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By Prof NOURIEL ROUBINI - the New York University economics expert who predicted the credit crunch YEARS before other pundits
THIS is by far the worst financial crisis since the Great Depression in the 1930s.
DESPAIR: As shares dive
The only light at the end of the tunnel is the one of the coming financial and economic train wreck.
The US and UK will experience a long, ugly and nasty U-shaped recession - the term for one which is so deep the economy takes a long time to recover. This one could last 18 months and lead to a systematic collapse of financial markets.
Despite the recent action to rescue banks, the biggest credit bubble in history is going bust - leaving £1TRILLION of losses, from mortgages to real estate to credit cards and loans.
As panic mounted in the financial market, and the turmoil became global, where were the regulators? Asleep at the wheel?
Governments in the US and UK were so fanatically ideological about free markets they did not realise financial markets without proper rules, supervision and regulation are like a jungle where greed - untempered by fear of loss or of punishment-leads to eventual bust.
Instead of wiping out shareholders and replacing corrupt and incompetent managers, the US and UK governments are bailing them out at massive cost to the taxpayer.
They have opened the floodgates for private firms, from airlines to car makers, demanding to be bailed out.
Now the sharp rise in energy prices and transportation costs, together with the sharp fall in home prices, will radically change the pattern of living of the typical household.
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This article has 5 comments
Judging from mr smiths comments he is obviously from the baby boomer generation. What he fails to understand is that we are going to have to inflate our way out of this mess or suffer a severe deflationary depression. For those Generation-X and Yers their debts will be inflated away. For those boomers with savings the same will happen. No comfortable old age for you. You didn't really expect to saddle the younger generations with trillions in housing debt and unfunded liabilities and expect them to struggle through life to feather your bed did you? Get real.
By james owen.. Posted October 5 2008 at 10:49 AM.
Am I really the only person NOT worried by all this? This will bother me when I am homeless and eating out of a dustbin.. I've been managing on £14K a year, could never get loans or credit cards and have fixed my mortgage. Should the average man on the street be worried?
By Emma.. Posted September 21 2008 at 1:46 PM.
I am a Generation X person I cannot believe how unkind the post by by Jack Smith is, I earn £90,000 a year from my city job, I am finding it hard to make ends meet, it’s so unkind of Mr Smith to comment in this way.
By Jill Jones.. Posted September 21 2008 at 10:06 AM.
If you voted for the shallow likes of Blair,Brown, and Prescott and were unable to see them for what they are ‘TOUGH” Now is the time for “Generation X” to grow up, do not blame the baby boomers. For you are the generation that voted New Labour into power, now it’s time to learn and suffer from your mistake as most other generations have had to do from time to time. “Generation X” now is the time to take a reality check. When Labour first came into office they quadrupled their Press Office staff immediately,Why? To tell us all lies, now is the day of reckoning while we all pay increased taxes just think of Blair living like a Lord in his Buckingham mansion at your expense.
By Jack Smith.. Posted September 21 2008 at 7:12 AM.
He's just described Gordon brown CORRUPT and INCOMPETENT....he should of never spent taxpayers money on saving Northern Rock.
By RIck.. Posted September 21 2008 at 7:43 AM.