Chris Coles refers to the article in the Sunday Times about the success of German manufacturing exports. The key point in this article was the fact that the relevant sector of the German economy that was responsible for this success was largely made up of family companies who were free of the stock exchange yoke of producing short term profits.
In contrast all sectors of the English economy are dominated by quoted companies which are managed by "here today and gone tomorrow" short term CEOs. Once they have secured their pension rights and share bonuses they butterfly off to the next victim leaving behind them their mistakes for others to deal with.
Corporation Tax should be phased so as to bare more heavlly depending on the size of the company involved with a sliding scale which would increase at an ever growing rate.

Stephen Green, Correns, France

The US sub-prime crisis was caused by the fall in the value of properties when interest rtes where raised.

This had a knock on effect onto the financial sector leading to the US based sub-prime crisis that has now effected world global financial markets.

The American's in response has slashed interest rates and
will be sending out tax rebates which hopefully by year end
results in some kind of upturn.

The situation in the UK is different we have been effected
by the US sub-prime crisis but are now entering into the
terrority of our own UK sub-prime crisis.

The next 6 months will be very interesting in terms of how this will effect the already over stressed financial system in the UK.

helencarr, London,

A dose of inflation wouldn' be such a bad thing. The burden of debt would be eroded.

Costas, Cyprus,

it always the unknown which causes the problems.

ben barr, nowilkesboro, nc/usa

This article, like a good many others, confuse wealth, GDP and shopping. The UK's 'healthy' GDP this last decade has arisen from city gambling and both the governemnt and public spending money they didn't have.
Real wealth (no quotes needed as it is tangible) is created by the creation of (not consumption of) goods and services people really want - and I don't count hedge fund managers and investment bankers as real people.

Eddie Reader, birmingham, england

Further falls in house prices are so catastrophic to future sentiment of consumers because this administration has allowed (under the guise of John Prescot's housing policy) a huge bubble in prices because of allowing continued shortage of standard new homes build by flawed central control of housing policy on a whimpish bunch of local counciland a strange fixation in allowing/encouraging the building of vast numbers of city flats and town houses, without taking into account whether anyone actualy wanted to live in them. Brown has allowed the resulting bubble of prices and consumer borrowing to fuel the economy to date. Now the brakes will come on sharply as property prices fall and sentiment amongst consumers turns sour with many household costs soaring. The final turn of the screw to house prices will come if BROWN manages to honour his promise to build three million more houses. It may be already too late to sell up and rent, but whatever you do, don't buy your first house now

David Nammory, Liverpool,

How can anyone pretend that the City's activities are divorced from the "Real Economy"? Someone please correct me if I have it wrong but I thought it was only the financial services sector which has kept UK Plc afloat for the past 10 years and more as the Balance of Payments in manufactured goods and other services declines into ever worse deficit?

Alastair, Rye, East Sussex

During boom times we praise the money men and the miracles they work, but hindsight has always proven this view to be largely false. These miracle workers are nothing more than glorified gamblers, and their miracles just clever illusions. As always Mr & Mrs Average pay for the excesses of the city with their jobs and pensions, whereas the gamblers take six months off to spend their obscene bonuses.

It may come as a surprise to some but when an economy is being stoked by a growing debt mountain even a monkey can produce growth in managed asset values (joking aside, this has been proved by training a monkey to pick random shares). There is little skill involved, yet the banks make huge profits from the debt and city traders receive huge bonuses. To borrow a phrase from Hollywood it seems the new mantra should be: 'debt is good'. Our institutions and population are wallowing in debt.

Wake up Britain! Credit bubbles are no substitute for sound economic growth.

David, London, UK

I wouldn't say it poses a threat to all of us, more to the greedy and the stupid - both in the City and the general population

City
-so called "masters of the universe"
-boasted how they had PhDs
-invented monetary instruments that we so "clever" even they didn't understand them
-ended up playing pass-the-parcel with toxic debt
-got caught out

Many of the public
-revelled in the rise in their house prices
-convinced themselves it was down to their cleverness
-bought everything on credit
-valued themselves by the amount of debt they had
-got caught out

As I said, greed and stupidity.

Now it's going to hurt them.

Clive, Surrey,

It did occur to me early on in life that all a country needed to do was to print money and then it could buy anything it wanted. As I got older I realised that the downside to this was that unless the country produced more real goods (growth) prices would simply rise. Unfortunately Gordon Brown never made it to phase 2 and in the last 11 years broad money has increaded approximately 2.5 times its 1997 level, created through debt and based on the delusion of perpetually rising house prices.

