With Spring in the air, the financial markets seem in a
frisky mood, there is a small bounce in British property prices. The banking
system is no longer in danger of immanent collapse. President Obama says there
are signs of hope in the economy...
This blog, which predicted the recession, has also been
constant in the opinion that the worst might be over this year if no one panics
– so the good news does not come as a complete surprise.
There are great opportunities for those who invest just as
the recovery begins. It all comes down to timing. It is a matter of precise
judgement and this blog would not want the responsibility of advising
However, as a general observation, those with cash probably ought
to hold on to it for just a little longer. There are indeed many positive
signs, but they should not mislead anyone into thinking that the worst is over
We are but in the eye of the hurricane – the calm that is
right in the middle of the storm.
1 There remain
fundamental structural problems in most economies.
recoveries are not what the markets need – they are a sign that they are still
subject to dramatic mood swings: what we need is slow, steady, stable,
3 Although out of
immediate crisis for the time being, banking remains a mess.
4 Politicians are
still nervous: some retain addictions to stimulus packages, and even
protectionism, which might make things worse.
5 When deflation
ceases to be a problem, inflation will become a problem – possibly a bigger one.
6 Recovery will not
be immediate: even if the recession bottoms out this year, it may be a long
time before many businesses are back where they were before it began.
7 History shows that
insolvencies, bankruptcies, and job losses may increase after the official end
of the recession, as businesses which have struggled to hold on finally