Sunday, May 31, 2009
World share prices have enjoyed a three-month rally, led by commodities, retailers and financials, capital markets have re-opened, with record issuance of equities and corporate bonds, credit spreads have narrowed and government bond prices have fallen in exactly the way they did at the start of the recovery in 2003. Yet most economic commentators have remained sceptical or even contemptuous of all this evidence. Surely, they argue, the threat of another Great Depression could not just have vanished in a puff of statistics? Is anyone so naive as to think that a crisis caused by over-leveraging can be solved by government borrowing and money-printing? Actually, some people are so naive.