The bleakest aspect of Sir James Crosby’s report on the mortgage market is what it doesn’t say. He has produced hardly any ideas for ending the crisis. Mind you, there were ominous clues to his thinking in his initial exchange with the chancellor.

Alistair Darling wanted “options for improving the function of mortgage finance markets”. The sharp and incisive Crosby, the former HBOS chief executive, Britain’s biggest mortgage lender, was careful to promise only talks “with a view to identifying market-led solutions that will work”.

Answer so far: there aren’t any. Crosby has calculated that the current mortgage famine will continue at least until the end of 2010, so a return to anything like normality is probably three years away. That is particularly bad news for home buyers, especially first-timers, but as house prices are falling the banks are probably doing them a good turn. However, the famine’s causes will hit everyone.

Banks are competing aggressively for money to lend, producing some deals (see below). However, Crosby warns: “With consumers’ disposable income now under such pressure from rising prices, I do not believe that this will prompt a surge in savings flows.”

Cut away the dispassionate language and you have a picture of hard times in which many people will be worse off, possibly fighting to repay debt but with little left over for a rainy day.

This is underlined by a new Legal & General Money Mood survey, which has found “increasing misery for most” as inflation eats into earning power.

And if you think governments can come to the rescue by pumping money into our pockets, think again. The International Monetary Fund reckons no government can lay hands on enough cash to make much difference.

The implications for investors are cheerless. Lower oil prices have lifted stock markets lately, and oil consumption should fall if economic activity slackens, but I believe shares have further to fall — probably for another two years before markets start anticipating recovery in 2011.

No-one, though, can predict when the upturn will begin, so this is a good time to invest in blue chips on a monthly basis, averaging buying prices on the way down and up again.

Crosby has another four months to come up with fresh ideas before delivering his final report. Barring a eureka moment, I predict the message will be to settle in for a long slog.

Bread and circuses

IN these tricky times, the search for recession-beating shares is throwing up a stream of new ideas, high-flown and down-to-earth. At the higher end is Iain Stewart at US-owned Newton Investment Management, who favours broad, long-term themes. His latest are “all change”, “uneconomic growth”, “more government” and “construction and reconstruction”.

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