The worst is yet to come

Since the subprime meltdown there’s been a lull. But now the so-called “Alt-A” loans, made to supposedly more credit-worthy borrowers and amounting to a trillion dollars, are allegedly about to go down the tubes, carrying banks and insurers with them. And this time Ben Bernanke, chairman the Federal Reserve, has no bail-out strategies left. He can’t lower interest rates to banks below the current 2 per cent, a level partially responsible for oil costing almost $130 a barrel. Round the corner looms hyper-inflation.

The sky is dark with chickens coming home to roost. America is in a terrible fix. But you wouldn’t know it from the politicians. Obams, Clinton and McCain flourish quick-fix recipes that are as inconsequential as a pop gun aimed at a gunship by an Iraqi child. Whoever is in charge come January 2009 will have to set as drastic a change in course as did Roosevelt in 1933, the last time the political economy faced this serious a crisis.