Milan (AsiaNews) – Get ready for a double crash - a double plunge as they say in finance - in global stock and credit markets over the next three months, this according to The Telegraph. In an article the paper says that the Royal Bank of Scotland (RBS) has advised its clients to brace for such a double whammy - the  double plunge - as inflation paralyses the major central banks.After stocks collapsed a first time back in the fall there were two alternatives, along period of stagnation or a double whammy, i.e. a financial and stock market crash, first in the West, eventually spreading to Asia and emerging economies. It seems that the second one will come. And a “very nasty period is soon to be upon us—be prepared,” said Bob Janjuah, RBS credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September, a drop of almost 30 per cent, with the contagion spreading across Europe and emerging markets. Such a slide on world bourses would amount to one of the worst bear markets over the last century.

RBS said the cost of borrowing would go up a lot for the best and largest companies in the world with the iTraxx index of high-grade corporate bonds soaring to 130/150 while the "Crossover" index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.

“I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.”

“Cash is the key safe haven. This is about not losing your money, and not losing your job,” said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.

“Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.

US Federal Reserve and the European Central Bank (ECB) both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.

The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets.

“The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation,” he said.

“The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets,” he added.

The political fall-out could be substantial as finance ministers from the weaker economies rail at the ECB whose institutional and constitutional bases have already been undermined, especially since the result of the Irish referendum means that the Lisbon treaty, on which the ECB rests, is dead because it required every member state’s approval.

For the Shanghai stock exchange whose value has been halved since last year there are also no sign of recovery, only signs of further storm ahead.