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A cuckoo in the stock market?

Robert Peston | 09:41 UK time, Monday, 6 April 2009

All the talk in markets is of a possible slowdown in the rate of decline.

The reason why share prices around the world have been rising in the past few days is not that there is evidence of economic recovery - but rather that the pace of deterioration may have been decelerating.

Think of it as what happens when you touch down in a plane and the pilot turns on the thrust reversers at full pelt - the plane stops before it overshoots the runway (barring mechanical failure).

The pilots of the global economy have been gradually increasing the force (and noise) of thrust-reversal in recent months: monetary and fiscal authorities have cut the cost of credit, pumped money into the system, rebuilt banks' balance sheets and stimulated the economy.

That amounts to many trillions of dollars of economic force. There may be more to do - but it's bound to have an effect.

Now, since it was a collapse in the availability of credit that pushed the world into the worst economic conditions since the 1930s, an improvement in the supply of credit would be (for most people) an encouraging sign.

In that context, the Bank of England's last credit conditions survey - which was published on Thursday but was drowned out by G20 mania - may turn out to be significant.

The survey claimed that in the first quarter of this year there had been a slight increase in the availability of loans to companies and a less-than-expected reduction in the supply of unsecured credit to households and small businesses - although the supply of mortgages shrank again.

Perhaps more relevantly, credit conditions were expected to improve in the coming three months: credit will remain tight, but not quite as tight as it has been.

It could be the first cuckoo (sorry for mixing my metaphors).

And there may be other cuckoo-ish noises; there's been contradictory data on what's happening in the housing market in the UK - whose underlying message may be that prices aren't dropping as quickly as they were - and a less-than-expected fall in US motorcar sales (though today's news on car sales in Britain is dismal).

I am being parochial, and economic stats from around the world remain pretty dire.

But here's the paradox. It's impossible to prove that we've heard the first cuckoo in spring. However that may not be the disaster it seems. What matters - to an extent - is what investors think they've heard.

Confused?

The point - which I've been making for some time - is that there is an inextricable link between asset prices and the supply of credit (and between the supply of credit and economic prospects in general). Or to put it another way, a pre-condition of economic recovery is that asset prices have to stabilise and then rise in a sustained way.

For asset prices to rise, investors' appetite for risk has to increase - which would happen as and when they see portents of better times ahead. And if - for example - property prices then bounced even a little, banks would have a bit more confidence when lending, because collateral would not be seen as inexorably shrinking.

A similar virtuous process stems from a generalised rise in share prices. And that's a trend we have been seeing from Tokyo to Wall Street to London.

If share prices rise, including the share prices of banks (as has been happening), then it becomes much more of a realistic prospect for companies - including banks - to raise the equity capital they need.

That in turn both reduces the demand for emergency lines of credit and increases the willingness of banks to lend.

Against that background, the strong demand for HSBC's £12.5bn of new shares has to be seen as a very good thing.

None of which is to say that even if we've heard the cuckoo that it couldn't yet be wiped out by yet another malevolent storm.

And I've bored you rigid with my fears about the huge challenges we'll face, even after the recession has ended in a technical sense.

That said, it would be mean-spirited not to take pleasure from the thought that we might have heard a cuckoo.

Comments

Page 1 of 3

  • Comment number 1.

    After all the talk against derivatives, I just love your "the pace of deterioration may have been decelerating". The world looks increasingly crazy to me. Unless it's me who is losing my sanity.

  • Comment number 2.

    Robert

    Surely a few more post like this with a positive edge will only help things start to improve.

  • Comment number 3.

    I'm confused, Robert, very confused. And I'm sorry, but it all sounds like cloud cuckoo land to me.

    http://moneyistheway.blogspot.com/2008/09/cloud-cuckoo-land.html

  • Comment number 4.

    Well you never know Robert, one can hope.

  • Comment number 5.

    Sorry to be a pesimist when the sun is shining for some, but in this part of the UK we are about to see the unemployment levels shoot through the roof, this will undoubtedly result in bad debt and reposessions. So whilst the City may be about to enjoy a burdgoning spring ours is looking dire. Even if there is the money to borrow most will not want to or be able to and IMHO neither should they, because the rest of the economy still has a very long way to go and I do not believe is even close to bottoming out.

  • Comment number 6.

    I think the use of the word `cuckoo' is very apt. You can hear a cuckoo but you hardly ever see it. Also it is a parasitical bird which just about sums up what has been happening in our economy over the last nine months..

    We seem to be reaching some sort of floor, or, as I have said previously, is it a step or a mezzanine? Too early to say yet. I have seen a lot of domestic building activity in my locality so the speculators are still out there expecting an asset recovery. The fact that they are there is significant.

