“It’s the end of the world as we know it” – A great song by REM, and a motto that seems to have been adopted by a plethora of financial journalists and so-called “experts” over the recent jitters in the global economy.

Yes, it appears that the same publications that have fuelled massive house price growth whilst promoting the “must-have today, might pay tomorrow” attitude to borrowing money (Wayne Rooney’s just bought a new car.. why don’t you?) is now forecasting a new global recession.

It’s a bit like forecasting a few showers when the windscreen wipers are already on – The signs have been there for years – House prices are at their highest ratio to earnings since.. erm.. just before the big crash at the start of the 90′s, personal debt is at it’s highest levels since. pretty much ever, bankruptcies are at their highest rate since the last recession (fuelled no doubt by all the “borrow as much as you like, and never pay it back” brigade advertising IVAs on daytime telly).

So are we heading for another recession? Well, the signs are certainly there, but I feel it will be another 12 months before we can say for sure. Hopefully, all the scaremongering that the press are doing now, combined with the recent Interest rate rises, will have the desired effect and curb people’s spending somewhat, and particularly their borrowing.

Many people (myself included) are still on fixed-rate mortgages, and it’s not until these start to expire over the next 12-18 months that the true effect of the rate rises will be seen. I have worked out that I will need to find another £200-250 a month to cover my mortgage from May 2008 (assuming that Interest Rates are around the 6 to 6.25% range), so I’m budgeting for that now. I’m sure many others will “cross that bridge when they get there” and end up losing their home.

I still find it amazing that people have borrowed so heavily, in some cases 5 or 6 times their income, on the assumtion that Interest rates were always going to be around the 5% mark. I’m still in my twenties, yet I can remember rates of 12%. If they were to go that high again, the housing market would surely collapse into itself once again.

Can a recession be avoided? Of course it can – It just requires enough people to act sensibly: Stop borrowing, and start saving. It really is that simple! If enough people did that, the economy would slowly start to get stronger once again.

And if it’s not enough, and we plunge into a global recession? Well, if your own borrowing is kept to a minimum and you have a decent level of savings in the bank, you should be fine – Who knows, you could even pick up some bargain repossessed houses or shares that have crashed. Keep your head, whilst all around you are losing theirs.

Then sing along with REM… “It’s the end of the world as we know it… and I feel fine”

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