The International Monetary Fund expects the U.S. economy to contract 1.6 percent this year.

According to the global bank, British GDP will contract 2.8 percent this year, worse than the U.S., the eurozone and Japan, which will shrink 2.6 percent and the eurozone decline 2 percent. Overall, the IMF expects the global economy to expand 0.5 percent, its weakest showing since the Second World War.

Economists at the IMF also estimated that bank losses may reach $2.2 trillion, almost twice the $1.4 trillion the organization predicted in October.

It warned that, “unless stronger financial strains and uncertainties are forcefully addressed, the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth.”

In Britain, the bank bail-out is already projected to take national debt to 8 percent of GDP, and today the Institute Fiscal Studies warned that national debt levels are unlikely to return to the pre-crisis levels for more than 20 years.

Albert Edwards at Societe Generale has grave doubts about the American economy.

The S&P 500 index of US shares, he thinks, is about to crash through its half-century support line to 500.

“Technicals say it is time to bail out. Cut equity expose and prepare for rout. US depression looking likely. While China’s 2009 implosion could get ugly.”

Albert Edwards has called this crisis right from way back. He goes on:

“The Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression. … Do you really trust politicians to do the right thing?

“Could the economic situation in China become so bad that it threatens the regime itself? Of course it could. But before being swept away in a tidal wave of worker unrest it has one key tool in its economic armoury it has used before. MEGA-DEVALUATION. China has a track record of such things. At the end of 1993 the authorities devalued the yuan by 33pc.”

Is the way to a Smoot-Hawley II — the Act that caused a catastrophic loss of world trade and the Great Depression? I doubt that a U.S. with Ben Bernanke at the Fed would make the same mistake twice.

However, Edwards continues:

“Amid confidence that the ongoing, massive, monetary and fiscal stimulus will prevent a repeat of the Great Depression, will it instead be competitive devaluation and implosion of world trade that we should watch out for.”