30 years ago (if you can remember back that far) we only had one Credit Card, you could only get a mortgage for 2 1/2 times your salary, and our economy was driven by manufacturing. We were not a credit driven economy, we all want things we cant afford to cash purchase so when credit is easy we borrow more, the Banks and lending institutions are providing finance to people who years ago would not have qualified on the basis of equity in their property... House price inflation has provided a comfort zone between personal debt and personal equity - A nice warm fuzzy feeling
American lending to people who would not normally qualify for a loan (Sub-Prime) has been sold on at 90 cents in the $ which is not a bad deal in a rising market. Guarantee's have been given by banks to other banks and somewhere in the malaise the debt is purchased by our banks. American's default on their mortgages, the American Banks flood the market with repossessions. House prices fall and equity wont repay debt and all of a sudden our banks are left holding the baby ie. Northern Rock.
People panic, Banks panic and wont lend because their supply of money has dried up from defaulters not making repayments and BANG - Credit Crunch.
People cant borrow, as they used to, high street spending slumps, prices are forced down, wages increase. Classic Recession scenario.
The Federal Resurve in America is trying to prop up banks by guaranteeing their debt book and pumping more money into the economy which is forcing the $ down on the international money markets (Which is great if your going to Florida for your Holidays) but if you drive a car (or in our cases) have a boat then its bad because Oil is purchased in $ so the oil price is going up and up, putting more inflationery pressure into the system..
Cash is. and always will be King
So to put it bluntly, your assets are worth less than they were if you are looking to sell them now.