Nothing gets many ordinary people fascinated by macroeconomics like a good political fight that affects their morgage.

As one Atrios commenter notes, “negative equity” has long been a key phrase of British politics. But thanks to Alan Greenspan recommending variable-rate morgages, Americans are now having to get to grips with this concept because it is one possible consequence of such a system being put in place. Atrios provides a characteristically blunt explaination:

Here’s the deal. Interest rates go up. Your housing price falls. Your mortgage payment goes up substantially. You can no longer afford to make your mortgage payment. And, since the market value of your house is now less than the value of your outstanding loan, you can’t just sell and trade down. Default. Foreclosure. Cardboard box.

Ironically, while Greenspan trumpets a British-style approach, the British Government and punditocracy have often looked to the American model as an alternative to Britain’s insane real estate market.