And then markets just hit new lows. Yesterday, the S&P 500 fell to its lowest level since 1997. The Dow and NASDAQ fell to their lowest level since 2003. The FTSE 100 merely fell to its lowest level since the end of October. Then again, at close of play last night it was only 20 points or so above the year low set on October 27, and at that level the index stood at its lowest level since 2003, too.

Meanwhile, the price of oil as measured on the New York Mercantile Exchange at midnight last night, when we took our daily reading, had a four in front of it; it was trading at $48.70, the lowest level since May 2005.

As for sterling, it was down again.

Today, in this article we are taking a closer look at the current state of play on the markets. Then, below, we are looking at the current value of the FTSE and comparing two views: one that markets have reached bottom, and that from now on in the only way is up, and another more pessimistic view.

Then, in today’s third article, we really attempt to crawl under the skin of the markets, and ask: is it a mistake to compare the shenanigans of this year with 1929? Could it be that, actually, 1998 was the year that was truly analogous with that momentous year from the pre-war period? Was the boom of the last ten years an illusion? But, even if that is the case, maybe it has all turned out for the best, anyway.

But first, here is a closer look at the markets.

In the US, it seems that the big fear doing the rounds relates to Citibank, until recently the world’s biggest bank. The US government is throwing another $25bn at the bank; 50,00 staff across the world are losing their job; and still the rumours persist. The bank’s share price just keeps falling, it was down to a 13-year low last night.

As for the Detroit Three, GM, Ford and Chrysler, the latest news here is that Congress has kind of agreed it will provide money – around $25bn in all – but the three companies have to produce plans to show the money will enable the companies to move towards a viable business model. It is far from clear that they can do this.

The fall in oil provides reason for cheer. This publication predicted oil would fall long before it was fashionable to do so, but, even so, the extent of the fall does come as a surprise.

Business cycles are like this, of course. Demand exceeds supply, price goes up, customers start looking at ways they can cut back, money is spent on ramping up supply, and it all goes into reverse. Price falls, we all relax, little money is invested, and the cycle begins again. The collapse of GM, Ford and Chrysler is symptomatic of this. Oil forced consumers to look for more fuel efficient cars, and demand for oil fell. Who knows, maybe if oil falls much further, those massive pick up trucks may come back into fashion.

Whether this is good news for the long-term, however, remains to be seen. It seems that once the global economy starts expanding again, oil supply will fall a long way off demand and its price will rocket. This is why many say that in the longer-term oil will go back up in price.

It does not have to be that way. There are alternatives out there. If governments were to spend their money on developing renewable sources of energy, and creating jobs in these sectors that could provide economic prosperity in the future, instead of subsidizing yesterday’s industries, it is quite possible we could see the emergence of a new world, in which for the first time since industrialization, oil is of minor importance.

As for the currencies, it does seem that the graphs provide quite surprising findings.

Sure, the pound is down against the dollar, but only to the kind of levels seen in 2002 and again in 1993. Both of those occasions came during the UK’s longest-ever run of economic growth.

The danger, of course, is that sterling continues to fall. There has to be a strong chance now of much bigger falls in the pound in coming weeks. If things do indeed turn out that way, it may then be impossible for the Bank of England to cut rates to the extent people are anticipating.

At face value, things are upside down right now on the currency markets. Sterling is doing badly because the prospects for the UK are so poor. Yet the prospects for the US economy are just as bad.

It is quite bizarre, really. Money is flowing into the US. The yield on US treasury bills is getting ridiculously low because, right now, safety is the overriding priority. So, people put their money into an economy which is virtually on its knees.

But what the global economy really needs is to see a certain re-balance: for the US to consume less, and for most of the rest of the world to consume more. For as long as the dollar keeps going up, this is unlikely to happen, which is why the world really does need to see some kind of new system for international exchange – a Bretton Woods II – although if this ever will happen remains open to doubt. There doesn’t seem to be anyone with the vision, the economic insight, and the charisma required to create such an international consensus. The world really needs to see some kind of hybrid of Barack Obama and John Maynard Keynes. Maybe, just maybe, an Obama–Paul Volcker double act could provide that fix.

So, which way next then for equities? There seem to be two schools of thought. To find out what they are, read the next article .