The crisis has not bottomed out yet

Rick Moran
If you're like me, you try to get your hands on as much information about this economic downturn we're in so that you can get a handle on how bad it is now and how bad it is likely to get.

Maybe I should start worrying:

The world economy is deteriorating more quickly than leading economists predicted only weeks ago, with Britain yesterday becoming the latest nation to surprise analysts with the depth of its economic pain.

Britain posted its worst quarterly contraction since 1980 on the heels of sharper than expected slowdowns reported from Germany to China to South Korea. The grim data, analysts said, underscores how the burst of the biggest credit bubble in history is seeping into the real economies around the world, silencing construction cranes, bankrupting businesses and throwing millions of people out of work.

"In just the past few days, we've had a big downward revision, we're seeing that an even bigger deceleration is on the way than we thought," said Simon Johnson, former chief economist at the International Monetary Fund and a senior fellow at the Peterson Institute for International Economics.

The depth of the troubles, analysts say, indicates that nations may need to spend more than the billions of dollars already planned on stimulus packages to jump-start their economies, and that a global recovery could take longer, perhaps pushing into 2010.

Recovery beginning in 2010 means no depression but the consequences of all this bailout money flowing into the economies of the world risks an inflationary spiral that would be even more devastating.

And let's not forget what this is doing to the private sector financial institutions. The chances are increasing - although many economists say it can still be avoided - that governments will have to nationalize banks at least temporarily in order to save the entire banking system.

For proof of this, I point to my friend Doug Ross's disturbing piece on his blog showing in graph form the "Treasury Bubble" - the amount borrowed from the Treasury Department by US banks. He calls it "The scariest Chart Ever."

Doug is not one to hit the panic button and he's not doing it here. But clearly, unless we are careful some very bad things are likely to happen with consequences to our liberty as well as our personal economic situations that would be incalcuable.

The bottom line is that this crisis is not over. And given how many economists believe that Obama's stimulus plan will only make things worse, it's hard to be optimistic at this point.





If you're like me, you try to get your hands on as much information about this economic downturn we're in so that you can get a handle on how bad it is now and how bad it is likely to get.

Maybe I should start worrying:

The world economy is deteriorating more quickly than leading economists predicted only weeks ago, with Britain yesterday becoming the latest nation to surprise analysts with the depth of its economic pain.

Britain posted its worst quarterly contraction since 1980 on the heels of sharper than expected slowdowns reported from Germany to China to South Korea. The grim data, analysts said, underscores how the burst of the biggest credit bubble in history is seeping into the real economies around the world, silencing construction cranes, bankrupting businesses and throwing millions of people out of work.

"In just the past few days, we've had a big downward revision, we're seeing that an even bigger deceleration is on the way than we thought," said Simon Johnson, former chief economist at the International Monetary Fund and a senior fellow at the Peterson Institute for International Economics.

The depth of the troubles, analysts say, indicates that nations may need to spend more than the billions of dollars already planned on stimulus packages to jump-start their economies, and that a global recovery could take longer, perhaps pushing into 2010.

Recovery beginning in 2010 means no depression but the consequences of all this bailout money flowing into the economies of the world risks an inflationary spiral that would be even more devastating.

And let's not forget what this is doing to the private sector financial institutions. The chances are increasing - although many economists say it can still be avoided - that governments will have to nationalize banks at least temporarily in order to save the entire banking system.

For proof of this, I point to my friend Doug Ross's disturbing piece on his blog showing in graph form the "Treasury Bubble" - the amount borrowed from the Treasury Department by US banks. He calls it "The scariest Chart Ever."

Doug is not one to hit the panic button and he's not doing it here. But clearly, unless we are careful some very bad things are likely to happen with consequences to our liberty as well as our personal economic situations that would be incalcuable.

The bottom line is that this crisis is not over. And given how many economists believe that Obama's stimulus plan will only make things worse, it's hard to be optimistic at this point.