My name is Cassandra

Some conclusions from this week's financial and economic developments:

1. Prolonged recession is now unavoidable. Let us not argue about whether to call it a depression. The economies of the UK, the US and the Eurozone will contract. This will have (is already having) serious implications for the Chinese, Indian, Russian and Brazilian economies, although some of these may be able (just) to keep their growth rate above water. Oil prices will fall below $50 a barrel.

2. For the UK, the lack of credit will lead to companies going bust or downsizing; unemployment and house re-possessions will soar, leading to additional welfare spending. Foreign adventurism (in Iraq and in Afghanistan) will be taken off the agenda - we can't afford it. The same applies to new aircraft carriers and other defence equipment. Domestic capital infrastructure will also suffer - forget about new roads or rail lines. Ditto foreign aid. A Labour administration would no doubt seek to protect health and education but don't count on it.

3. All this faffing about with "re-capitalisation" of the banks and guaranteeing liquidity is not achieving anything. The banks are in a deep hole and will need to be wholly nationalised, especially RBS, HBOS and Lloyds TSB. Some of the others might survive as independents but, once those three are in the government's hands, the others will have a tough time as the spotlight is turned upon them. Given the value of bank shares, compensation for shareholders will be derisory.

4. Italy, Spain, Ireland and others will leave the Euro, as the German government and the ECB will refuse to help bail out those countries (or to allow them to weaken the euro as an aid to recovery). On the other hand, the UK might be forced by economic circumstance to join the Euro, forming an ever-closer union with Germany, Benelux and perhaps France.

5. The Labour government will be replaced by a government of national unity, including members of all three of the main UK political parties.

Don't believe it? Tick off the predictions in the months to come ...