A long depression with no end in sight

THIS time two years ago we were starting to see the unravelling of the US sub- prime mortgage market, but I don’t think any of us could have foreseen the carnage that was about to go down in the next couple of years.

The world economy has been pushed into a very deep recession, with the contraction in economic activity the most severe seen in decades. The global banking system has also been fundamentally altered and many of the international banking names that I grew up with in my professional career are no longer around. Those that remain are still trying to work through the carnage created by the excesses unleashed by some financial geniuses who should never again be left loose on the global financial system or any system for that matter.

After two very difficult and turbulent years, some positive economic signs are at last starting to emerge. It is quite clear from the majority of recent economic releases that the global economic momentum has stopped falling, and is now stabilising. The hope is that there will be a gradual lift off over the next 18 months or so. I stress the word gradual, because it is difficult to envisage a robust and sudden recovery, given the destruction of personal wealth that has occurred in the US in particular, and the ongoing difficulties with credit availability around the global banking system.