    However, this might apply to the economy at a macro-level but at the micro-level it is dire and still getting worse.

    The consumer is paying down debt, there is a lot of inflation about that dare not speak its name and the prospect of significant increases in taxation are very real. This does not bode well.

    I think everything impinges around how the government tackles the considerable debt it has run up for not passing by on the other side. Tax hikes and welfare cuts will cause manifest political trouble and exacerbate economic woes. Cuts in public spending sufficient to meet the rise in debt are not in the canon of Labour thinking and against the interests of their client groups.

    So we can expect fudge for the budget and an Augustinian desire to be worthy but not yet. This will not be good enough, there will be a further run on sterling and inflation will take off.

  • Comment number 7.

    Robert

    You continue to argue Brown & Darling's assertion that it is a lack of credit behind the economic downturn. This is simply not the case - collectively the indebted population of the UK has recognised that continuing to consume on credit at the level it was is no longer viable and it is the reduced demand which has triggered the onset of the recession.

    This then becomes self perpetuating with the associated job cuts and lack of investment leading to further reductions in demand as individuals attempt to reduce personal indebtedness or save for their own rainy day.

    Brown sees the only way to break the cycle as encouraging further consumption through once again borrowing but memories are not that short! The electorate knows he milked the availability of easy credit to generate his illusory good decade and will not be suckered again.

    Consequently demand for borrowing will remain low and the recession will be deep. Good quality applicants (personal and business) will continue to be able to borrow as they have throughout the last couple of years.

    Brown (and you) need to be able to distinguish between cause and effect.

  • Comment number 8.

    If we are re-inflating the asset bubble to deal with the dodgy derivitives market, then I think we're all in cloud Cuckoo land.

  • Comment number 9.

    Have the Labour spin masters ordered you to put this out there Bob? Next thing you will be telling us it`s a good thing for Britain to go to the IMF.

  • Comment number 10.

    Robert,

    Even if the stock markets had meteoric rises, it will take a significantly long time for that to translate into more jobs and people having more money in their hands to feed their families with, or to retire on, or whatever, and even longer before it stops people putting money away in anticipation of problems ahead.

    And - even if that all happened overnight - it will be even longer before people regain any trust in the financial industries such as banks, investment advisors, insurers, etc. Humans, rightly or wrongly, often take the attitude of "once bitten, twice shy". It's called learning by experience.

    Sadly, the lax regulatory regime has left a legacy whereby many ordinary people feel they are unable to do anything whatsoever about risk taking, over-stretching, maverick financiers or just plain arrogant and bullying ones. It's just not a level playing ground, so why bother to play at all?

    Let's face it, track record shows that they can't trust HMG or its regulators to rein them in. (The Financial Ombudsman Service is ludicrously slow and is highly under-resourced, judging by my personal experiences with it and, as for the FSA, well let's not even go there!)

    Long drawn out legal battles about bank charges don't make people feel any better about banks' true willingness to give a monkey's whatever about them as customers. (Really, why couldn't the banks have just 'rolled over' on that one, even part way? Wouldn't it have been worth the PR? Why this insistence on dragging everything out like they have. Yes, I know, the Anglo-American way of doing business).

    So, the industry is still left with the issue of how to rebuild trust and the simple fact is that building trust takes time. The more the trust has been abused, the greater the time. Unless, of course, we're going straight back to running everything on the basis of fast fat profit again.

    Are you sure that was an actual cuckoo you heard? It wasn't a cuckoo clock, perhaps? It's amazing, with modern electronics, how realistic those things sound nowadays, isn't it?

  • Comment number 11.

    So people hear something and dont know what it is but imagine it is what they want to hear. So we are no further forward are we because this is exactly how these genii got us here in the first place. Surely it is time to send them to the corner to write out one hundred times - I must not imagine I am hearing what I want to hear. I must ignore the voices in my head. I have a disorder and I am a danger to myself and others.

  • Comment number 12.

    i am not sure that share prices have anything to do with real life.... the stock market is nothing more than a casino... look no further than a stock like Tesco ....in the last year it has been as high as 437p and low as 285p....yet during that year was tesco's business any better or any worse? No it was just people gambling that moved the price not the fundamentals of the business... This latest rise could be a sign of better times but could just as easily be a bear market rally and in two months will be once again testing the lows...basing economical judgements on the state of the stock market is very dangerous..

  • Comment number 13.

    People are getting desperate for all this horror to be over and everything to get back to normal. The gamblers at the Stock Exchange want the punters to come back. But it's all a mirage.

    The recession is just getting started. Nothing has changed in the directors rooms. The same millionaires are still scratching each others backs and hoping their comfortable protected lifestyle can resume as soon as possible.

