Time to stock up on tinned food, bottled water, and ammunition
There’s so much big economic news breaking at the moment that it’s impossible to cover everything in any amount of detail – the whole Bradford and Bingley thing bears further discussion for a start (just how many failed banks is the UK government going to buy before the money runs out?) but events have overtaken us and right now there’s only one thing worth talking about: The US House of Representatives has voted down the $700 billion rescue plan for the US banking system which, if we’re honest, most of expected to be swept through without too many hiccups. At the time of writing, global stock markets are plummeting by record levels. By the time this news broke, the FTSE had already closed after a miserable day which saw it dropping by over 5% to under 5000 and it seems pretty likely that it’s going to get another kicking as soon as it opens again tomorrow. Not to put too fine a point on it, things are going tits up in spectacular fashion.
So what happened? Everybody thought this rescue package was a done deal, how could it fail at the first hurdle. It’s easy to be wise after the fact, but it seems to us that the American public is deeply uncomfortable with the idea of using public money to bail out private business, and with a general election looming in just over a month’s time few politicians were willing to vote for this massively unpopular bill. It looks to us like the working people of America are tired of putting up with Wall Street’s bullshit and their representatives in government are acutely aware of this shift in public attitudes. Politicians are nothing if not masters of self-preservation.
This is momentous stuff, the global economy has been looking very rocky for a while now, but now things have spiralled dangerously out of control. At this stage it’s difficult to predict how things will play out, there’s a very real possibility that we are facing a financial crisis every bit as bad as the Great Depression, but there’s also a chance that this could be avoided, although it’s hard to see anything other than a very hard couple of years ahead for all of us. Whatever happens, it’s like watching a massive train-crash happening in slow motion- it’s terrible, but spectacular to watch at the same time.
Just remember – this whole shitty situation has been almost entirely driven by the greed and mind numbing stupidity of a property boom allowed to spiral dangerously out of control on both sides of the Atlantic. The day we started thinking of houses as dead-cert, easy money investments instead of homes for people to live in, we sealed our own fate.