I OPEN this missive with a caveat. My grasp of all things fiscal is flaky to put it mildly, but the current state of our economic climate is exercising my mind.

The finer points of our crumbling financial towers cause an unpleasant knotting in my brain when I try to understand what’s going on, but the clear fact is that we’re all feeling the impact.

The ‘Credit Crunch’, as the tabloids have branded it for the sake of a snappy headline, is spreading far and wide. Even the seemingly lofty world of Grand Prix racing, which was awash with so much money that even banks looked like struggling market stall holders, has come to a shuddering halt.

Honda, after pumping £300m a year into the sport, is quitting. The company’s president, Takeo Fukui said on Friday: “This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry... and the sudden contraction of the world economies.”

You can see why ‘credit crunch’ has become the favoured off-the-shelf phrase.

So it isn’t just the UK, this is a global ‘problem’ – no-one is actually calling it a recession yet – and this is where things start unravelling for me.

Here we have a situation where banks are being bailed out by the government (with our money of course), finance houses are collapsing, house prices are falling faster than an elephant without a parachute, businesses are folding, thousands of jobs are being cut, retail is going down the tube because nobody can afford to buy anything – and on it goes.

Apart from a handful of people with tracker mortgages everyone is having a miserable time of it and even the trackers will be feeling the pinch as other costs rise.

So the problem I have is this: logic dictates that someone, somewhere, must be making a buck. All that money can’t have just disappeared into outer space.

Surely not absolutely everybody is falling on hard times, but for the life of me I can’t think who it is. Certainly nobody seems willing to shine a torch into this fiscal gloom.

In my exceptionally simplistic grasp of the economy, my reasoning goes like this: I have a pound coin.

You would like to borrow it I lend it to you.

The consequence is that there’s still a pound coin in circulation. So in this global financial crisis where have all the pounds – as well as euros, dollars and yen – gone?

They are now talking of interest rates ultimately being cut to zero – certainly a long fall from the days when I bought my first house for £11,000 with interest rates at 16.75 per cent.

And if that doesn’t work not even all those economic wizards seem to know where all this will all end up.

Well I may have the jump on them there.

We’ll return to a Middle Ages style economy.

I’ll grow enough potatoes to feed me and my family with a few left over to give to you in exchange for your chicken eggs.

Now I’m sure there are several smart people out there who can rip all this logic to shreds, but I did say my understanding was highly suspect.

However I think I may be in the majority that can’t understand how, in the blink of an eye, we’ve plummeted from the giddy heights of plenty to the devastated economic wasteland now stretching before us.