Martin, people will frequently strive to stay in their homes, because that's what they know, and that's where they live. And in the present circumstances, their trust in the government is probably rock bottom.

a single percentage point can batter millions of home-owners into bankruptcy

Won't the prevalence of fixed rate mortages in the US protect a single many home owners form the immediate effect of interest rate rises? Its not like the UK where your payments go up and down with base rate...

Dave: over the past decade or so a lot of Americans have been sold variable-rate mortgages "because interest rates are only going to go down".

Martyn: forget cholera -- cholera is trivially treatable if you have a source of heat for boiling water, and a supply of sugar and salt. (It kills through dehydration; the treatment is simply to make the victim drink lots of isotonic fluids until their gut flushes itself clean -- or, if they can't drink, to hook them up to an i/v drip.)

The real forthcoming medical threat is H5N1, which from some reports in Malaysia may have already hybridized into a human-transmissible form and be about to go epidemic. Ick.

OK... all the USisans I know have been more sensible. I didn't realise the variable rate disease had spread.

Stuff like cholera is one of the reasons why military ration packs include water purification tablets.

It's also one of the reasons why the British military rat-packs include teabags and boil-in-the-bag food. You can cook your dinner and make a nice hot cup of tea. at the same time.

Anyway, here's a link to the BBC's decription of the British 24-hour rat-pack. Worth reading (and the comments) for anyone who has time to do a little preparation.

http://news.bbc.co.uk/1/hi/magazine/4221838.stm

Dave Clements - To back up CS's claim on the adjustable rate mortgages, a report put out recently by the Mortgage Bankers Association stated that, of the mortgages closed last year (re-fi or purchase), 32% were ARM's.

Bloomberg.com

To add more fuel to that fire, and the article above touches on it, real estate appraisers are now starting to come back to reality. At least here in Michigan, gone are the days of double digit property appreciation values.

As an aside, Charlie, I would point out that what sold folks on the ARM's probably had more to do with paying off debt (consolidation loans) and the ability to keep more cash in pocket. But yes, some inscrutable lenders, I'm sure, utilized your "rates will only go down" reasoning.

And while a lot of folks are running round talking about the impending collapse of the sky, I have to say that I believe it is merely a market adjustment. While the number of sales is down, property appreciation is still there, albeit not nearly as robust as it was.

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