But we should be under no illusions that, even if it works as well as its authors hope (a large aspiration), it is already too late to avert a serious economic downturn — not just for the US, but for the world and, like the residents of New Orleans that fateful weekend three years ago, we seem ill-prepared for what is about to hit us.

I say this with great reluctance. It is no business of journalists (who, as someone once said, are like harlots, who wield power without responsibility) to go around scaring people. What’s more, until a few months ago I’ve been a relative optimist, convinced that we would get through this with not much worse than the kind of mild recession we’ve seen in the past 20 years. Now I think it might be time to panic.

The US is already in a recession that, even if financial conditions returned to normal today, would still be very unpleasant. In the quarter that ends tomorrow, it seems almost certain that US total output declined. Consumer spending and investment have been alarmingly weak in the past two months. On Friday we are quite likely to get another depressing report on the labour market, expected to show the ninth straight month of job declines in September. The housing market still seems to be getting worse, with sales falling faster than new construction, adding to the excess supply.

Britain’s economic activity is already declining, as is that of most of the big eurozone countries. So much for “decoupling”. We may have got into this predicament by different routes, but we’re all going the same way.

Read it all.

Filed under: * Economics, Politics • Economy • Housing/Real Estate Market • Personal Finance • Stock Market • The September 2008 Proposed Henry Paulson 700 Billion Bailout Package • * International News & Commentary • England / UK

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