Pray that this lightning bolt doesn't hit the spot

There's an old saying that lightning never strikes twice in the same place.

It's not true, but doubtlessly, anyone who has survived being hit once earnestly wishes it were.

Richard Duncan has mixed feelings on the topic. In 2003, the Hong Kong-based fund manager achieved a notable lightning strike of his own when he published a book called The Dollar Crisis.

In that work, Duncan argued that the United States' credit-fuelled consumption boom was a bubble inflated by the financial sector.

He hit the nail right on the head when he warned that the proliferation of asset-backed securities was freighted with moral hazard because the new instruments allowed 'the originators of the loans to enjoy most of the benefits of lending money without bearing the risks'.

These were being transferred to the investors who bought the securities and who would one day suffer for it, 'particularly since subprime home-equity loans have become the fastest-growing sector of the ABS market in recent years'.

Duncan rightly predicted that the crisis would come 'when the US property bubble pops'. Falling house prices would force US consumers, long used to financing excessive spending by borrowing against the rising value of their homes, to tighten their belts. Aggregate demand would fall, and US appetite for imports would drop by several hundred billion dollars, throwing the rest of the world into a painful recession.