Excesses in the financial sector have spilled into all sectors of the economy and are spelling global recession. The worst, most say, is yet to come, as the manufacturing, retail, housing and other sectors reel from the fallout, with more layoffs, generally rising unemployment, curtailed consumer and business spending, slashing asset values and so on—all on a global scale.
Nor have the financial sector causes of these real economy consequences ended: there remain trillions of dollars of financial instruments, created in the period 2004-06, outstanding, whose settlement upon maturity or other triggering events will have additional consequences.
Those consequences may either continue to add to the economic crisis or just possibly resolve it, not only by providing capital to the financial sector but possibly by reversing the consequences infecting the real economy.
This is the interesting analysis offered by Australian financial columnist, Alan Kohler, in Business Spectator, entitled A Tsunami of Hope or Terror?