There goes civilisation...

what gets me about the whole "credit crunch"* house price thing is the absolute surprise that it is happening, people seem genuinely shocked at the financial situtation this country is now in.

I have no financial/economic educational background, no friends or family with inside information.
despite this I had my suspicions about how the 'give me that lifestyle Now!' generation were paying for their new bmw's and 40in plasmas, so i did a bit of research and looked at the polar views of various websites and made my own mind up as to what was about to happen.
got laughed at by friends/colleagues when i mentioned my view as to the impending financial meltdown.
my opinion was seen as misinformed as i didn't really know what i was talking about (this is from people who wear suits at work,(i don't)).

if i could see what was about to happen along with all the tin foil hat wearing doommongers why didn't the goverment financial big wigs see the inevitable and do something constructive about it?

*credit crunch. a media term used by those afraid of the word reccession

A lot of people in the financial sector thought that something would happen, but they didn't feel able to buck the trend and actually follow that belief, so just carried on closing deals.

I remember last July the hen head of Citigroup, Chuck Prince, made a comment for which he was widely mocked, but which to me, at the time, summed up the situation:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” he said in an interview with the FT in Japan.

The musical chairs analogy seemed quite prescient, even now - that there would be a mad dash for solid assets once the music stopped, but that everyone would keep closing deals right until the last moment, precisely because nobody knew exactly when the music would stop.

The problem being that while everyone else is mounting up risks and it's not coming back to bite them in the rear, if you hang back and don't close deals, you won't earn a bonus or a promotion and all the risk-takers will pass you by. You have to be very confident that the end is indeed nigh to make that play, because it can be very hard to stick to it in the face of criticism from your bosses and your peers.

So by and large the financial sector just kept mounting up risk until the bitter end.