Mortgage Crisis Crosses The Atlantic

I know I've mentioned this before, but my mother always told me to watch the United States to find out what was going to happen to our weather. Her theory, and like all mothers she was quite right, is that bad weather always comes across the Atlantic from the States.

The same is true of our economy. Here in Britain, we have just had a very depressing annual budget report, packed with tax rises and borrowing and gloom, and it is all your fault -- you and your rotten sub-prime fiasco.

As a result of the ensuing credit crunch, says our Treasury Secretary, we are not getting the economic growth we expected. That means less revenue for him, that means more tax for us, that means more borrowing for the government.

Not his fault you understand. Your fault.

Not that we can compete with you in terms of deficits. I read of a US deficit of 175 billion dollars for February alone. Now that is what I call a deficit. Makes me almost embarrassed to mention our paltry little debt.

But we are in a spot of bother, it seems -- and that means we are going to have to pay more to put cars on the road, and fill them up with gas. And there we can put you in your place. I read that you are outraged to be paying more than $3.20 a gallon. Here we are paying more than 10 dollars. We are also going to have to pay more for cigarettes, and booze, and those big SUVs.

So the outlook is gloomy, although not as yet desperate, according to our government. Taxes are rising a bit, and borrowing is rising quite a bit, but all is under control. But like my mother, our Treasury Secretary is gazing anxiously across the Atlantic as he makes those predictions. The problem is that no one -- not the journalists, not the financial gurus, and not even the Prime Minister, knows how much trouble the world is really in. Confidence has fallen faster than a New York Governor.

So the other day, your Federal Reserve and our Bank of England joined banks across the world to pump a lot more money into the banking system in an attempt to get the wheels moving again. Will it work? Well, it all depends on you. Have we heard the end of the credit crunch? Is there still a bank in trouble? Just how dark are the clouds gathered over the American economy? As my mother would have told me, only when we know what your weather is really like will we know whether our Treasury Secretary's sums will add up.
By Peter Allen