Over the past year you have failed to spot a single significant
economic trend. You have sat alongside the most optimistic
mortgage company economist and proclaimed 'nothing to see here' . Finally, when even my cat has started to fret about economy cat food you acknowledge their is a problem and tell us the worst of it over. If Glaxo could market whatever you are on they may be the only company to post a profit this year.

Mark, Epping, Loughton

Unfortunately, my fear is that the attempts after the last recession to bail out the banks and to make the poor get deeper into debt to make the rich richer has reached the end of the road in the West. With the present debt levels, it seems impossible to wring any more debt from the poor.
At last the rich have started to fear the same as what the poor have endured since capitalism commenced.
The greed is so immense that no concerns for whether borrowing can be afforded has brought us to this impasse. Now the pain will start to flow towards the perpretrators of this financial disaster. Some have left the party early with payoffs, after presiding over total incompetence in their management during their stewardship. They should be the ones facing repossessions and bankruptcy, instead their appointees and peers will reap the whirlwind.
What good are lower interest rates if you are up to your eyeballs in debt.
In answer to Mr. Kaletsky's article. The pain has only just begun.

R. George, Lowestoft, England

Yep, all over. Just look at Citigroup and Merrill today.

Please sack this chancer and save valuabll ink and electrons.

Alex Ritchie, Salisbury, UK

Oleg, Cambridge, UK.

Well said that man. Gold star. Ten out of ten.

Maybe your right. Maybe this is just the medicine that we need.

joe, Berwickshire, scotland

Its a brave forecast, so I think if you are correct you should receive more money from the Times for your column the following year but if people use this forecast to invest and you are totally wrong you should lose your job with the Times. LETS GET SOME ACCOUNTABILITY

DAVID REARDON, nuneaton, warwickshire

I recall that Private Eye ran a column a few months back , specifically on how consistently wide off the mark Mr Kaletsky's predictions were .Economists as a whole are not renowned for the accuracy of their foresight , so this was high praise indeed for Mr Kaletsky. Therefore, judging by the contents of this article , we're in even bigger trouble than I thought.

mick, manchester,

I think the accuracy of this article will be quickly seen. Citigroup and Merril Lynch give their Q4 2007 results this week so we'll see what happens to the inter-bank rates then.

The Economist reckons that 200-300B of losses (approx) will be written off by the banks and we have only (!) seen about 80B so far, so I would guess that we are about a third of a way through this. A long way to go yet, I'm afraid.

jxc, MK, England

Well, that's a relief then. All a storm in a teacup really ... If only! I must save this particular piece from your resident perma-bull take it out, dust it down and read it again in perhaps a year's time.

I also note that the venerable AC predicts that:

''The intransigence of the ECB will cause serious economic and political disruptions in Europe - and could even raise questions about the euro's survival as a reserve currency in the long term.''

Sleepers awake! Your knee-jerk europhobe seems to have missed out on the fact that it is the dollar's reserve currency status that is at issue not the euro's. And given the fact of the US's intractable current account deficits this is hardly surprsing.

Anyone with any nous or any idea of what is actually going on with regards to exchange rate movements, currency valuations and forex markets would take the euro over the dollar any day.

Frank Lee, Wallington, UK

I agree with all the points in this article.
At least someone is ballsy enough to come out when everyone is taking cover and hiding away.
Well done!

Robert, London,

One word you didn't use: inflation! Do you honestly think central banks can pump money into the system indefinitely?

Robin Bruce, Bristol,

Anatole, I agree that the Euro may become over valued but that will be the fault of the US and poodle UK economy. The ECB is following the correct course of anti-inflation policy. If we succumb to the stupidity of the US Fed in cutting rates to further fuel the flames of debt with resulting inflation, it will only make matters worse. No amount of talking up a failed economic model is goping to fix this problem.The US and UK now need to go 'cold turkey' and allow their economies to correct the perverse reliance on the consumer.

Steve Marchant, Broadhempston, UK

your living on cloud 9. The sooner people like you get a grip on reality the better for society.
The world ecconomy is in a mess due to greed and over inflated self importance by financial and multinational corporations. The bubble has burst and the fall out will lead to world recession. Stop trying to kid yourself that you understsnd the market and ecconomics.No one does!
The fact is the financial system is out of control and kidding itself in to thinking it will ride out the blunders that have been made. The buck stops here!

philip Hammond, crosby,

To say that the credit crunch is easing as shown in inter-bank rates is "so wrong" I am afraid.

