Read the Handwriting on the Wall

One of the things we find amazing, at least in the area of economic depression, is how easily things can be explained away. The pieces are all there, but the dog ate the box and no one wants to put the pieces together. We can sympathise -- it looks pretty scary -- but we can't help but feel that seems like sticking one's head in the sand and hoping the volcano isn't, in fact, erupting.

For instance, in the Autumn of 2007 we were driving through a good chunk of the United States. At one point, we remarked to our partner that the number of cars in the road had fallen off a cliff. A few weeks later, the owner of a coffee shop we frequented said to us, that business was doing okay... even though the country was in a recession. We nodded sagely in agreement; we had seen evidence of the truth of his words. But guess what we didn't do, dear Reader? Even though we thought we saw the writing on the wall, we didn't start planning for recession.

Now, however, we're paying a bit more attention, especially to articles like this one from Reuters U.K., which paints a grim picture of a 55% drop in commercial loan issuance. Although good data seems to be impossible to find, we feel confident in saying that bank lending strongly supports the U.S. economy. How much, we can't say, but with a 55% drop-off in commercial loan issuance by banks... even the Wizard of Oz couldn't prevent the United States economy from contracting significantly this year.

How much, we don't know. Singapore has slid 12.5% year-over-year, but we have a suspicion it will be worse in the United States, and other economically weak nations. How are we responding to the signs now? We're preparing.