Pause for thought
How can the banks be back paying mega-bonuses, just a year after Lehmans collapsed?
That's the question that many outraged citizens in Britain and America have been asking the past few days.
But for economists, there's a much bigger question: how will banks meet the cost of writing off all the bad debts they still have sitting on their books - and help fund an economic recovery as well?
The IMF recently reduced its estimate of the total bank losses for banks in the major markets as a result of the crisis - from around $3.8 trillion to $2.8 trillion. That's the good news.
The bad news is that, collectively, they are less than half way through the job of recognizing those losses and writing them off.
The Fund reckons that US banks are about 60% of the way there. But in the UK and the euro area, the figure is more like 40%.
Put it another way, the Fund thinks that around 60% of the £400bn in British bank losses as a result of the crisis has yet to be written off.
That has gloomsters such as Danny Gabay, of Fathom Consulting, predicting a second wave of the banking crisis here in the UK. He says we've had the first, foreign, wave. That took out a large chunk of lending capacity in the UK.
But the domestic wave of the crisis could still be ahead. And if the banks are still mired in debt, they will surely be reluctant to fund a full-blooded recovery.
As I said, that's one of the darker views out there. I might add that Gabay thinks the good news on the labour market is a false dawn as well. Most see the smaller than expected rise in unemployment as reason to hope that the labour market has become more flexible.
He thinks it shows the market has been even slower to adjust than it has been in the past, and a much larger rise in joblessness is still to come.
More upbeat analysts point to the sharp fall in the cost of bank funding since the start of the year. With so much liquidity sloshing round the system, they think it's only a matter of time before bank lending starts to pick up as well.
In other words, they say the recovery scenario is still on track.
And, of course, the IMF could be wrong about the total bank losses as a result of the crunch. It is something of a moving target.
That is all quite possible. We will get further clues on the state of the real economy when we get next week's preliminary estimate for third quarter GDP in the UK (though not that many more, given how much these preliminary figures are usually revised).
But for Carl Weinberg, Chief Economist for High Frequency Economics, it is simply impossible to generate a healthy recovery out of the kind of credit contraction we're still seeing around the developed world. "The next leg of this credit crunch will be the effect of a prolonged period of credit retraction among small and medium-sized enterprises."
Indeed, he see the contraction in bank lending to companies in the UK as a sign of more to come in the US and Europe (see chart below from one of Weinberg's recent reports). In his view, all the major economies could well be shrinking again by the turn of the year.
I'm not sure I'm that gloomy. But for anyone caught up in the euphoria on Wall Street and in the City in recent weeks, the still enfeebled state of lending to ordinary businesses around the world ought to be pause for thought.