    If no dramatic action is taken, like root and branch clearout of the robber barons, then the current sticking plaster fixes will ensure that we muddle on, gradually getting worse unemployment, then hitting bottom and bouncing along for years of depression.

    Maybe it will get bad enough to force real action to be taken, but if not, we are in for a long age of suffering like Japan.

  • Comment number 14.

    Any chance of a post without the terms "to put it another way" or "i have been banging on about this for the last year" as if we are all so stupid it needs explaining 3-4 times in different ways and we certainly dont need the "i told you so!!" bit. If you were some sort of clairvouyant surely the goverment would have employed you buy now!?

    Other than that i like the tone of the blog. Basically everyone is just waiting for the starting gun before getting on the property ladder.

  • Comment number 15.

    The armchair-experts are waiting for the gun to fire. Having stratosphered the dot-coms with day trading, over-inflated the housing market with their homes-under-the-hammer, and now that their lovely-loot no longer earns interest merely by existing - because every man and his dog that could pay them interest did so, and then some - they need another easy win... What's it to be? Hand guns and mines? A BBC daytime TV programme on export of torture instruments to make a "healthy profit"? Buy plots of 3rd world land then sell it back to them weeks later at an inflated price? It's the British dream: have enough money to live comfortably off the backs of others. The big question is, is this the bottoming out or just a few over-eager gun-jumpers? Only time will tell, but one thing is for sure, your average working-class-joe won't be seeing a "nice little earner", they'll be hoping to stay afloat as others speculate their life away.

  • Comment number 16.

    It`s all a nice picture you`re painting but it still doesn't get away from the fact that the economy is no where near growth yet.

    Based on your arguement, if my football team is playing Manchester United and I`m expecting them to get hammered 10 - nil but they only lose 6 - 1 I should be happy. The lose was less than I was expecting so maybe my team is better than I thought. None of this changes the fact that the team still lost the game no matter what kind of gloss I want to paint over it.

    The problems our govt have been building up with all of this debt will go far beyond the recession. Darling has come out now and said he got it wrong in the pre budget report - nah do you think?

    Every man and their dog said at the time that Brown`s and Darling`s forecasts were crazy. Now 2 weeks before the budget he tells us the deficit is 2.7% worse and we are short another £39 billion. And at the same time Mandelson and a few other ministers are laying the ground work by telling us it`s ok to turn to the IMF for help.

    Here`s some more information for you: PM's just saved apocalypse for later http://creditcrunchedoutinuk.blogspot.com/2009/04/pms-just-saved-apocalypse-for-later.html

    Max Keiser refers to all of this mess as Financial Terrorism and I can't say I disagree.

  • Comment number 17.

    It would seem that for our economy to be flourishing we require a state of affairs where credit is constantly increasing. When credit dries up people stop buying things like houses and cars, and the economy nosedives.

    Because interest has to be paid on loans the amount of credit has to rise exponentially. This is obviously not sustainable in the long term - at a certain point the interest payments just become too great to bear, even with further borrowing.

    All the G20 has done is to create a stimulus whereby credit can be extended for a bit longer. We have effectively borrowed from the future in order to fund current spending.

    This will result in a rally in the markets and in business confidence but it will be short-lived for the simple reason that credit cannot just keep on rising exponentially.

    The better option would have been to bite the bullet and to raise interest rates/reduce govt spending. When we finally get rid of this terrible government that is what the Tories will have to do, as they have had to do after every failed Labour government.

    The IMF will get through a trillion very quickly indeed. Gordon will be too arrogant to approach them for money until it is much too late anyway. I have no doubt that he will opt for printing money instead, and won't stop until he has completely ruined us all.

  • Comment number 18.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 19.

    Perception can and often does have much more impact than reality, certainly in terms of the economy and never more so than in the stock market.

    Organisations, governments, individuals, and the media need to realise that this "economic airplane" didn't crash. Yes, it came down onto the runway hard. There are some casualties that need our immediate help.

    But the passengers and pilots of this global economy need to stay calm whilst the plane is checked. Normal flights will resume soon.

    Roger, Wilco, over and out...

  • Comment number 20.

    A last you seem to have got the point that markets rely on sentiment just as much as hard facts perhaps now with this hindsight you can see how some of you early rumour reporting about the condition of some banks (in particular one that has just had a highly successful rights issue)did more damage than good.
    As for those still harping on about the nasty derivatives market please be a little more specific if you can, a large part of the derivatives market (interest rate and foreign exchange) has done much to protect many businesses from the violent market movements we have seen and in fact the few pension funds that switched to a liability based fund using derivatives (inflation swaps and interest rate swaps) have performed much better than the tradition asset (equity) based funds. Many of your pension funds and investments have actually been protected by derivatives and saved YOU money. But I guess its too much to expect these days for anyone to look at both sides of any story much easier to jump on the bandwagon, generalise and not attempt to try to gain the full facts or dear I say base your comments on actual facts

  • Comment number 21.

