Certainly it would appear that the general public at large are much more skeptical about what we’re told and rightly so. With the run on the Northern Rock causing devastating wide-spread pandemonium amongst 97% of it’s clientele forcing the Bank Of England to step in and guarantee the banks investors all of their money back if the bank collapses, then clearly there are a lot of non-believers out there.

However, since that piece of news hit the screens, it’s hardly surprising that any similar news has been played down. Had the Northern Rock’s difficulties not been reported as they were, then the Bank Of England may not even have to have been called in.

That’s the difference between the debt problem for the Northern Rock costing £25billion compared with what the original sub-prime debt of just £11billion.

So would it suggest therefore that confidence is a crucial element when it comes to the global economy – or is there really more of a bigger problem out there than the media is letting on.

The answer to that crucial question is also in the news, but you have to read between the lines.

The words ‘Subprime’ and ‘Credit Crunch’ have almost become part of a day to day patter amongst news journalists and the news media at large. Certainly the name ‘Northern Rock’ has become a well recognized name in global banking and it is held up as a prime example of a Subprime lending idiot.

Given the fact that the stampede of private investors who raced to the bank to withdraw their funds when the news broke about the Northern Rock grew tenfold because of the news itself, then it would strongly suggest that there is more bad news but we are just not being told the truth.

In America, the press have been reporting that the very thing that has caused such turmoil in the money markets is a problem called ‘Subprime’. That the US Subprime will spill over into the world economy and that it is the fault of several thousand American citizens who couldn’t afford to repay their mortgages that are to blame.

Not so say many city analysts, some are even going so far as to say that the problem in the global economy lies not just in subprime defaults

alone but also from the cost of many other factors including the war in Iraq, rising oil prices and natural disasters all hitting the economy at once.

Michael Strauss of SwissInvest says “There is more than just a severe problem in financial markets that is hitting the global economy – the war in Iraq has cost the US more than $2Trillion and with escalating costs, the price is being pushed up by more than $18million a day”.

“Add to that the cost of Hurricane Katrina which was estimated initially at just $10.5billion but the real cost of the devastation to the wider economy is more likely to be closer to the $150billion mark because of the knock-on effect from industry, agriculture and transportation – not to mention the human cost in terms of unemployment, social services and compensation” he said.

Oil production, importation, and refining in the Gulf area came to a standstill, thus having a major effect on fuel prices.

Prior to the Hurricane, one-tenth of all the crude oil consumed in the United States and almost half of the gasoline produced in the country came from refineries in the states along the Gulf's shores. All production refineries in the area were hit by the devastating effects of the storm and an additional 24% of the natural gas supply is extracted or imported in the region. Furthermore, the nation's Strategic Petroleum Reserve is also stored in here.

Katrina have also caused severe power outages in the years following the disaster and this has lead to further problems with distribution for oil and natural gas. Giant pipelines which are used move petroleum products from places like Houston to areas of the east coast have had their flows interrupted because power outages shut down the pumps that kept materials flowing.

Subprime lending, also called B-paper, near-prime, or second chance lending, is the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history.

There are over 7.2 million US families currently living in property courtesy of a subprime mortgage which represents almost 15% of all US mortgages. One in five will end in foreclosure. The larger portion of foreclosed mortgages are in states affected by Hurricane Katrina.

The phrase ‘Subprime’ also refers to paper taken on property that cannot be sold on the primary market, including loans on certain types of investment properties and certain types of self-employed individuals.

Subprime lending encompasses a variety of credit instruments, including subprime mortgages, subprime car loans, and subprime credit cards, among others. The term "subprime" refers to the credit status of the borrower (being less than ideal), not the interest rate on the loan itself.

At the start of 2006, the U.S. subprime mortgage industry to go into meltdown. A steep rise in the rate of subprime mortgage foreclosures has caused more than 100 subprime mortgage lenders to fail or file for bankruptcy.

 New Century Financial Corporation, previously the nation's second biggest subprime lender collapsed. The failure of these companies has caused prices in the $6.5 trillion mortgage backed securities market to liquidate, threatening broader impacts on the U.S. housing market and economy as a whole. The crisis is ongoing and there is no end in sight as more and more subprime debts are revealed.

