It’s becoming clear that, over the last decade, house prices have been wildly and unsustainable high. The news from Nationwide today that house prices have fallen 18 per cent in the last year is both arresting and oddly comforting.

Too many young people have been unable to even claw at the first rung of that Jacob’s housing ladder. Far too many mortgage borrowers were forced to take loans that they must have known would lead to negative equity.

Bankers, politicians and regulators have all landed in the public blame cross-hairs when, in a way, they should turn the gun on themselves. Private debt is a product of individual greed and capitalist competition, yes. But it was also, in many cases, the only way that people could afford to get a place of their own.

This British obsession with having your own home puzzles many other European countries. Why pay more than you can afford to own a house and wear it like a millstone for the rest of your days, when you could just rent? No fuss. No debt.

Couple that with the government’s insistence that house prices not be factored into the Consumer Price Index (the government’s target inflation index) and the fundamental way in which British inflation is measured and tracked seems disingenuous.

I would say that Labour deliberately allowed a housing bubble to inflate, while not factoring it into its official inflation targets.* Keeping inflation relatively low builds sustainable wage increases and protects both savers and debtors. But it doesn’t allow for meteoric financial gain, the kind we have seen during the boom.

Allowing house prices 10 – 15 per cent annual inflation meant high street banks were able to create huge swaths of debt, much of which they knew they’d never recoup. But, package it up as a fancy CDS and that’s not your problem.

Labour’s blind eye housing bubble has undoubtedly helped exacerbate this downturn. It may even have caused it.

*I say ‘I would say deliberately’ because, according to Vince Cable at Monday’s POLIS financial journalism debate, Gordon Brown still refuses to admit that there was a housing bubble. Astonishing.

Yesterday, as most of Britain frolicked in a winter wonderland, businesses were counting the cost of the heaviest snowfall for almost 20 years.

It’s estimated that “snow day” cost Britain in excess of £1bn and that figure could rise to £3bn as the cold front looks set to remain for the rest of the week.

Over one fifth of all British workers (at least those who aren’t striking) couldn’t make it to their desks as transport links across most of South East England were disrupted. Of those who clambered through the wilderness to make it to work, 80 per cent of them did so late. Britons yesterday essentially pulled a nationwide sicky.

How can this country be brought to its knees by the weather, even if this is highly unusual weather? At a time when unemployment is rising steadily and job security is waning, can people really afford to not make it in when they might be asked not to bother even if they could?

London’s transport network was paralysed by treacherous road – and, puzzlingly enough, underground – conditions. Never one to leave the public wanting for a sound-byte, Mayor Boris Johnson justified suspending all London bus routes with:

You run the risk of unleashing a 12-tonne bus on to heavily packed snow and turning it into a lethal weapon.

He also felt sufficiently philanthropic to waver the C charge for a day as a gesture to those brave souls who managed to drive to work. That won’t have been cheap.

The cost may be large to the economy in fiscal terms, but you can’t put a price on motivation. Yesterday thousands of office workers forgot the mundanity of form filling and spreadsheet making to indulge in that most simple of pleasures – throwing a snowball.

They’ll go back to work refreshed, uplifted and ready to plough ahead, regardless of a bit of bad weather. For one, white, serene and mischievous day, people all across the country forgot about the recession and worked out that some things in life are more important than work.

Lords, eh? They know how much things are worth. Take Lord Taylor, yours for a cool hundred grand a year. Today evil overlord Mandelson himself announced a loan scheme for Britain’s – pinch of salt needed – ailing car manufacturing industries, amounting to £2.3bn of taxpayer’s money – having almost nothing to do with his recent trade trip to India and Jaguar being owned by Tata.

As with so many of Mandy’s headline grabbers, the announcement of such a scheme was tempered with a salient thought provoker:

Britain needs an economy with less financial engineering and more real engineering.

It would take a brave man (or banker) to disagree with that. Britain has, over the last quarter of a century – even longer when we consider the decline in coal and North Sea oil industries – moved from having a robust manufacturing sector to a pompous financial one.

A such,  currency has been wildly overvalued and the UK has been increasingly reliant on  products dreamed up by financiers as opposed to being rich in resources and primary produce. It’s simply not been legitimately rich.

Ever the pugnacious Scargill impersonator, Unite chief Derek Simpson delivered his take on Mandy’s Rover rescue:

There could be little left of the industry by the time it arrives. This package is too little but it is not yet too late. Ministers must leave behind the failed free markets philosophy once and for all and intervene decisively now.

I think that’s known as damning with faint praise.

It seems a little disingenuous for the government to be prepared to save an industry which accounts for around 20 per cent of all UK transport emissions and that they know full-well is in terminal decline.

The promise to lay “the foundations for its reinvestion for a low-carbon future” is, of course a Mandy sweetener; £2.3bn is laughably small beer for a fundamental shift in the industry’s ecological drive – excuse the pun.

Labour’s need for a car loan scheme is likely to be echoed in other manufacturing industries. But further intervention will only be patching up holes caused by a short-sighted fixation on financial service sectors and years of manufacturing neglect.

Too long has passed for such carbon-heavy industries for them to have a long-term future after this crisis, no matter how many loans the government throws their way.

Still, we could always ‘hire’ Mandelson to change carbon legislation.

Whisper it quietly. Shout it from the rooftops. It’s finally here. The word that has been written, reported, blogged and tweeted countless thousands of times since last September finally gains credence. The UK is officially in recession.

It’s perhaps not the most compelling or unexpected of news stories but it does lend some perspective to what the Tories are labelling, only half-unfairly, Gordon Brown’s Recession.

That an article of such economically cataclysmic content is treated as old news is news enough in itself.

We have just experienced our worst quarter since the depth of the last recession – the word’s usage has apparently increase 2000 fold recently – in 1990.

