What can be learned from the “slow motion” market crash here in the United States?

For one thing, it seems that the capital markets freeze in the U.S. is precipitating, or at least foreshadowing, an economic recession here. And if that is the case, it bears noticing that capital markets in other nations are starting to seize up.

Consider an exchange I had recently with our esteemed BankInnovation.net member Johan Bryggare. Johan is the web manager at Skandinaviska Enskilda Banken AB, one of the largest banks in Sweden, and I asked him on Oct. 12 how the credit crisis was playing out in Sweden and whether there is rampant economic fear in Sweden, too.

Here’s what Johan responded yesterday:

“I think that people in general are quite worried about the overall situation, but [when] asked about their personal situation, I don’t think they are to worried yet. There has been some layoffs from one of our large car manufacturers, house prices have fallen, and the media has written extensively about the crisis, but there is no real panic. SEB and Swedbank are the banks that have suffered the most, partly because of their relatively large Baltic exposure. But all in all the major banks are quite solid.”

This sounds like where the U.S. market was at the end of the summer: some problems, a lack of credit, but economic indicators are strong.

I can see signs of a changing course in Sweden and in similar economies. In neighboring Norway, the central bank there yesterday cut its key interest rate for the first time since March 2004 to 5.25% from 5.75% to counter the diminishing supply of credit. Elsewhere, Hungary, India, and the Ukraine have joined the list of countries that are suffering from shrinking credit availability in their banking systems. Liquidity is duly being pumped in.

When you piece together Johan’s comments with news of what’s happening in Norway, India, Hungary, the Ukraine, and elsewhere, you see the slow creep of credit asphyxiation making its way across the globe. My fear is that the shortening supply of credit will be followed by economic recession, and with global markets in a downward spiral, the forecast for the U.S. proper has to be darkened.