[The once and future king]

I am a Brit, if America catches a cold we are going to get the plague. All the structures that have led to the current wobble we have in spades.

We have a gargantuan housing bubble, with massive amounts of personal debt (highest in developed world) which has been obtained on the premise that house prices only ever go up amirite with alot of people resorting to mews (mortgage equity withdrawals) which also has been exacerbated by massive speculation in the housing market and huge armies of BTLs (buy to lets). Also many have taken out 100% interest mortgages on the amirite premise.

Interest rates have risen 5 times this year to 5.75% and a rise to 6% is almost guaranteed with 6.25% not looking unlikely as inflation is rising aggressively. Repossessions are at a 5 year high and increased 30% last month.

In about 2-3 months hundreds of thousands of mortgages are going to be reset from as low as 3% to somewhere between 6.5-8%.

This means rental yields from BTL will be hit massively. If this plus a sell off single home owners from those unable to meet new payment levels leads to significant house price falls this will hit the UK economy so hard I wouldnt rule out a full blown depression.