The Great Depression II

Forget about all the talk of recession. According to a number of the world's leading economists, we are now living through the second Great Depression. After a brief respite, the world's economies are set to plummet.

As long ago as 1997, British economist Fred Harrison predicted the current crisis. He places the blame on the prevalence of land and property speculation. The scenario painted in The Fred Harrison Blog is not a pretty one, but is one that must be taken seriously. Governments could fall, unemployment could rise dramatically and a depression could ultimately lead to World War III. Unfortunately, governments are not listening.

David Rosenberg has already declared that the US economy is in a state of depression. Rather than improve, the situation is likely to get worse. Already, the July 2010 statistics show a 27% fall in the sale of real estate in the US - the worst fall ever recorded. Rosenberg believes that there has not been a recovery at all and that the worst is still to come.

Arthur Laffer, well known for the "Laffer Curve" that illustrates that lower tax rates can produce more revenue than higher tax rates, believes that the US will head into full scale depression once the Bush tax cuts expire in 2011. He cites the record and unsustainable levels of debt as being central to the collapse of the great economies of the world.

Other economists have joined the trend, naming the current crisis as The Great Depression II.

There can be little doubt that the policies being followed in the UK and Europe are likely to cause hige increases in unemployment and possibly even deflation. By the same token, the US fiscal rescue package is not being put to use or is being used in ways that will not stimulate the economy or produce jobs.

In the meantime, it seems that we are all aboard a sinking ship that is sinking fast.