The narrowing of the spread of 3 month rates over Central Bank indication rates (Fed, BofE, ECB) is more a simple result of the credit markets pricing in imminent cuts by those Central Banks. ie Fed will likely cut rates by 0.5% - 1.0% on Jan 29th (or before!) - so a 3 month rate from today would have 70plus days of the 90 priced at a rate of 3.5% - 3.75% factored in - and not the present 4.5% .

Mike Small, Dubai, UAE

Every time I come to Anatole's comments I hope to find one that actually depicts the reality as it is (in fact this hope is the only reason that makes me return). However "optimistic" you are for 2008, with the City, the overpriced housing market and the public sector being at the heart of the British economy, its crash is just a matter of time: if not 2008, then 2009 or 2010. This here is the economy that cares no more for the prospects of its younger generation and vulnerable, that drives the class separation further into the deep, its the economy that killed its own engineering and technological traditions etc. It is not sustainable, and the City could not care less: it will move as soon as it does not feel happy in the UK. The crash seems to be the only factor that could bring the English back to Earth and make them start thinking, thinking of unlimited consume, youth crime, poor education, poor family relations etc - think of the values of the society.

Oleg, Cambridge, UK

I just taught myself in economics and found that it was very interesting that people start to think of recessions in UK and US , so I checked out the factors , GDP, unemployment etc....which leads to it , well I still not convinced ??? the true answeres could it be all the key factors affecting the economies in all sectors and where can one get this data ???? of the last year , help where ?
It would be great if someone could guide me to these data !!

claire, surrey,

Why is inflation not mentioned at all in this prediction?

Because it will have a devastating effect on the conclusion?

Its easy to cut rates when inflation is low (US in 2002), foolish to do so when every indicator (except cheery picked CPI) is shouting inflationary spiral.

Did stock markets fall in 2002 despite the rate cutting? Oh dear they did. But only about 30% because there was no proper recession!

GG, Essex,

Dear JMD: I love all of Mr. Kaletsky's wonderful predictions. He leaves very little "on the other hand..maybe..perhaps" wiggle room. Time will tell if, and how wide of the mark, he is! (Many real financial journalists -- Randall Forsyth (Barron's) and Wolfgang Munchau (FT) -- disagree with him completely. TTFN, Peter Adam

Peter Adam, Chevy Chase, MD

Which bit of Kaletsky's prediction does Peter Adam not like ?
To question whether the Euro's 'one size fits all' strategy actually works amongst so many disparate economies seems sensible.
And if one continues to follow his argument there has to be a malign economic impact if products in the Euro area become overpriced through inflation and an overvalued currency.
Airbus has been vociferous in its complaints about the impact of euro strength on sales.

JMD, London,

Anatole, I'm afraid you are way wide of the mark on this one. The carnage in subprime mortgage CDOs is set to be repeated in similar repackagings of credit card, auto receivables, leveraged debt and so on. Further, where are all the losses outside of the banking sector, ie in the investment and hedge funds, the latter of which are often bank funded? What happens when credit default swaps get called from counterparties who can't pay up? A few questions for you to answer there before calling the end of this mess...

JP, London,

Economic predictions exist in order to make horoscopes more credible.

guido, rome, italy

not much analysis here. all you've really said is that since LIBOR has come back a bit the banking crisis is over. well i guess it might be that simple.
the second assumption rather than analysis is that if there is a US recession then it will be over before christmas and everything will be hunky dory again. i suppose that might be true too.
i think you're normally mroe incisive than this which makes me think you dont really have the arguments to support something that is just an attempt to be bullish because you sense others are bearish.
And no doubt this comment will simply confirm your views that people are too bearish. You may be right on that too.
BUT you havent been convincing.

OJ, Frant, UK

i think some of the predition might be true in the future,

arifin, medan, indonesia

Dear Mr. Kaletsky: As Casey Stengal once noted: Be careful about making predictions, particularly about the future. Regards, Peter Adam

peter Adam, Chevy Chase, MD