What would you do if the unthinkable happened?
So what if the banks went bust and the money we thought we had (a series of electronic transactions in computers around the world) suddenly disappeared? ... just take a few moments to think about this... perhaps you can get the money which was in your current account... but all your savings, pensions, investments... gone!
What a leveller... in one instant moment in time, we are all pretty much the same, doesn't matter what possessions we have, how much money we had... that is all irrelevant now... what matters now is survival, and for that, you need people around you... people who you have deep relationships with, who trust you and in whom you trust. This applies to getting things done as well as obtaining the necessities for living... suddenly fancy restaurants, holidays, luxury items become very secondary to ensuring that we have food and warmth for our family... how quickly would our perspective on life change?
The UK credit rating has dropped, the net effect of this is that it raises the interest rates for new borrowings, so as existing loans are repaid, new ones are set up with higher interest rates... this makes it progressively more and more difficult to service our existing debts let alone any new ones we might need... couple this with the problems of obtaining new borrowings... if we borrow £100 over a few years, the lender would be expected to receive their £100 back plus a profit for lending the money... let us say the over 2 years an additional £20 was earned... so we pay back £120... what if... once we introduce the factors of inflation and quantitive easing (increasing the money supply) the £120 we paid back was only worth £97? suddenly lenders would be less enthusiastic to put their money our way... what if we just were unable to borrow any more? what then?
None of the above looks very palatable... but we are so close to this happening that there is an inevitability about it and it is likely in the next few years... if you then bring in the whole European debacle and the implication of that to all of the above, we are in a very serious situation.