    Financial markets always pre-empt the economy. That's how they work. The problem is that they don't go in one direction only and it is rarely clear as to why they behave the way they do at any given moment. It is possible that equity markets are now starting to get to good value levels. The other possibility is that they are starting to discount a large surge in inflation caused by some governments printing money. This explanation becomes more likely if yields on government bonds (Gilts here) begin to rise. That would indicate a loss of confidence in the government's ability to restrain the inflation they are trying to create as a temporary antidote to deflation risk.

  • Comment number 22.

    A lot of the population in the UK are naive to just how bad of a situation the UK is actually in. They think the recession will come to an end and that`s it - we can all go back to the way everything was.

    It may not happen this year or even next but the UK is going to be in for a real jolt of reality somewhere along the line.

    Brown cannot even answer the question of how much in the hold UK plc is.

    How will Gordon Brown pay back the national debt?
    http://tinyurl.com/c7dl8k

  • Comment number 23.

    This seems an overly optimistic view of things.

    The secondary effects of the recession aren't even being fully felt yet - mass unemployment, reserves of cash being exhausted etc. Companies can "make do" for a while when business is quiet, but sooner or late they use up their reserves and would have to borrow (difficult in current market) or start firing people.

    This will create a new wave of secondary effects, which will feed back into the market.

    The fractional reserve system always has been a house of cards, akin to a pyramid scheme, that persisted purely because enough people thought it was sound. Now our leaders would have us believe that real wealth can be created with a printing press and a big bottle of green ink. They appear to not even understand the basics of why the system has broken.

    Gold price is currently down - looks like an excellent time to buy.

  • Comment number 24.

    So stock markets have been rising for a month. Very nice for people who bought a month ago and plan to sell now. Meanwhile, back in the real economy...

    Robert, the fundamentals haven't changed. We had ten years of unsustainable growth based on ever rising consumer and government debt. In order to pay back that debt (or if you will, inflate it away) we need several years of reduced living standards, which in turn means lower company profits. People can no longer buy new cars by increasing the size of their mortgage. There may be the illusion of recovery in the next year, especially with a pre-election giveaway, but after the next election there will be sharply increased taxes and lower government capital expenditure, to pay for the bailout of the banksters.

  • Comment number 25.

    If only it was so simple! Too big to fail or simple special pleading? I think what Robert really means is that pumping air into a deflating air bubble might work. Time will tell.

  • Comment number 26.

    The cause of the recession is simple, take me for example.

    Bank stops paying me interest on my cash, AND increases interest on my credit cards (zero balance by the way).

    Result?

    Closed my savings account (extracting the cash and paying down my mortgage) AND closed ALL lines of credit.

    Who else is doing this? Lot’s is my guess so the recession will become very deep and only the strongest will survive. This is the reason the recession will not only continue but deepen, as for the cheap money that vanished back offshore? I’m willing tobet the Chinese wish they had not done that now….. (and as the currency USD and GBP are being diluted, they may as well have left it here).

    Also,

    Why is the oil going up? Sterling is gaining strength against the dollar and the Euro – Me confused!

  • Comment number 27.

    There is no doubt that the stock market is on the rise and house prices will be moving out of a negative direction by late summer . However I still believe the government will have no alternative but to dramatically cut public expenditure in the next 12 months , it is simply unsustainable , tax rises will not cover the deficit , on our prsent course the deficit will be massive. We need to adjust the % tax on GDP , so its again worth while to generate wealth / jobs .

  • Comment number 28.

    Bob - will you please stop doing the job of Labour's PR people for them.

    Whilst there may be signs of a slowdown in the slowdown this is countered by a lack of any evidence at all that the Govt is going to carry out it's "promise" to rebalance the economy.

    Anyone under the age of 35 should emigrate now!

  • Comment number 29.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 30.

    Market volatility is the easiest way of making money on financial markets. The markets will be volatile this year; which is a good thing if you want to buy and sell shares and currencies for profit.

    If you get your timing right, you'll be quids in......

  • Comment number 31.

    Let's hope that the disastrous frenzy of greed of the last 10 years has come to an end and been replaced with something far more valuable......common sense.

  • Comment number 32.

    Re: point 7 - it is horrifying that politicians and leading economic figures have yet to fully grasp the idea that the "real" economy is crashing to a terrifying halt ref: continuing collapse in car sales and recent reports about nose-diving summer holiday demand.

