The "R" Word

Welcome back to 2008, I hope you all had a good break - I certainly did.

The "R" Word is everywhere.

Equity markets around the world have finally caught up with debt markets and declines are now regular and daily, interspersed with short lived rallies. The US Fed has reacted with its typical disregard for monetary restraint and seems intent on trying to monetise the problem away.........again. We may see interest rates rise to to the levels seen in the 70's and 80's if this policy continues. I can't see it working this time. The market's core sentiment has finally changed from greed to fear and I doubt it will abate any time soon.

There may be an equity rally later this year, but by the end of 2008 no one will be predicting a recession - it will be here. What people still won't have grasped is the length and severity of this recession. This recession will likely have significant geo-political consequences for the world.

We will continue to follow the Recession of 2008 throughout the year as it develops into the Great Recession. More in February.