a worrying picture. It's like watching a huge explosion in very slow motion - the bomb ticking under the global financial system has already gone off, but most of the fallout hasn't reached the general public yet.

But it is on the way... for example, in the last couple of days, First Direct and the Co-operative Bank have withdrawn mortgage deals from new customers. They say it's because they have been swamped with applications after other lenders have raised interest rates on mortgages for new applicants. Possibly... or it could be that they can't secure adequate financing at reasonable rates to make it economical to take on new business (in which case, expect FD and the Co-op to raise their rates soon too). Whatever, the outcome is that if you want a mortgage you're gonna currently be chasing an ever-shrinking pool of reasonable offers and you may end up having to pay much more than you would have done six or twelve months ago. That is going to hit the housing market very hard... after the crazy inflation of the last decade, we may now be looking at an early-90s style property crash.

At the same time, Wednesday's Evening Standard carried the headline 'Home owners in debt binge.' I eventually managed to find the story even though their website is complete crap, and although it claims to be based on new data released from the Bank of England I'm pretty sure that in actual fact, like most ES stories, it is recycled from something run on the BBC website a few weeks before, suitably distorted and exaggerated. (Quick aside: apart from the Will Self column, which is damn fine coffeeee, the Standard is hopeless rubbish populated by vacuous imbeciles without a writing brain between them. But anyway).

The gist of the story was that credit card debt and bank loans and overdrafts both went up in February according to the Bank of England figures, whereas given the shortage of credit, one would have expected a fall, other things being equal. But of course other things ain't equal... the Standard reckons that consumers are being forced into other lines of credit now that mortgage deals are getting harder and more expensive to come by. To quote, "the fear is that once borrowers have exhausted all sources of credit, many will be forced into insolvency or have to give up their homes." Quite possibly: still, seeing as insolvency only seems to last for about 2 weeks now before people are allowed back on the treadmill (an attempt to promote 'Enterprise Britain' apparently), will anyone care?

All the same, it is worrying. To use a (no doubt inappropriate) analogy, the data coming out at the moment make the UK financial sector look like a dying star running out of its basic fuel - hydrogen (aka mortgages) for fusion reactions, which is then forced to turn to the heavier elements - helium etc (credit cards and overdrafts) to prolong the show for a little while before the whole system finally collapses. We seem to be living on borrowed time. All this begins to make Gordon Brown's chances of re-election in 2010 (as it will almost certainly be, not 2009) slim as hell, although he could yet do a John Major and win in the teeth of everything if Cameron and Osborne contrive to look lame-ass enough.

For me, though, it is now time to do the Smart Thing... start betting heavily on the Tories to win in 2010. If nothing else, it provides a fighting/survival fund to endure what will no doubt be one of the most vicious and retarded periods of govt seen in Blighty since the last Tory accession of 1979. Hunter S Thompson would have died laughing at all this (if he weren't dead already... girl, you know the reason why.)