Learn some maths

One of the downsides to the credit crunch is the sheer number of people who now have an opinion on what the economy needs despite knowing nothing about economics nor, in many cases, having any understanding of basic building blocks of finance.

I've ranted about idiots (specifically Billy Bragg) talking about debt earlier (see footnote), and while Bragg-bashing is fun for everyone concerned, he is not the only one. Listening to Any answers - I know, it's a bad idea - I heard, again, the tiresome line that the banks were to blame and people used to be allowed only a multiple of three for their mortgage.

Every time I hear another moron repeat this asinine statement, I want to tattoo 'interest rates' on the inside of the eyelids. The triple multiples was current when my parents first bought a house in the 70s, and when they bought their current one in the 80s, but then so were double digit inflation and correspondingly high interest rates. Now, the base rate is 4.5; in 1975 it was 11, in 1985 it was 12.

Now, at the risk of being patronising, if you apply those rates to a mortgage taken out at the different periods (a formula here), you get radically different numbers. Let's assume market rates a generous 1 percentage point about base and you get figures for annual repayments of £7,455, £11,874, and £12,750 respectively for now, commensurate with a 4-5 multiple of salary for the same monthly outlay.

Einstein called compound interest the eighth wonder of the world - it would be good if people ever bothered to do the calculation.

*By the way, this achievement is Tory one which Major, Clarke and Eddie George can take much credit (helped by benign global conditions). Labour complained and said that reducing inflation wasn't worth short term job losses. Don't ever let them pretend otherwise - Tessa Jowell once tried to do that to me when I lived in her constituency, but then she has never been good with numbers.