    The lack of credit to ordinary consumers on very average salaries is partly the issue - but only because for the last 10-15 years a significant majority of people have not had the real income to spend as they have and made up the shortfall with endless personal loans, credit cards and equity release (on the back of an always unsustainable boom in property prices). So yes, the cutting of credit lines is the initial issue. But the woes the "real" economy is experiencing are the embryonic stages of a fundamental reassessment in British society. Ordinary people simply do not earn enough to sustain the level of economic activity that Gordon Brown et al seem to desire. Now that the unemployment spiral has kicked in this will only get worse.

    The stock market and its performance is becoming an increasingly vulgar side-show as recession now truly begins to take hold at ground level. Point 12 is right - Tesco is simply a supermarket (admittedly a very diverse one) but its fortunes have not recently fluctuated to such an extent as to explain the variation in their share price as nothing more than speculators speculating. The stock market is nothing more than an expensive bookmakers outfit - it can't be denied that unfortunately it seems to influence our society significantly but it is a million miles away from the experiences and realities of everyday Britain.

  • Comment number 33.

    FOR THE BIRDS

    it's the start of a lovely week here in old London town and having attended the G20 I'm rekitting the Numpty down here in Wapping (the traditional home of pirates and sea captains is Narrow Street if you didn't know); based on your predictions, I shall be setting sail with new-found optimism that there will be more merchants ships and easy pickings for us pirates

    HOWEVER....

    I suspect that your use of a CUCKOO as the example has some deeper meaning; any ornithologists on here or partakers of the big back garden survey? cuckoos are seldom seen and traditionally seen as devious things

    Now if you had said that you had seen the first ROBIN of Spring, I would be more confident

    Here's my predicitions, which I'm calling the

    EARLY BIRD INDEX OF WORM FUTURES

    April 2009 = first CUCKOO of Spring (a sucker's rally)
    remainder of 2009 - rising unemployment, declining world trade, deflation

    April 2010 = first ROBIN of Spring (some genuine green shoots)
    remainder of 2010 - very mixed, anaemic and flat 'recovery' and possible stagflation

    April 2011 = first BLUEBIRD of Happiness (growth in consecutive quarters)

    April 2012 = first ALBATROSS of Peak Oil (rocketing resource prices knock us back to CUCKOO STATUS AGAIN

  • Comment number 34.

    An alternative explanation for the bouncyness in stock prices is that traders have come to the view that all this furious interest rate slashing and money creation is going to lead to a nasty dose of inflation. Remember, stock indexes are nominal.

    Similarly - upticks in credit availability and house prices, in the absence of any real growth, could just be indicators of inflation.

    With all the novel policy action going on, it must be almost impossible that the authorities will hit a stable growth with low inflation outcome first time.

  • Comment number 35.

    The take up of HSBC and other rights issues is not a case of seeing the light at the end of the tunnel as you suggest. It is more a case of vultures prepard to pay deeply discounted prices which they could never have had a year ago.

    If large FTSE and international companies can't use the stock market as it was intended what's the point of it.

    What is needed more than ever is the ability to stop discriminating in favour or grossly over indebted large firms and realise that UK wealth generation comes from smaller ones who employ far more across the industrial and keep this country going.

    When that happens the real first shots of recovery will definitely be there to comment on. Until then you need to put things into perspective Robert

  • Comment number 36.

    "The point - which I've been making for some time - is that there is an inextricable link between asset prices and the supply of credit (and between the supply of credit and economic prospects in general)."

    Doesn't it strike you that none of this makes sense? Property and asset prices experienced a bubble. The bubble burst - the world went wrong.

    Now we need another asset bubble to get things right again, i.e., get fools to overindulge in the hope of making unrealistic and unsustainable profits?

    Surely more of the same isn't the answer. Doesn't anyone see that a junkie needs to go cold turkey to be cured?

    Anyway, the latest rise is likely to be a dead cat bounce - some more will be suckered in before the next drop. This tends to be what happens. made worse by the media.

  • Comment number 37.

    DUNBORROWIN'

    as #26 javaman and many others say, a lot of people are spooked and therefore not following the US and UK govt's entreaties to carry on borrowing and spending money they don't have

    so we are in the early part of a long adjustment back to an earlier age; it will take a long time to flush the trillions of debt out of personal finances, if ever, given the rushing increase in unemployment, as Larry Elliott discusses in today's Grauniad

    even the Americans have tried to stop spending money; they have mega problems with unemployment linked to lack of health care and plummeting house prices; and the Alt-A, ARM (Adjustable Rate Mortgages), commercial property problem and massive credit card debt that can't be paid are all coming along as successive waves of the TSUNAMI

    remember how that TSUNAMI worked? you don't get just one wave, but a series

    sorry for the pessimistic take on this, but I think it's important to remind everyone that it is feasible or even right to believe that we can return quickly to economic growth as it was, as it ISN'T SUSTAINABLE

    D'OH

    in honour of my views I'm playing Steely Dan's Pretzel Logic at the moment; marvellous music circa 1974, when the economy was quite screwed up but not as much as today's..........

