In his book The Long Emergency, James Kustler describes a situation which is not exactly a crash, but an unravelling sequence of difficulties, in which the stock markets oscillate wildly in perpetuity and a generalised social upheaval occurs as cheap oil runs out. The best possible outcome is an albeit difficult relocalisation of global, urbanised America into smaller communities that are increasingly self-reliant, having been forced to curb their use of transport. The alternative of course, is mayhem and anarchy. Kunstler is an American and so his prognostications are focussed on the collapse of the urbanised system there, but they are innately applicable to all industrialised societies, including those in the U.K. and western Europe in general.
The global nature of modern trade and economics means that no man is an island, and where one stumbles the rest must take-up the strain. In reality, the gaping gaps in our banking system could not be more apparent and it is almost incredulous not to have been aware that a facade "underpinned" by credit - promissory notes in effect - betrays a house of cards. The governments of the world are trying to push more money into the economy, via tax-incentives and so on, but it is unlikely to make much difference as people are too frightened to spend, preferring instead to hang onto their cash when there is so much uncertainty, over jobs, etc. and even the viability of the banks themselves.
Sufficiently desperate is the impending recession that the British government is now threatening to use legal force to make the banks pass on their newly available currency, from the source of a government fund intended to help them out through this crisis of their own making, and to begin lending money again, both to other banks and to small businesses. Too late, the banks are now cautious about lending and if they had been so during the past two decades we would not be in the mess we are now. However, if all goes to plan, it is thought that the U.K. may be coming out of a recession by the end of 2009, so it is reckoned optimistically in Whitehall, although the CBI anticipates a longer run than this into the middle of 2010.
Now this is beginning to time-in with the expected arrival of peak oil, variously reckoned to arrive any time between 2006 (i.e. has happened already) and 2012-2013. The timing of the peak is in fact of lesser importance than the inevitable formation of a gap between rising demand and the supply of oil. The effect will be to force oil prices up again (as we saw last summer), and encourage economic downturn, i.e. the flow of money that the governments are trying to restore, will coagulate once more.
This does sound like a long emergency. That we will never arrive on calm shores after a storm such as we are in the midst of now, but having passed through one, yet another will rip into our sails, ultimately beaching the fleet of the global economy.