NEW YORK - I have long been forecasting that it was only a matter of time before America's housing bubble - which began in the early days of this decade, supported by a flood of liquidity and lax regulation - would pop. The longer the bubble expanded, the larger the explosion and the greater (and more global) the resulting downturn would be.

Economists are good at identifying underlying forces, but they are not so good at timing. The dynamics are, however, much as anticipated. America is still on a downward trajectory for 2009 - with grave consequences for the world as a whole.