  • Comment number 38.

    Lags are an important factor to consider. A lot of the figures being reported now are for the period of the last quarter up to January and those were bad, of course. But I reported previously that reality had markedly changed since then. 7 weeks of solid increased trading figures have now become 8 for us, with a week that's not only the best of the year, but the best of any year we've ever had. Not just more customers, but also spending more on bigger ticket items. Interest rate reductions meant more money to pay off personal debt, now it means they have more disposable income. The weaker companies who barely had a viable business in the boom years have gone to the wall so the better companies are picking up the stronger demand. In my sector, recovery is so undeniably well under way it would take an idiot to deny it. Unemployment will remain high because, as people say, they won't make the same mistaken spending decisions as before. But lower consumer debt is a good thing. It was one of the mistakes of the past. That's a good thing, though, as banks won't get the easy ride of loading us with debt and they'll turn over and profit less as a result. We've made structural decisions about where we put our money and how we pay bills for the future, and they don't involve banks at all.

    Flaky companies in flaky sectors won't be coming back to mop up the unemployed. There'll have to be whole new sectors to do that. People have to be more creative in future. Recessions are the mother of innovation, so I expect that to happen too.

    Have ou not noticed all those For Sale signs turning into Sold signs recently? I have. Maybe it's just where I live and work but I doubt if I'm alone.

    Also, fianncial markets don't pre-empt the economy. They pre-empt the /reporting/ on the past economy by getting more current information on progress through a reporting period. What I did at the start of this post is give you a heads up on what that progress is. Believe me or don't believe me, I don't care. It'll begin to be reported to you as news in about two months or so, while markets have just got wind of it now. Just because there's still lag in some sectors doesn't mean it's not happening. It is, and it'll spread to them when the massive stockholdings are run down to acceptable levels. Those sectors delivered and profitted on today's demand months and months ago, so I hold no sympathy for them.

  • Comment number 39.

    As soon as we do see real recovery we will also see interest rates starting to rise rapidly. Lord Turner in his FSA report back 4 or 5 weeks ago already told us to be prepared for 9 or 10% mortgage rates.

    At that point even raising taxes will probably not bring in enough revenue for the Govt to service the debt. If it were a business, UK Plc. would be heading for insolvency. A few months back I wouldn't have thought that to be the case.

    We may be screwed but we saved the Banksters anyway. Have a look at:

    The Best Way to Rob a Bank: Own One!

    http://creditcrunchedoutinuk.blogspot.com

  • Comment number 40.

    #28 wee-scamp

    Anyone under the age of 35 should emigrate now!

    You`re not wrong!

    Anyone for Canada or Australia???

  • Comment number 41.

    I think the availability of credit should remain more restrictive than before this crisis began. Why are we trying to get back to 125% mortgages and loans that are 7 times average incomes? As in Japan maybe it is not so much a problem of availability as it is one of willingness to take on unaffordable debt? If this is indeed the case then cutting rates and running fiscal deficits will turn out to be a problem, not a solution.

    PS If monetary policy and Govt stimulus measures turn out to be economic errors will MPs be asked to cut their pensions too?

  • Comment number 42.

    We heard about the green shoots of recovery, then we heard the cuckoo, what we need is a photograph of them.

  • Comment number 43.

    Why don't we face up to the fact, that having spent the last decade or so spending beyond our means as a nation, it's not going to resume normal service anytime soon. This is not doom mongering, it's just being realistic. Forget about the stockmarket, it's not the real world, and reacts to the most ridiculous snippets of news.

    I think it would also be helpfull to swap the word "CREDIT" for what it is "DEBT". And no matter how it's dressed up "CREDIT CRUNCH", this is a full blown DEBT CRISIS and until that debt is paid down there will be no true recovery, only smoke and mirrors.

  • Comment number 44.

    We are in a false dawn. How long have we been waiting for some good news? House prices stabalise? Well not if you believe HBOS the following day with prices down 1.9%. Nationwide said prices rose in October 2008 too!
    There remains a lot of money on the sidelines waiting for capitulation. How can this happen when we are waiting for it with money on the side?
    Some businesses are seeing very strong rallies. Barclays are up from 50p to 180p. Will we regulate this business so profits are much less than before? Let's hope. Do they still hold a huge amount of toxic debt on and OFF balance sheet? Of course. Has the media been more positive? Yes.
    I honestly hope we will see the FTSE stay strong but I do not see any improvement in the economy to justify it. Even the G20 was a con offering £1t of money that may never be called and may never be printed.
    Good luck investors.

  • Comment number 45.

    One thing that hasn't been considered is that a lot of big companies don't want a recovery yet.