The crisis is having far-reaching consequences around the world. Long before the subprime debt market began to reveal it’s problems, the debts were re-packaged and sold on to other global financial institutions.

In order to sell the debts, US financial institutions turned the huge debts into attractive looking investments and the trend in Subprime investment took off all over the world.

But when the troubles began in the subprime mortgage industry, those who bought into the market suddenly found their investments worthless.

With market paranoia setting in, banks began to reel in their lending to each other and to business, inter-banking lending rates began to rise slowly at the same time, more and more subprime mortgages began to foreclose.

Globally, healthy businesses with no direct connection whatsoever to US sub-prime have suddenly started facing difficulties or even folding due to the banks' unwillingness to lend money.

Many observers of the meltdown have cast blame in all manner of areas. Some have highlighted the shark-like practices of easy lending institutions and the lack of effective government oversight. Others have charged mortgage brokers with steering borrowers to unaffordable loans, appraisers with inflating housing values, and Wall Street investors with backing subprime mortgage securities without verifying the strength of the underlying loans. Borrowers have also been criticized for entering into loan agreements they could not meet.

The outlook for the next two years is extremely bleak say several of the world’s leading industry experts. Many have suggested that the crisis will worsen to levels not seen since the great depression. Lewis "Lewis Ranieri, formerly of Salomon Brothers, considered the inventor of the mortgage-backed securities market in the 1970s, warned of the future impact of mortgage defaults: "This is the leading edge of the storm. … If you think this is bad, imagine what it's going to be like in the middle of the crisis."

Echoing these concerns, consumer rights attorney Irv Ackelsberg predicted in testimony to the U.S. Senate Banking Committee that five million foreclosures may occur over the next several years as interest rates on subprime mortgages issued in 2004 and 2005 reset from the initial, lower, fixed rate to the higher, floating adjustable rate or "adjustable rate mortgage". Other experts have raised concerns that the crisis may spread to the so-called Alternative-A (Alt-A) mortgage sector, which makes loans to borrowers with better credit than subprime borrowers at not quite prime rates.

Some of the world’s most highly respected economists, including former Federal Reserve Board chairman Alan Greenspan, have expressed grave concerns that the subprime mortgage crisis will affect the housing industry and even the entire global economy. In such a scenario, anticipated defaults on subprime mortgages and tighter lending standards could combine to drive down home values, making homeowners feel less wealthy and thus contributing to a gradual decline in spending that weakens the economy.

Here in the UK, many have predicted that the UK housing market would not initially be affected by the US subprime crisis, however, in September 2007 Northern Rock, the UK's fifth largest mortgage provider, had to seek emergency funding from the Bank of England.

Stocks and shares in the global markets have suffered more in the last 6 months than at any time in the history of the stock market, with more frequent and larger drops in value than at any other time in history.

On August 15, 2007, concerns about the subprime mortgage lending industry caused a sharp drop in stocks across the Nasdaq and Dow Jones, which affected almost all the stock markets worldwide. Record lows were observed in stock market prices across the Asian and European continents. The U.S. market had recovered all those losses within 2 days.

Now, the concerns are getting even worse than in August and all the recovery made by the stock markets are gone since the Fed cut interest rates by half a point (0.5%) on September 18 and by a quarter point (0.25%) on October 31. Stocks are testing their lows of August now.

The chances of the US and UK economies falling into what is officially known as a recession have risen to almost 40%.

Korean CEOs have cited the U.S. subprime mortgage crisis as the biggest business story of the year. The Samsung Economic Research Institute on Sunday said in a survey of 372 CEO members about economic issues that affected their companies most this year, some 18.1 percent cited the subprime mortgage crisis. Some 16.3 percent named all-time high oil prices, and 14.8 percent the free trade agreement between Korea and the U.S.

UBS, the Swiss banking group, confirmed the worst fears of investors by writing off a further $10bn (£4.9bn) on US sub-prime losses and reversing previous guidance by admitting it faced a full-year loss. It wrote off $3.4bn in the third quarter.

As 2007 draws to a close, there are less and less hopeful analysts out there predicting anything other than a major global financial catastrophe. Most are forecasting that 2008 and 2009 will prove to be two very bad vintages for world economy.