The wild swings in the markets around the world are just the most obvious symptom of an economy heading down. You probably know by now that credit is frozen–so businesses can’t borrow to pay off normal bills. Banks are just unwillining to hand out money when they have no idea what the underlying value is of the collateral being offered to secure a loan. The unwinding of the $60 trillion in credit default swaps ($60 trillion!!!–where is Ronald Reagan when we need him to tell us how high a $60 trillion stack of one dollar bills would go) is going to take a long time. Most of this language is pretty foreign to most people but here are some things that I’m guessing we can expect in the coming year, as the economic crisis deepens, that will be a lot more understandable:

   1. One or two or more big retailers go belly up. No one is going to be spending money this holiday season. You know the problem is acute when you read, as I did yesterday in the Financial Times, that Las Vegas is in a big downturn. With home equity loans a thing of the past, most people will have no more credit–and those that might have some cash are going to sit on it because everyone is worried about their jobs. No money spent=retailers go bye-bye.

   2. At least one major airline will go belly up in 2009–and may simply be absorbed or liquidated. Somewhat same reason as #1–no money means people will cut back on travel (both leisure and the more profitable business class).

   3. Demands will start picking up that public employees cut back on their "generous" pensions. I’ve been telling people this was coming for weeks and, sure enough, in today’s New York Times we read that this about New York City:

Some fiscal watchdog groups are pressing Mr. Bloomberg to move quickly to take deficit-cutting actions that could infuriate municipal unions, including requiring many city employees to start paying health care premiums and creating a new, less generous, fifth tier of pensions for all future city employees.

   We are going to see that message coming from politicians at the city and state level.

   4. There will be a great push to say "we must now push through so-called "free trade" agreements". Mark my words: the proponents of so-called "free trade" will drag out that false nonsense that "protectionism" caused the Great Depression of the 20th Century and we will be told that if we want to avoid the same thing now, we have no choice but to save the globe by pushing these bad deals through–even though, in reality, depressed incomes of millions of workers, partly brought about by these failed deals and "liberalization" generally, is at the heart of the economic crisis.

   So, to sum up: the greedy got really greedy, played casino games with really big money and we get screwed.

   On that note, have a  nice day.