Apocalypse Now?: New world order could have devastating implications for Western nations
London finance district down, disease spreading over London
In due course, it will topple governments and lead to a permanent transfer of economic and political power from Europe and America to the emergent and, in some cases, such as China, semi-barbarous economies in the East.
I know I will be accused of being unnecessarily apocalyptic and irresponsibly negative, but I believe that the greatest mistake we can now make is to downplay the seriousness of the situation and bury our heads in the sand.
But they will be felt very soon and very brutally. The British economy is in the same position as the Texan coast earlier this month as Hurricane Ike approached — apparently calm, with life going on as normal, but an almighty storm is raging just
over the horizon and heading our way with terrifying speed.
We can expect a sharp increase in personal bankruptcies. Yet the numbers will not peak until this time next year at the earliest.
Hundreds of thousands of people will lose their jobs, with many forced to sell their houses. Property prices will slump.
There will be extreme human suffering, panic and despair. Many careers will be
destroyed. This is considerably worse than the downturn of the early 1990s.
The orthodoxy from the British Government, the Confederation of British Industry and elsewhere that there will be a mild slowdown ending late next year is nonsense.
This crisis is vicious, dynamic and only just beginning.
Even those of us lucky enough not to lose our jobs and our homes will have friends and relatives who do.
Let us examine, first, the fate of City bankers from firms such as Lehman Brothers — all summarily dismissed when their firm went under this week.
They will receive no severance payment and almost no chance ever again of benefiting from the six-figure salaries and massive bonuses they have taken for
granted over the past few years.
That means they cannot service the huge mortgages they have taken out on hugely expensive houses. So this weekend they have become forced sellers — which means that thousands of new For Sale signs will be going up in London and the South-East
in the coming weeks.
Personal bankruptcy:Traders and investment bankers face an uncertain future
If these unemployed investment bankers had the misfortune to buy anywhere near the top of the market, they now face the prospect of personal bankruptcy.
This is because they will find that their houses are worth much less than they paid for
them, and will therefore be unable to repay their loan.
With so many vendors on the market obliged to sell at any price, it can be assumed that any London house will fetch 25 per cent less this weekend than it would have done this time last week.
Many of the younger bankers — those in their 20s and 30s with young families — now face utter disaster.
Of course, there is scant public sympathy for these former ‘masters of the universe’ who enjoyed good times.
But we already know that Thursday’s merger of Lloyds Bank and HBOS (supposing it
is completed: contrary to statements by Chancellor Alistair Darling, this is by no means certain) will lead directly to the loss of some 40,000 jobs among
There will be bloodletting on every High Street where there is both an HBOS and Lloyds outlet — one branch will undoubtedly be closed.
But that body-blow is just the start. Over the coming months, the financial typhoon will mercilessly spread outwards and wreak devastation on the economy.
Banks will foreclose on thousands of small businesses.Massive corporate failures are inevitable.
These disasters will then rebound on the financial sector, as company bankruptcies
and plunging house prices force fresh balance sheet write-downs and yet more sackings.
Unemployment — already rising fast and up 80,000 over the summer — is set to surge ahead and will increase well above the two million predicted by economists.
This will produce a vicious spiral. Every worker out of a job means less tax receipts and higher welfare payments.
In last March’s Budget (a work of fiction when it was published), Alistair Darling forecast borrowing this year of £43 billion. Even at the time, this figure was shockingly large.
It meant that only Egypt, Pakistan and Hungary among significant world economies had more profligate government spending than Britain.
As of this weekend, Government borrowing is out of control.
It will soar nearer £100 billion next year — more than double Darling’s estimate. This will cast doubt about Britain’s ability to finance our debt in the international