Scenario planner and chairperson of the Anglo American chairman's fund, Clem Sunter, said on Wednesday that while the world had enjoyed a "long boom" since the 1980s, signs of recession are ushering in a new "hard time" scenario.

He notes that there were minor recessions in 1991 and 2001 "but nothing like that of the late 1970s".

He says a warning flag has already popped up and is fluttering in the wind, being the US property bubble popping.

"It means American consumers will reduce their spending — and they represent two thirds of the US economy and 22 percent of world GDP — and this is what has happened."

He said this was the trigger event for his "hard time scenario".

"In some areas US house prices have fallen 50 percent and the average American consumer therefore feels a lot poorer and is not spending as much," said Sunter.

Sunter says he does not buy the view that this will simply be isolated to the US.

"I spoke to the Chinese communist party and they said if the US goes into recession then it would halve Chinese growth from 10 percent to five percent."

"Signs of recession are creeping up all around the world — you are seeing it in property in Britain and it the property market is also stickier in Johannesburg or Cape Town than a few months ago," he said.

"The hard time scenario is upon us," he emphasized.

Sunter pointed out that many people probably haven't experienced a proper recession, which is still not the same as a depression.

He concluded that when military risks, like the US in Iran, were added to the hard times scenario, then a 30s/40s style "long-drop" scenario did enter the equation.

I-Net Bridge