The housing crisis is the result of earlier Federal Reserve easy money policies. The free market is better than central bank or government intervnetion and manipulation of the economy.

The Federal Reserve is to blame for much of the financial panic sweeping the world. The online “Abolish the Federal Reserve Petition” is rapidly gaining signatures during economic turmoil today.

Today the world financial system and investment markets, real estate and the availability of credit are all under direct assault due to past actions of the Federal Reserve in the United States.

Read and sign the Ron Paul Is Right – Abolish the Federal Reserve Petition at http://www.petitiononline.com/fed/petition.html

Please link to the petition and forward this message to your friends and help the general public wake up during the current financial panic conditions to the problems we face from the Federal Reserve. You can also read comments from hundreds of signers who aren't shy in saying what t

Ron Holland, Mars Hill, NC USA

Karl Marx argued that the value of a commodity is the amount of labour time incorporated in it. In the case of UK houses we are talking of about £40-60K for new houses, the present price in Germany for such new builds. The orgy of speculation on property conceals behind it this simple fact. House prices will fall and fall dramatically to around or below the cost of production.
Suddenly the Brownites want to Nationalise the banks, well then go ahead! You could then fix mortgage repayments at a rate which would both reduce prices and reduce costs of the home owner. Where homeowners face repossession you could turn their mortgage into a council rental agreement.

heiko khoo, London , UK

I suspect that interest rate cuts will be minimal, both in America, Europe and the UK. I suspect the Fed will cut interest rate by 0.25% today, but no more this year. I expect a "wait and see" statement from the Fed, with a bit about it will act to prevent recession should signs develop. Also a bit of self congratulation on keeping liquidity in the money markets: compared with other developed markets i.e. London

The ECB and BOE will leave interest rates where they are for the rest of this year, so no great relief for the banks.

Finally I suspect the 'buy-to-rent' housing market to collapse, especially in London. All those "bright young things" working for the investment banks who lose their jobs by Christmas will up sticks and return home: especially a significant chunk of the 150,000 French graduates working in London

Bryan McGrath, Weston-s-Mare,

Interest rates should go up to encourage people to save money.

Even if house prices fall back by 20%, it's only the first time buyers who bought in the last two years who will be looking at a paper loss. All the rest are still looking at a good profit. House owners have had a great ride for the last decade and shouldn't come whining if prices come down a bit.

I hope that after this debacle the government brings out a law to limit the amount that people can borrow on a house. The old multiple of 2.5 times annual salary worked very well in the past, and obviously the financial institutions are not responsible enough themselves.

I hope that the rate of return on deposit accounts will be a few points above the house price inflation.

Dick Pennytell, Watford,

"Consumers, laden with £1.35 trillion of debt, are feeling the pinch "
Sorry, just who imposed this burden on them?

Nick, Potters Bar, UK

Housing is in a classic bidding situation. With too little stock, and everyone needing somewhere to live, prices go up and up until people at the bottom literally cannot raise the cash.
However lenders are going to be much more cautious in future, reducing the amount of money chasing housing. Though underlying demand will remain strong, prices will fall, then there will be a feedback effect as the expectation of further falls reduces lender's willingness to lend still further. Then you will see more defaults - people are much less willing to pay good money to reduce negative equity than to buy an asset.

Malcolm McLean, Bradford, UK

How much room for manoeuvre do the rate setters really have? Look at the reports on these pages. The oil price is rising, inflation in China is increasing and its currency is steadily appreciating. The cost of wheat, corn, meat and dairy produce is also rising by double digit percentages. Won't these numbers soon lead to a spike in the CPI? Or is it that the CPI is engineered to allow the government to continue to inflate the economy with low interest rates and completely impoverish anyone who doesn't already own a house?

Strephen Grindle, London, UK

Mr. Duncan you are obviously too young to remember the crash of 1973 which led to NatWest being rescued by the BoE in a situation which was almost exactly the same as we have now with Northern Rock. This resulted in a credit crunch which resulted in the British economy coming to a virtual standstill for about 5 years. I would just remind you of the definition of an optimist: "a pessimist who hasn't got all the facts".

Adam Murza, Croydon,

Spot on, Paul, Harrogate.

I own two brownfield sites near Leeds which could probably accommodate 90 or so family dwellings, but I have made little progress with Leeds City Council over the last ten years, mainly due to the refusal to deal with hghways issues. Their standard response is either no, no, no or give us some money.

They only want to deal with big developers in the City Centre who will line their palms. And what has Leeds ended up with? An overdeveloped desert of shoeboxes suitable only for single people.

MarkS, Leeds,

Paul of Tunbridge Wells, house prices are not high because of Northern Rock, which has lent sensibly and has arrears at half the industry average, but due to the shortage of housing in this country. The population has swelled well beyond 60 million and our building has completely failed to keep up. I agree prices are far too high but until we sort out our awful planning process, and require/encourage builders to re-use more brownfield sites, we will still see demand above supply and firm prices.
And if you don't believe me on the supply/demand argument just look at Leeds, where a boom in apartment building in the city centre has lead to very flat prices, despite a thriving economy.

Tom Paul, Harrogate, North Yorkshire

Why is it bad news that house prices decline? The UK economy has become totally unbalanced and the young are having to borrow obscene amounts to buy a home. Yet house prices are only so high because the likes of Northern Rock have lent so much to so many poor credit risks. I look forward to a return to relatively normal economic conditions in future years, though there will be many more casualties before we get there.

Paul, Tunbridge Wells, Kent

You're arguing that an interest rate cut, led by the Fed, will save the day? In other words a good dose of inflation, which is what got us into this mess in the first place. Remember effectively negative rates after 9/11? Who still thinks that was a good idea? Consensus views on economic growth are worthless, if the UK housing market follows America by collapsing, all bets are off.

Dr William Shaw, melbourne, australia