    All this recession talk is enabling them to cut pay-rises this year, make people redundant with those remaining in the company having to work harder and longer to make up the staff shortfall and yet somehow be happy and thankful because they still have a job.

    Friends in so called 'recession-proof industries' are seeing staff numbers cut with departments being moved off-shore where labour is cheaper which were long term company targets that have been brought forward with the economy as an excuse to difuse the bad publicity.

    Large companies also know that they are in a better position to weather the storm than small companies so the longer the downturn goes on the more of the competition will go to the wall meaning they can claim the market share and larger profits come the recovery.

  • Comment number 46.

    Sorry yopu have spent too much time with G.Brown, in the real world of small businesses there are NO signs of anything picking up, infact all we see is big companies and goverment departments taking longer and longer to pay and suppliers demanding cash up front.

    As for the goverments small business rescue / garantee plan promised in the pre budget statement. Will as far as i can tell its still does not exist.

  • Comment number 47.

    I'm not sure if the choice of cuckoo as the sign of an improvement in conditions is the best. A cuckoo in the nest normally implies that someone has supplanted the rightful occupant of a position. The offspring of the cuckoo replace the offspring of the bird in whose nest the parent cuckoo has laid its egg and receive all the benefit of the host birds attention.
    Normally a swallow implies the arrival of better days, the first swallow of summer. But then again, the arrival of one swallow doesn't guarantee a good summer.
    In either case we are talking about migratory species who make fleeting visits.

  • Comment number 48.

    A cuckoo in the stock market? Sorry but I don't think you've even got the right class of animal. Try the attached link, it's a tad old but still relevant:

    http://www.ameinfo.com/16529.html

  • Comment number 49.

    #39. jd6969preston wrote:

    "As soon as we do see real recovery we will also see interest rates starting to rise rapidly. Lord Turner in his FSA report back 4 or 5 weeks ago already told us to be prepared for 9 or 10% mortgage rates."


    I have read Lord Turner's review and do not recall any such warning.

    Would you please post the relevant extract? Or, if you prefer, just the page number?

  • Comment number 50.

    Another reason for being a bit upbeat is the non failure of the G20 summit. There are indications that since this group covers most countries that really matter economically, it is able to at least affect confidence. Politicians like the idea of networking with their peers under the admiring gaze of TV cameras. The G20 is likely to meet fairly often and has it within its power to do things which might work. Crucially, the associated PR effort coordinated by governments may increase confidence in markets. I.e. the vital and hard to capture ingredient which could trigger an upturn.

  • Comment number 51.

    A recession which is over before it's begun? Now that really is cloud cuckoo land. I doubt that the impact of pumping trillions into failing banks stops at the closure of Woolworths and a brief decline in house prices.

    It may be over for those who don't pay UK taxes, but for us mere mortals it hasn't even started. What I want right now is to stop hearing Gordon Brown going around telling people what a hero he's been through all this. Only time will tell whether he's been a hero or not (in the same way that time told us what ten years under his stewardship as Chancellor achieved).

  • Comment number 52.

    For those of you looking for a picture of the cuckoo, you will see him on the news every day - He wears his pants over his trousers and it was his actions that saved the world / universe.

    His best mate often referred (on here) to as, comical ali – is also cuckoo!

  • Comment number 53.

    The credit conditions survey extrapolates tentative conclusions from broad questionnaires circulated to various lenders. I thought it said that availability ( or lack of it) of wholesale funding was still an inhibitor to loan supply. The Lending Panel Forum are giving ( or should be) the Government hard facts about both supply and demand for credit. Poor supply conditions will excacerbate recession. The FSA were doing their sums on the lending capacity shortfall, but as yet I cant find any figures. What we need is the facts. Michael Coogan, director general of the Council Mortgage Lenders, says: "January and February are usually the quietest months in the mortgage market. The current withdrawal of many specialist, small and foreign lenders from new lending has created a huge gap in the capacity to fund mortgages to match consumer demand and this is continuing in 2009.

    "People want to know why lenders are not lending. They are, but government schemes to restore the flow of funds are primarily focused on a few large banks and recent lending commitments by a few lenders cannot fill the gap overnight although we hope to see more funds flowing into mortgage activity later in the year."

    I'm all for cuckoos and green shoots if they exist, Robert. Meanwhile I note the hedge funds are betting on inflation biting in.

  • Comment number 54.

    Yes there is a cuckoo in the stock market. There is a cuckoo in the housing market. There is a cuckpp
    in the supermarket. The UK has become a mere suburb of the cloud cuckoo land where politjcians and global
    leaders live. We are the landless and disinherited.

  • Comment number 55.

