Debt, commodity price increases and house price falls will drive down consumer spending

Over a decade since debt and property prices reached historically high levels they have been driven even higher by a financial system that just doesn’t want a recession. This has been a debt-fuelled delay to an inevitable recession. Just take a look at the savings ratio.

We are now starting to see consumer spending fall in certain sectors. These falls will spread. Companies will delay the impact as long as possible. CEOs will let the hope of a short-lived recession influence the extent to which they will announce the truth about their companies’ finances. They will be wrong and they will be out in a year.

What we need is an admission by the Government (well done Darling) that times are hard, that depositors will be protected, that those in financial difficulties will be helped and that the perpetrators will be found. What we don’t need is everyone balming the credit crunch so that the Government can use this as an excuse to bail-out the financial sector.

1 Response so far »

  1. 1

    Tim Ramsey said,

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

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