Total Meltdown

With Lehman Brothers filing for bankrupcy today and Merrill Lynch being acquired by Bank of America the U.S. has lost three of the big five investment banks in the past year. Organisations that survived the Great Depression have fallen victims to the Great Recession. The consequences of the Lehman failure will mark a key point in the transition of the "credit crisis" from a financial services phenomenon into a broad based economic downturn not unlike that seen in the 1930's. Uncertainty and volatility will now become the trademarks of the end of this decade. Allow me to quote a little from the article linked above:

it’s unlikely to be a slow-motion train wreck this time. With Lehman in liquidation, and Washington Mutual and AIG on the brink, the credit market would likely shut down entirely and interbank lending would cease. In his newsletter yesterday, Nouriel Roubini wrote: “What we are facing now is the beginning of the unravelling and collapse of the entire shadow financial system

This is not contrarian, gold bug, doomsday press (as it largely was when this blog started) this is mainstream journalism in mainstream media.

By 2010, so says this blogger, a mood of pervasive pessimism will have decended across the US and the World akin. The breakdown in the World order from the undermining of global economic stability will quickly flow from the economic to the social and political spheres. Economies such as China, built on the monetary expansion of the 90's and 00's will slow and faulter. Their implied covenants of personal feedom exchanged for prosperity will be invalidated. Their populations will become restless.

This will play out just as the 1930's did. The story will be old, the names and faces will be new.

The 2010's are unlikely to be a happy decade.