Are we due another crisis? We know that the banks fell apart during October but we have not seen a full accounting of their bad debts or whether they have set aside sufficient reserves to meet these requirements.
The process of deleveraging has hit the real economies hard. Now, the United Kingdom is passing through the first stages of the recession where the onlooker does not know how hard, how fast or how long the downturn will take. Every week we hear another phase of terror wander the garden of punditry: Japanese style lost deflation, a longer lasting recession than any other advanced industrial country, the potential sterling crisis and so on.
Let us be clear: no one knows if this downturn can be described in orthodox terms or compared with previous recessions. Gordon Brown is arrogant enough to believe that he can affect this tsunami through a splurge of borrowing but, if I stick my finger in the air, this money will have no effect at all in the long run, and will do nothing to cozen the pain. What desperate measures will Brown turn to then?