Rick, Manchester,

Two world will come into one, the fools that thought houses were worth what they were paying for them will suddenly have a feeling of reality. I only feel sorry for the real people who actually buy a house to live in and not the cowboys that buy to rent or profit.

Lets see what happens to the South East rental market which is being underpinned by Eastern European immigration. Lets see how many people will be running back home leaving empty houses. The fun has just began.

Tony, Maidenhead, Berks

The City sowed the wind with their greed and stupidity and now they will reap the whirlwind. When will they pay back their bonuses? Silly question really.

Frederick, London, UK

Less debt = less spending
less spending = jobs at risk
Jobs at risk = less spending = more job cuts
Job cuts = lack of confidence = lower house prices
Lower house prices = feel poorer = less spending

Result -
PAIN for those overstretched but a great opportunity for patient & prudent individuals who have not succumbed to the spend spend spend mentality in this country and have held back from buying property and rejecting countless low intelligence estate agents telling them that house prices keep going up no matter what. They will find value at the expense of the greedy. I'm ready.

Stef

stefan, london,

I agree with the sentiment of the article - I have often wondered where some of the people in authority have studied economics. A lack of confidence/problems in the monetary sector - as history has shown - has extremely dire consequences ifor the real sector. I fear that we are heading for a very severe contraction.

malcolm, cambridge, UK

House prices artificially doubled or trebled and people used the exaggerated increase to go on a spending spree. Money lent to them by banks using the exaggerated inflated house price as collateral. Now that people can see that house prices have increased and that the country did not generate any wealth to back up the house prices the debts they have incurred have to be repaid. It is going to be a hard few years where every body has less money to spend. The only thing the Bank of England can do is to support the good parts of the economy where businesses have not borrowed too much.

Tony , Dartford, Kent

I note that the UK economy was still performing well in the summer of last year. The Pound had sat at around 1.50 euros for some considerable time, the world was at peace and Northern Rock was working furiously behind the scenes. Then, it all went wrong. At the end of June 07 Gordon took over. Since then, we have plummeted in an ever increasing spiral of economic implosion. The Euro sits at 1.25 to the pound and the UK is clearly not configured to cope with the changes in the world economy. Are the two linked? Are chickens coming home to roost? I think we should be told.

DLL, Brussels,

One of the tenants of the Islamic religion is the rejection of usury. On this occasion they are resoundingly correct. The financial markets are characterised by fear and greed. There can be no better example of the wrongness of this than what is happening now. We should all learn a lesson here.

David Nammory, Liverpool,

The City pays super-normal returns to very average people who are simply surfing the wave. It is a refuge for sociopaths and people with short attention-spans coupled with avarice and high levels of self-regard.

No manufacturer could expect such light regulation nor to get away with selling such shoddy products. Then again The City is about lucre and politicians just love lucre where none of the actual "manufacture" involves bending metal or turning lathes

CCTV, Oxford, England

I remember about a year ago 'experts' were referring to rising defaults in the US as the 'dog that didn't bark' and were puzzled about the disconnect between the the real economy and the credit markets. Suddenly GDP growth fell from 4.6% in Q3 to 0.6% in Q4. The UK is just a bit behind the curve. Britain is also a lot more reliant on Financial Services than the US. Recession here we come....

Chris, Singapore,

And what has been missing from all this? Where is the substantial raft of equity capital, taken from the nations savings, in turn, passed to the nations savings institutions and re-invested, as equity, into the industrious of our society to create the industrial production, as exports, to cover the cost of the overhead of the nation? Any prudent entrepreneur ensures that there is more than sufficient equity capital underpinning the balance sheet of their business to guard against certain downturn of the general economy. But the entire conversation, from Bank of England downwards, makes no mention of such matters - Why not? Your sister paper, the Sunday Times, (March 30, Special Report), shows exactly why we are in such a mess with their front page report "Germany's export powerhouse". Our savings institutions have no connecting ethos describing any responsibility to invest in the industrious of the nation. Not even the Governor of the Bank of England recognises these responsibilities.

Chris Coles, Medstead, Alton, United Kingdom

A striking difference between The City and town&country is that the wheeler dealers of bubbles in the city get to put real money in their pockets ; town&country get to put debt, based on those bubbles, in theirs. So if you expect sympathy for the City it's unlikely to be found in town&country (except perhaps among those country dwellers who are the City black arts money men).

Tezza, Guildford, U.K.