Meltdown

15 Sep

I’ve long predicted a financial meltdown. The level of borrowing was never sustainable.

Even before I started this blog, I used to argue for hours on forums with rightwingers who said that I was just a doom-monger, and that my like had been proven wrong time and again. I asked them to explain how America and the UK could possibly borrow so much, run such huge deficits, and yet expect the money would never run out?

Then again, I never expected the coming recession to be quite this devastating.

Alan Greenspan, the man at the Fed when times were good and when the credit flowed, has called this a ‘once-in-a-century‘ financial crisis (h/t Sunny). U.S. banks are collapsing at a terrifying rate. House prices are tumbling and unemployment is on the rise again. With David Cameron poised to take control of this country (I’m in the UK at the mo), and an election in the States this November, we will see new governments walk into to a catastrophic economic climate.

Let’s not mince our words; this is going to be a massive recession. It will no-doubt be concentrated on the US and British economies (and other countries so heavily indebted), but the rest of the world will feel the pinch also. The BRIC countries are not ready to take up all the slack if America stops importing quite so much.

What will be interesting is how the right will spin this. McCain has time and time again claimed ignorance on economic issues, Rush Limbaugh spends at least one show per-week spinning the economic news in favour of the incumbent president, and economics will now probably gazump terrorism as the primary issue. Expect the extreme fringes to find a way to blame the Democrats, and watch the others play it down.

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