We face a period of global economic turbulence caused by the problems in the US housing market. This turbulence will affect every major economy and we are not immune. The world economy is slowing down in the face of two pressures. The first is the global 'credit crunch', where lenders are becoming increasingly risk adverse, which has its origins in the under pricing and under-reporting of risk by parts of the financial sector. The second is the growing commodity price inflationary pressure as the fast growing economies raise their demand. World oil, coal and gas prices are up by 60 per cent, while wheat prices have doubled. Consumers around the world are finding the bills for many of the basics are rising and are feeling their family budgets are being stretched.

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