Sweden is an influential adviser on credit crunch issues. This is because of the lessons it learned during its own major banking collapse in the early 1990's, which has close parallels with today's global crisis.
Its central bank argues that the main risk now facing the world is deflation, not inflation. It points to the very worrying parallels between the progress of the current crisis, and that of the Great Depression.
The chart above, from Profs Eichengreen and O'Rourke, summarises the bank's argument. It maps the decline in global industrial output from the Depression's start in June 1929, versus the period since April 2008.
Of course, policy responses have been different in this crisis. But chemical production is closely tied to changes in industrial output. Any further decline from current levels would be very bad news indeed.
Footnote, 17 June. The Financial Times today follows up the blog's posting above on the work of Profs Eichengreen and O'Rourke. After detailed analysis, the FT concludes that "those sure we are at the beginning of a robust private sector-led recovery are almost certainly deluded. The race to full recovery is likely to be long, hard and uncertain."