Skid row, here we come...

...not the early 90s heavy metal band, fortunately, but the imminent collapse of the entire US (and perhaps the entire Western developed world) economies.

The US bailout plan has been defeated.

As that was pretty much the only thing holding global stock markets up, stand by for a financial bloodbath. It'll probably unfold as a domino effect over the next few weeks, with bank after bank failing - and dragging various other companies down with it.

What seems to have scuppered the bailout plan is three things:

1. hardcore opposition from the right wing of the Republicans. The official line from these guys is that a bailout is inimical to capitalism; we need to let the irresponsible corporations and investors fail, and the responsible ones will prosper. Which would be fine - except that the more banks fail, the worse the situation gets for everyone else. What looked like good investments up until recently suddenly turn bad as asset values fall further and further, asset values are hiked and your debtors default. The idea that capitalism is some kind of atomistic system where my fortunes don't depend on external market conditions, or anyone else's actions, is pure unadulterated bullshit that anyone with a brain, even on the right wing, should be able to see through.
   
2. hardcore opposition from the left wing of the Democrats. These guys don't want to bail out Big Corporate America, and that's a viewpoint it's very easy to have sympathy with. But again, the problem is that Big Corporate America takes a lot of people down with it - in the US and elsewhere - if it goes down. Again, it's all interlinked. Letting the big corporates collapse is the wrong remedy to corporate abuses - we need more effective (and more substantial) taxation and regulation of big capital, both here and in the US.
3. the fact that there is an election in 5 weeks and many politicians were worried that their constituents wouldn't forgive them for supporting the bailout. Again, many people are worried about the bailout for the best of reasons, but see 2. above.
   

There may also be a more sinister factor at work for the Republicans - which is that the worse the economic crisis gets, the worse John McCain's poll ratings seem to get as well. Many Republicans may have decided that there is simply no way McCain can win in November - so it's time to adopt a 'scorched earth' strategy, f***ing up the economy as much as possible so that Obama has a complete 'mare when he gets in, his poll ratings collapse and that clears the way for an extremist right wing nutter to take over in 2012. Well, it worked for the GOP in the late 70s. Jimmy Carter was unable to sort out the tremendous mess that the Nixon and Ford administrations had made of the economy in time to avoid going down to Reagan in 1980.

And I think that unless Barack Obama gets his shit together on the small matter of a fundamental shift in US economic policy before taking office (if he does win), there is a real danger of his presidency running aground big-time on the economy. Four years is normally a fairly long time in the economic cycle, but if we are headed for a 1930s-style depression... maybe not.

That's assuming the pundits are right that we are headed back to the 1930s. I've had my doubts before, but the new crop of data coming out from the UK is so weak that it's getting hard to maintain any faith in the system's ability to right itself without taking a huge hit. For example, mortgage lending has collapsed by 95% in one month. And that was before Lehman/AIG! Jesus Christ, we are f***ed.

Remember the barter economy... start storing those valuable non-perishables now. And a stock of food to eat, if your bank goes under and you can't withdraw any money from the cashpoint. Yes, you've got £35,000 covered by the Deposits Scheme but how long will it take the govt to give that to you? Gotta play it safe at the moment.

We're OK for a few days... got a vegetable patch. Beetroot is gonna be on the menu... a lot.