2009: The Hangover World

If this has been the year when the true scale of the credit crunch has dawned, the next could be the one where the severity of its impact may bring growing demands for a new way of running our financial world.
Though the credit crunch actually began back in August 2007, it wasn't until the spring and early summer of this year that it really started to squeeze the housing market and High Street shops.
Come September, and it exploded into a full-scale international banking crisis. Since then our economy has slowed to a crawl, as banks desperate to hang on to what money they'd got pulled the shutters down in front of consumers and companies looking for loans.
For all the Government's political posturing, that particular problem won't properly go away until the economy actually hits the deck. That's the point at which prices stop falling and banks can lend again in the knowledge that the price of the house you want the mortgage for will start going back up – and therefore be worth enough to pay back the loan if you can't.
They – and you – will be able to take sensible financial risk again.
The signs are that this may happen late next year or early in 2010. In the meantime, the continuing lack of lending will lead to a continuing lack of confidence among consumers and businesses.
And that, I'm sorry to say, will mean more shop and business closures and more job losses. The signs are that they could be pretty shocking.
These closures could also claim some big names - unless the Government decides they are, like banks, too big and too important to be allowed to fall over.
Why is this happening? Let's put it this way: if four companies supplied the same product in the boom years, one or two could well disappear in an era where vast chunks of the money that made them tick has simply evaporated.
If, as expected, the economy does hit the floor sometime next year, then what?
Will recession be followed by business as usual, with more credit available, rising house prices and people spending freely again?
That would be the normal course of events, but this time I wonder.
The credit crunch was caused by two things: years of over-borrowing, followed by the collapse of a wildly over-heated property market funded by cash the banks had sourced not from their own deposits but from international wholesale money markets (which were flush with surplus cash invested by booming Middle and Far East economies).
Those money markets remain firmly shut (which is why mortgages are still hard to come by). Why would they start spraying money around again when they've just seen things go so badly, catastrophically, globally wrong?
I don't think they will, and for two reasons. One is that they won't want to take anything like as much risk again. The other, I suspect, is that Governments around the world simply won't let banks act like bonus-crazed loan pimps ever again.
There is one more factor that will drag on the economic recovery. The Government has poured billions into softening the impact of the economy's vertical plunge. That money will have to be paid back through higher taxes, much of it on business.
That has implications for all of us.
If you follow this through to its logical conclusion then it suggests the days of businesses run in a brazen, swaggering, big-buck fashion are over. No more chancy expansion.
It suggests that the credit card-fuelled era of two foreign holidays, a new car and the latest home cinema system all in the same year is also history. It's curtains for conspicuous consumption.
Hold on a minute - what about falling interest rates? What about Government spending packages and tax cuts? Necessary, all of them, and likely to continue happening on a bigger scale than they are now – the Government may even set up its own business investment bank.
The one last throw of the dice will be a Bank of England decision to indulge in what economists call 'quantitative easing'. What it boils down to is printing more money and pumping it into the economy.
Frustrating as it is when businesses are failing and personal debts are rising, these measures always take time to have an effect.
But like paracetamol after a hangover, even if they do have an effect they don't change the fact that the economy – all the way from individuals to banks - drank itself stupid.
What's happened doesn't mean the end of life as we know it, but less of life as we know it for years to come.
Less of life as we know it looks like the only way we'll pay off all that debt – debt the country is still racking up.