A short, sharp shock or armageddon?
Downturns come in all shapes and sizes - are we facing a concentrated few months of pain or a long decade of misery?

The short, sharp shock - the V-shaped recession

Gordon Brown's bank rescue plans work like magic. Interest rates are slashed to 3.5% by Christmas and after the festive season confidence returns to the banks and they start to lend again. Interest rates are slashed further, to 2.5% by the summer. House price stabilise as buyers come back and consumer and business confidence turns up.

Companies report lower profits, but there are not big collapses. Commodity prices stabilise. Oil goes to $60 and stays there, helping bring inflation down to 2%. A few emerging-market economies have similar wobbles to Iceland but get assistance from the International Monetary Fund. The global economy is helped by only a mild slowdown in China and unemployment in India peaks at 2.5 million. The FTSE 100 is back over 5000 by next summer.

Five years of gloom - the U-shaped recession

Banks remain reluctant to lend as a harsh new regulatory regime bites. Lenders focus on only the safest loans to the best risks. Interest rates are cut to 2.5% by the summer, but banks do not pass the lower rate on to borrowers in order to rebuild their profits and capital bases.

Some banks require further capital injections. Policymakers run out of ideas. Chinese economic growth slows, inflation remains and unemployment hits 3 million. The FTSE 100 is locked in the 3300-3800 range. Repossessions rise and properties lose 40% of their value. There are numerous company failures. The enterprise culture appears dead. But after five years, the first green shoots of recovery start to appear.

The double-dipper - the W-shaped recession

It looks just like the short sharp shock, but Opec cuts production and there is a new drought in wheat-producing regions. At the same time pay demands take off and inflation re-emerges.

The Bank of England's monetary policy commmittee lifts interest rates. Consumers lose confidence and struggle to repay their debts. A new round of bank write-offs begins. Repossession rates and corporate failures climb again.

The lost decade - the L-shaped recession

As witnessed after the Japanese banking crisis: today's inflation turns to next year's deflation. The banks remain reluctant to lend and consumers struggle to repay their loans. Bad debts mount, house prices fall 40% after a sharp drop and then a sustained drift. Corporate failures are at a record rate and unemployment reaches 3.5 million.

House repossessions rise as borrowers lose their jobs. There are bank failures and a couple of insurance companies topple over. The US is also in deep recession and the Chinese economy faces a hard landing. The FTSE 100 index dips to 3000 - another 25% down on today's levels and more than 50% below its 2007 peak - and fails to recover.

Armageddon

A new war in the Middle East pushes oil prices into the stratosphere. Central banks have to raise interest rates to combat inflation. Most major economies tip into depression.

Banking systems in many countries collapse, leading to widespread chaos as people are unable to access their money or pay for anything. Riots ensue and long queues appear outside soup kitchens as governments put soldiers on the streets to maintain order. Unemployment exceeds the peak seen in the 1930s.

Overall world output falls for more than a decade. It's the worst depression the world has ever seen.

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se te olvida recesion en ^ (en ceja zapatera)

como que parece que vamos a subir , que vamos a superar a francia, a italia, a uk, y cuando se pasa el efecto de la farlopa... para abajo indefinidamente

Os referis sólo a españa o a la economía global.

Me referia a España.

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en L de LAAAAAAARGAAAAAAAAAAAAAAAAAAAAAAAAAA!

En U o en L...

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yo no sé como sera...pero desde luego que se ha ido la cosa de la smanos....no se, esta bien que se intenten enriquecer con su esfuerzo pero hasta un limite

se habla mucho de dar clases de economia en el colegio, pero creo que haria falta de filosofia o etica para que botin y demas empresarios no se dejaran cegar tanto por el dinero y olvidasen que por su exceso de querer dinero puede pasarlo mal muchos millones de seres. veo bien la labor de los emprendedores, pero siempre que se ponga un limite de acuerdo entre todos para los beneficios privados. una participacion de todos en lo que quieren hacer las empresas yo creo

repito, mas filosofia

Como estais en la FAES, lo tirais por la ventana.

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el otro día escribí aquí algo de eso

De crisis, recesiones y depresiones

os animo a que os suscribáis y enviéis artículos

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¿quién es chiki? ¿una tia buena que está de moda ahora? ¿link?