So where does that leave us going into 2009? In my view it leaves us in a semi-depressionary state. There are many ills to overcome: commercial real estate, Alt-A mortgages, the unwinds of the banking sectors in the UK and Ireland, and the Eastern European debt crisis, a potential dollar crisis. Most of these things have yet to fully materialize but they are coming. Below are my predictions as made in posts in October and November following the market panic.
- The U.S. banking crisis: where are we?
- History shows US bank lending will be soft for years
- Europe is in for a rude awakening
- The Europeanisation of the Credit Crisis
- Where is the global economy headed?
- A shift to Eastern Europe and emerging markets too
- Dollar strength is an illusion
- Currency crisis is gathering storm
- Subprime good, prime bad
- The emerging markets crisis
- Iceland: a cautionary tale for small nations
- Is Ireland the next Iceland?
- Why I am bearish on the U.S. Dollar
Make no bones about it, we are in a very tough economic climate. It will get much worse before it get better.
The key, however, is the policy response. Are we going to stick our heads in he sand and act like these things will never happen or are we going to face the challenges head on? I say we forge ahead and take on the difficult decisions, work our way through this mess and make sure we reform the system so that it never happens again. It will be a long road to the kind of place we really want to be in – perhaps a decade – but we have done it many times before. All we need is the courage to do it again.
I am ever hopeful.
Originally published at Credit Writedowns and reproduced here with the author’s permission.