Declan Curry takes a balloon ride over Bristol
By Declan Curry
BBC Business Presenter
Call me a big fat coward if you like, but there's something unnatural about trying to fly in what's essentially an over-sized picnic basket.
So when the team suggested I hop into a hot air balloon to film over Bristol, my first reply was "no".
As was my second. And third. And fourth.
But in the end, television triumphed over timidity.
Up went the balloon, and in we squeezed. I thought the basket was pretty cramped after three of us got in, but apparently four was better. (I imagined it provided extra cushioning if we were to plunge to our deaths.)
Once we were in the air, it was a lovely ride. But this wasn't tourism.
I was using the balloon to explain how our economy relies on debt.
If you imagine the balloon is the economy and debt is hot air, you'll get the picture.
Borrowing - and the spending it allows - expands our national wealth.
It creates jobs, and pays for goods and services that someone, somewhere will produce in response to that demand.
But if we overdo it and borrow too much, the economy gets harder to control.
Prices - in the shops and in the estate agents' windows - rise too fast. We may even demand bigger pay packets to keep up.
Think of a balloon with too much hot air.
The Bank of England had been trying to take some hot air out of our balloon - pardon me, rein in our borrowing - by putting up interest rates.
It was aiming for what economists call a soft landing. And those early increases did slow the economy down a little.
But then the credit crunch came along, and the cost of borrowing soared - much higher than the Bank of England had planned.
And that soft landing is now in danger of becoming a hard crash.
his may have started with poor homeowners in the United States, but it's going to end up at our kitchen tables.
Anyone in debt is likely to be paying much more for it.
Credit card and overdraft rates have jumped.
New mortgages are harder to find.
And millions who already have a mortgage face a huge jump in their bills when those cheap deals run out.
And it comes at a time we're facing another squeeze on our finances. The costs of essentials like food and fuel are also soaring.
That's caused by rising commodity prices, which have been pushed up by everything from booming demand in China to bad weather in Australia.
They weren't caused by the credit crunch. But they do make the credit crunch more painful.
The Bank of England could ease the burden on borrowers by slashing official interest rates, like bankers have done in the United States.
As many as 78,000 families risk being trapped in negative equity
But it says it needs to keep interest rates high here to dampen down those rising prices. So borrowing costs remain higher than they otherwise should be.
All that takes money out of our pockets, and leaves us with less to spend in the shops - a slowdown that will spread out to the rest of the economy soon enough.
So is debt the villain?
Debt is an essential of modern life.
Very few - certainly no-one I know - could afford their homes without a mortgage.
That new car we need to get to work, or that relaxing holiday as a treat for working so hard every year, are often put on the never-never.
And so long as we don't borrow more than we can afford, it's perfectly manageable.
That's the situation most families will find themselves in.
Some of the retired people we spoke to in Bristol recalled their younger days, when credit was effectively unavailable.
You had to save up for your holiday or your car; there was no alternative.
Was that better for us? It meant very few people actually had a new car or enjoyed expensive holidays. And not many owned their own homes either.
FEELING THE PINCH
Over 1.5 million homeowners have cheap mortgage deals that will run out this year.
In February alone we put £2.4 billion on our credit cards and overdrafts.
More than 27,000 people lost their homes last year.
Far more people rented - so were giving money away instead of building up family wealth in property they owned.
In that light, debt can be seen as liberating and empowering; used properly, it allows us build up assets for the future and use them at the same time.
But some people got hooked on the cheap, easy credit we've had for almost a decade.
The iron rule is - you can borrow as much as you want, but you have to pay it back sometime.
Cheap credit does not equal free money.
For anyone who forgot that, payback is going to be painful.
Panorama: Feeling the Pinch was on BBC One at 8.30pm on Monday 14 April 2008.
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