A version of this article appeared in Syntagma recently.

Gold rushes come and go in the world’s innovation capital, California. But when they go … they really go.

The City of Vallejo in California has filed for Chapter 9 bankruptcy, making history it seems. Half Moon Bay, home to some internet digerati, may well be next. According to John Moorlach, Orange County board chief, “This is the tip of the iceberg: everybody is going to line up for Chapter 9 in California.”

What can it mean to people on the ground when their city goes belly up? What of their assets, houses etcetera? It will be interesting to watch this pan out.

According to Goldman Sachs and Lehman Brothers American house prices are likely to fall 25pc from peak to trough. With between 10m and 12m households in negative equity already, there’s still a way to go.

Shares across the developed world are set for big falls too. Albert Edward Société Générale’s global strategist says, “Nowhere and nothing will be immune. We are on the cusp of an equity meltdown that will slash and shred portfolios. We see a global recession unfolding. Liquidity will drain away and crush the twin emerging market and commodity bubbles. The recent hope that ‘the worst might be over’ is truly staggering. Profits are disintegrating.”

Ambrose Evans Pritchard of the Telegraph (UK) — ever the Cassandra — says pointedly, “Britain, Europe, Japan, and China will go down before America comes back up. This is turning into a synchronised bust, after all. The Global Slump of 2008-09 is under way.”

The Bank of England and the European Central Bank are still stubbornly refusing to cut rates because of inflation fears, which will be the least of our miseries in the next two years and should abate soon as global demand falls off the much-imagined cliff.

It’s probably true that Ben Bernanke’s Federal Reserve has saved the U.S. and other countries from another Great Depression. But nothing can stop a slump now because it’s already happening.

Moneyizor.com has a piece on the International Monetary Fund’s latest Global Financial Stability Report, in which it claims losses by financial institutions are set to rise to $1 trillion (£500 billion).

Moneyizor comments :

On the day when the UK’s biggest mortgage lender, the Halifax, reported a staggering 2.5pc drop in house prices in March alone, the IMF warns governments, central banks and regulators that they now face a test of their mettle unique in modern times.

… the Fund remarks, “The critical challenge now facing policymakers is to take immediate steps to mitigate the risks of an even more wrenching adjustment.”

The report indicates that this downturn is about more than just liquidity, as some commentators are still arguing, but is rooted in “deep-seated fragilities” among banks with too little capital. This “means that its effects are likely to be broader, deeper and more protracted.”

Bloomberg is reporting that “Carlyle Group’s publicly traded mortgage bond fund failed to pay margin calls, prompting creditors to seek immediate repayment, as the burning subprime mortgage market scorches investors in even the highest-rated debt”.

The London Stock Exchange has been criticized for missing out on some IPOs recently. Amsterdam took this one.

Looks like the LSE was wiser than its critics.

The United States’ Federal Reserve has intervened dramatically to cut base rates by a whopping 75 basis points or 0.75 percent, indicating that it regards recession as a real threat to the US economy. This is the single biggest cut by the Fed in 20 years.

Despite the out-of-synch announcement, the markets are currently less than impressed, regarding it as a panic measure. The White House has also weighed in with the President saying he is considering an even bigger fiscal stimulus than the recently announced $150billion.

London markets have lost around 13 percent of value in only three weeks, heralding a worldwide bear market.

Syntagma has an in-depth analysis of the upcoming recession. Here’s a taster :

As we’ve been saying here in Syntagma for some months, a long, deep worldwide recession now looks more likely than not. Opinions are hardening among key players, principally in America and Britain.

Yesterday, the Wall Street Journal proclaimed : “U.S. warning signs point toward deep recession”.

Now even the insurance companies, or Monolines, that underwrite possible defaults, are also in trouble, with two of the biggest in the U.S. said to be close to Chapter 11 status (a form of bankruptcy protection against creditors).

Clearly, with the Fed and the White House in fighting mode something nasty is moving in the undergrowth.