The Telegraph carries a very interesting piece about the potential economic dangers of an interest rate hike. According to the Bank Of England:

A sudden jump in borrowing rates - potentially caused by a further surge in the oil price - could cause a 2pc fall in economic output and wipe out banks' annual profits, estimated this year to top £40bn.

This is the "fine line" of profiting from debt. Push the interest rate too high, people just can't pay and then you really are in trouble. Other results include a 25% fall in house prices over three years. The Bank is said to have drawn out a list of six major risks that could lead to City meltdown. All six rest on record levels of consumer debt.

Record mortgage levels [June 29]
Mortgage broker world - where "sub-prime" includes "heavy adverse [June 28]