The economic problem wasn’t in 2008, that’s just when we saw the first effects. The problem was set five or ten years earlier when Alan Greenspan ushered in an extended period of cheap credit.

So cheap that money was being lent to people who had no reasonable ability to repay it let alone to withstand any increase in the interest rate. (Eventually referred to as ‘toxic debt.’)

The people selling these cheap mortgages saw a huge new marketplace become available, provided they could get the finance. Traditionally this finance would be achieved through savers' deposits and through capital repayments of mortgages. This was much too slow for the high-bonus dealers and their bosses so they dreamed up a way of reselling this (questionable) debt in packages by mixing it with some sound debt and by ‘guaranteeing’ the whole package. They put their reputations and their balance sheets on the line and they made a fortune. They were aided and abetted by their auditors, who didn’t see the trees within the wood, and whose fees went up because of all the profits; and also by the regulatory bodies because they weren’t equipped to be cynical and disbelieving. They accepted everything they were told, probably and particularly something along the lines of ‘and if do don’t like it we’ll move our entire operation to…..’

This was almost certainly a global activity with each financial institution individually conning and coercing their local auditors and regulatory bodies along the lines of ‘everyone’s doing it so it must be all right!’ whilst simultaneously exhorting their colleagues in other countries to talk the same talk.

There were a few of us thinking ‘you can’t lend someone ten times their annual salary on a house valuation of 125% of the buildings worth.’ The underlying 'asset' is fictitious, we will get our comeuppance’, the house of cards will come crashing down AND so indeed it has.

The problem now is still the same “How do we get the toxic debts out of our Balance Sheets?” No one has yet devised a way of freezing them so that the rest of us can pick up the pieces and get the real commerce going again.