1. Global bank balance sheets remain loaded with toxic assets. The real banking crisis has not started. Government bailouts have delayed the day of reckoning, not eliminated it.
2. Stock markets rebounded ‘too far, too fast’ in 2009 and are overdue for a big correction.
3. Chinese exports fell around 20 per cent in 2009, and have not recovered. Global trade continues to reel from the worst crash since the 1930s.
4. US consumer and commercial lending is sharply down. The banks still are not lending for spending.
5. Property values continue to deteriorate around the world putting new financial pressure on owners and banks. US mortgage resets are the sub-prime crisis part two.
6. A double-dip recession like 1980-82 is the most likely scenario with a further leg down in the second half of 2010. The 2009 downturn was too short following a major financial crisis.
7. Emerging markets like India and China are faking their growth – Chinese exports for example are in a deep depression. These markets are anyway too small to lead global recovery.
8. Oil prices are too high, and generally depress economic activity.
9. The record gold price indicates that smart investors are expecting the worst.
10. In past major global financial crises a bond market crash has always been the final phase, and we have not seen that yet. This will bring much higher interest rates, and a boom in the gold price.
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