The heralding of the end of the recession is/was optimism at it's highest.
We have seen the stats of jobless rates dropping. I was not very optimistic as many people I know who have lost jobs have taken up lesser jobs. Technically they are no longer unemployed, but they are underemployed.
House prices, a long and faithful friend of economic indicators, has show occasional rises but these are more in the fluctuations of finding a new level.
There are huge amounts of people paying off debt, easing the banking sector's strain. The monies put into kick-starting the economy in USA (in particular) was utterly wasted as it wasn't geared through the right channels. With poor interest rates savings have diminished and these stimulus packages have gone to pay off debt. Why have people been paying off instead of spending? This is because interest is low and is very likely to go up so in order to keep solvent, pay your debts now and hope tomorrow brings in further income.
The gold standard was a good means of maintaining sobriety, but simply adhering to the fiscal rules of savings/lending ratios would have reduced a lot of heartache. Too much credit and no real value in saving meant for need to borrow to accrue yet financial institutions had to increase the savings/loan ratios.
With the implosion of credit demand and a semblance of returning to sanity there is going to be an increase in the cost of borrowing so that banks can keep earning.
House prices are going to go down during the second phase of the double dip in the economy. This is likely unless there is a miracle.
Negative equity is really not a happy situation. However that will not be for that long and will only be if people sell properties now and realise the loss. But for now, the indicators are back to painting a depressing picture.
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