Recession Watch

Asian markets rallied this morning, most likely in expectation of an emergency rate cut from the US Federal Reserve. After the falls of yesterday, many commentators predict that Western markets will also stabilise today. 

Any respite, though, will only be temporary. The major indicators still make for gloomy reading, and fears remain that other US banks will go the route of Bear Stearns.

In the UK, one of the major questions is of whether there'll be any political fallout from the the financial crisis. Brown's spending and borrowing binge has exposed us to the worst of it all. Will he get his comeuppance? Much will depend on whether people swallow the Government's message that: “any problems are the result of global forces”. On this front, recent polls have delivered mixed messages. But the worry for the Prime Minister is that as the housing bubble bursts - and as inflation travels ever-upwards - an increasing number of voters will see his economic policy for what it is: a catastrophe.