History is a guide to navigation in perilous times.

- Pulitzer Prize winner David McCullough

The natural tendency once something of this magnitude has been confirmed is to seek solace in history. Previous events set precedents that can cajole us into believing that, although we are in awful shape, we are not in that scariest of positions – uncharted territory.

We hear that the pound is at its weakest against the dollar for 23 years. Unemployment is encroaching on levels not seen for 15. Economic growth is the slowest in 27.

Yet we are are in unprecedented financial times in many ways. The Bank of England’s base rate has never been lower. Media reporting of job losses and instantaneity of market transactions have never been quicker nor, lamentably, more prone to error.

History cannot console us. Look back and comparable figures show that the last time Britain’s economy shrank by 1.5 per cent, we were still in the mire. The oil shocks of the Seventies were still rippling and inflation soared to levels not seen since – you get the idea.

Analysts understandably look to history in order to predict a recessions course. But all they provide us with are a set of rules that apply to different times. No recession is identical and no country has exactly similar problems. In this recession alone we have had ‘worst since 1990′, ‘worst since 1980′, ‘worst since 1929′ etc. Will we have the worst ever?

I wouldn’t bet against it, just as I wouldn’t advise anyone to attempt further predictions based on historical premise.

One modicum of solace can be taken from history, in the Nineties recession, to be exact. On the morning of 22 November, 1990 Prime Minister Margaret Thatcher, after over seeing a meteoric boom in unregulated financial growth followed by crippling bust, resigned from office. Are you listening Mr Brown?

Charles Ponzi is a man you may hear a lot more about over the next few days. In 1918, the broke Italian immigrant noticed a loophole in a Spanish international postal reply coupon that would allow him to make a lot of money, very quickly.

80 years later, after the Great Depression and the dot com boom, after several destabilising cycles of economic fluctuation – “boom and bust” – in the midst of looming recession, the Spanish have once again been had.

Santander has amazed analysts by keeping its nose relatively clean as other banks get theirs smeared across the bricks of Wall Street. It had not only appeared to withstand the toxic shocks of America’s sub prime mortgage market, but it has actually expanded its asset base, swallowing up British banks Alliance and Leicester and Bradford and Bingley.

Yesterday we found out that Santander was doing the dirty on its savers all the while.

It was not the only bank to have been sucked into the calamitous pyramid scheme, brainchild of ‘mega fraudstar’ Bernard Madoff. He cajoled the greed and avarice of the rich and power drunk into investing in a financial black hole. Madoff by name…

A story with this level of embarrasment could be a metaphor for the whole global economic crisis. Maddof, former head of the Nasdaq - how terrifying is that? – is now completely vanquished. His respectability and reputation are shattered.

But apart from him and Jerome Kerviel, who else has been prosecuted. Many bankers, traders, brokers and fund directors are guilty of criminal mismanagement and incompetence. The threat of job bonus losses are not sufficient to stop companies getting excessively leveraged. Is prosecution?

Don’t count on it. Madoff might end up in prison. The only difference between him and the hundreds of others who recklessly gamble with savers’ money is that he got caught. For that, we thank him.

Do the banks have any moral obligation to hand on the Bank of England’s base rate cut?

The Nationwide, HBOS, the RBS/NatWest group and our own Northern Rock have announced that they will pass on the full cut of 1.5% to its lenders in December. It seems Darling’s enticements of “coffee and bacon rolls” sufficiently appeased/threatened bank chairmen to help out borrowers and small business owners.

Admittedly, this will help many homeowners struggling to meet their mortgage repayments. It will also help businessmen borrow at more competitive rates. But a cut in the Bank of England’s base rate wont help the banks themselves.

Because banks don’t tend to borrow from the Bank of England, they borrow from other banks. The Libor, although on the way down, is still far higher than 3%. Any liquidity that the Treasury had hoped the Bank of England’s violent rate slashing would produce will not materialise until the rate of lending between banks dips further.

Governmental and retail pressure has seen banks capitulate in their refusal to alter rates offered to customers. Such political posturing epitomises the mess that part nationalisation has produced for all concerned parties. As preference shareholders in the big commercial banks, the Government (and, by extension, us) should like them to make a quick profit and pay us back. But they won’t make a quick profit by lending at unrealistically low rates.

Furthermore, if the easy availability of debt and mortgages the public couldn’t afford were what got us into this pickle, does anyone really expect more cheap lending to help? People on the high street – the same people who will struggle to make their repayments, who may have to close their businesses – need get used to spending and borrowing less.

The banks are trying to save themselves. But in doing so, they just might be teaching us all a valuable fiscal lesson.

The Bank of England has slashed interest rates by 1.5%, the largest cut since 1981. The new rate of three percent is the lowest since Elvis Presley sang “Heartbreak Hotel”. This is unprecedented territory.

It is the kind of radical action financial experts and small business managers were calling for, but it will amount to little if banks don’t pass on the saving to their customers. Stock markets are clearly unconvinced.

“I think it’s essential that the banks do pass on the benefit of lower interest rates to people and to businesses,” said Alistair Darling, before admitting there was absolutely nothing he could do to make them.

It appears the Bank can’t win. Were it to err on the side of caution (as it has recently,) critics would be quick to point out the measure’s insufficiency. It may now have done too much, too late.

People will panic. If such drastic action cannot persuade lenders to start borrowing at sustainable rates, then what can? Banks’ reluctance shows that they see the profound gravity of the UK’s economy. And the shopper on the street soon will too.

Christmas may well plaster over the gaps in people’s bank accounts. Credit cards will be festively maxed, money woes will be put off until for a less jolly month, and  January will bite. People will then realise just how much trouble we’ve got ourselves in. By then it might be too late.