More than a trickle

There was something of the expected in the bailout of mortgage twins Freddie Mac and Fanny Mae. As the news seemed to have hit smaller lenders hard and many journalists stood aghast, one does get the feeling that Hank Paulson was not quietly waiting in the wings but had his water wall ready to shift the feet out of the giants.

Note that there have been no ramifications as yet on street level; no consumer backlash ala the immediate bank bombardment shortly after Northern Rock imploded. But this could potentially be much more, as the ripples of one of the biggest buyouts in history spread far further than the crisis that hit Britain and the continent this time last year. When US consumers start to cotton on to the real after effects of the drastic move their all-knowing Federal bankers have inflicted upon them, there could well be outright carnage.

Whilst Congress, the Senate and the American people stand back, placing their homes and finances in the hands of Paulson and co, one must wonder how long they’ll ogle on as if an innocuous discharge of funds had been pumped into the economy. But they will soon sit up and take note, as the estimated $12bn per month that is due to trickle down the drain gurgles on through the great nation’s sewers, turning pungent as it flows eastward. Make no mistake, this could well be the substance and making of the recession the Feds have been teetering on for the past fifteen months.

And for those euro optimists currently giggling with glee, this is a sure sign of an impending monsoon. The best we can hope for in dizzy euroland at the moment is that we are fully prepared for the worst. Businesses must do more than pull their socks up and hope for the best.