Toby Birch (pictured), using the pseudonym Hugo Bouleau, wrote The Final Crash: Addictive Debt and the Deformation of the World Economy. The Blackfish Capital Exodus Fund manager talks about how he had predicted the global financial crisis.

THIS first of three editorials is a synopsis of my book, The Final Crash. The Guernsey Press covered its launch in April 2007 with the caption, ‘Biggest bust since the industrial revolution’. Its forecast of financial failure seemed far-fetched, particularly when markets peaked six months later. While it has since proved to be prescient, these articles are not an egotistical exercise in ‘I told you so’ but provide a positive message – not for the short term, but for the next generation and beyond.

My epiphany occurred in 2004 when the legendary Alan Greenspan, then-chairman of America’s central bank, made a bizarre pronouncement. He told the public to take out adjustable-rate mortgages rather than lock-in stable long-term rates (the more traditional method). It seemed imprudent because interest rates were bound to rise as they were just 1% at the time. Homeowners would be bludgeoned when mortgages eventually readjusted. It appeared that a housing bubble was being tolerated to prop up the economy and encourage consumer spending. Such manoeuvring has always ended in boom and bust. After 9/11, permanent growth became the new political mantra and no doubt the Fed had good intentions in letting house prices inflate. It is ironic that America’s downturn has not been caused by the terrorist without, but the inflationist within.