Wednesday, November 24, 2004
The Great Crash of 2005
There is a remarkable reluctance among politicians even to admit, let alone discuss, the possibility of a deep economic recession. Yet all the signs are that one is on the way.
Our continuing prosperity is built on growing levels of debt, both government debt and consumer debt. It cannot continue indefinitely. We are living in a bubble, which will eventually burst.
And if you thought the Bush administration's foreign policy was delusional, you should see what it's doing to the economy.
A recent corrective to the prevailing fantasy was this article by William Rees-Mogg in Monday's Times. His remarks were echoed by Larry Elliott in Monday's Guardian. The coming crisis is likely to be precipitated by the falling value of the US dollar (which hit a record low this Tuesday).
Meanwhile, house prices have started to fall and investors are rushing to buy gold (always a bad sign). One investor, after hearing US treasury secretary John Snow's dismal speech in London last week, said, "I would sell the currency of any country of which he was the finance minister."
Still, why worry when you've got a wallet full of credit cards?