    The cuckoo! What a metaphor. Undoubtedly the most evil and terrifiying species in existence the cuckoo commits up to 6 homicides (birdicides?) within 9 hours of it's birth. While still blind, featherless and looking like a small chicken wing the cuckoo kills any and all of other babies in the nest by pushing them over the edge whereby they plummet to their deaths. (all under the nose of the rather clueless mother)

    I will leave the sheer number of parallels that can be drawn here to more imaginative people than me!

  • Comment number 56.

    What will be interesting to both know and watch is the number of Bank Directors themselves actually buying (rather than being given or exercising options) very large amounts of their own banks shares with their own money. By very large I would hazard this would be an investment of at least half a million pounds? Possibly higher.

    The new motor vehicle sales market does not seem to have clocked any cuckoo's. But it has heard a sick parrot's feeble little squawk, does this count?

  • Comment number 57.

    Fantastic news Robert!
    We are getting more of the same then?
    From Wiki:

    It is a brood parasite, which lays its eggs in the nests of other bird species, particularly of Dunnocks, Meadow Pipits, and Eurasian Reed Warblers.

    ......
    Cuckoo (common) chicks methodically evict all host progeny from host nests. It is a much larger bird than its hosts, and needs to monopolise the food supplied by the parents.


    Was that Fred I saw heading off to an office block this morning? Everbody, quick transform yourselves into an ostrich!

    Seriously, this is not good news. Increasing value of assets? Back to the never-ending growth that is not sustainable. No real change. Not very intelligent or forward thinking is it?
  • Comment number 58.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 59.

    So what comes first - The first cuckoo of spring - or green shoots?

  • Comment number 60.

    Rising asset prices. Well this is almost guaranteed to happen with banks allowed to defy previous accounting rules. I think my 5 year old car is worth 100K so it is not unreasonable for my bank to lend me 50K against it. The fact that I only paid 8K for it 3 years ago is besides the point. It is down to the banks what notional value they place on the stuff other than cash that they have on their books. Well now isn't that going to fix the World eh ??

  • Comment number 61.

    So, in effect, we could be on the way up, but we could not be as well? Thank you for that nugget of incisive journalism.

  • Comment number 62.

    #49 rbs_temp

    The Times (as did some of the other papers) did a story on March 22nd titled Coming to a bank near you: the 9% mortgage

    In the story the following was quoted:

    "If, like me, you’re holding out for cheaper fixed mortgage deals, last week’s review of the global banking crisis by Lord Turner, chairman of the Financial Services Authority, showed just how long a waiting game it could be.

    Buried in the report was a startling figure: mortgage rates can stay high for six to nine years after the onset of a banking crisis.

    Turner wants banks to hold much more capital to prevent the failures of Northern Rock, Bradford & Bingley and Halifax Bank of Scotland from being repeated....Indeed, the margins on tracker mortgages are now so fat that the 9% mortgage may not be far off. Nationwide building society has the biggest margin on a tracker mortgage, according to brokers."


  • Comment number 63.

    the black market is beginning to prosper in the south west mr starling where oh where are you going to get your much needed tax revenues from.cash is king and will remain so for a long time yet.

  • Comment number 64.

    #39 jd6969preston

    Thank you again.

    Just watched the interview with ex-regulator William Black in your link. 10 minutes very well spent. I urge everyone genuinely interested in learning the truth and learning from it to watch this. I've grabbed and saved the video in case it "disappears" from the web.

    Many things he said made eminent sense, for example: "Lying to create confidence does not work."

    Black's almost final words: "Get rid of the people who have caused the problems!" In the US banks, they are nearly all still in place. Too many of ours are too.

    Back to my OU studies now.

  • Comment number 65.

    Stocks are propably not rising because of a slowdown in the slowdown.

    It'll be the pinstriped runts unwinding their short positions, which exacerbated the fall in stocks in the first place. At some point they have to go back into the market to buy the stocks that they borrowed from the pension funds so that they can return them.

    The stock market is a very poor indicator of reality in the short to medium term. Anyone who has had the misfortune to show "Analysts" round their quoted business will know that the last thing these chumps actually do is meaningful analysis.
    If share prices are a mirror of the underlying value of companies then the mirror is at best fogged over but more likely cracked or even broken.

  • Comment number 66.

    I think the phrase robert peston used before was kinda like things are getting worse slower which isn't the same as things are improving.
    From what I'm reading elsewhere the real story now is that some top people are going to get sued and bail out money given to liars from liars might have to be clawed back.
    The companies/banks that have been committing fraud may have to go into receivership.
    The whole bail out process might have to start again.

    Maybe Robert with all his inside knowledge should phone up the the Serious Fraud Squad If there is anything he wants to get off his chest now would probably be a good time.

  • Comment number 67.

    Cuckoo = rich blocks wearing red socks (the bankers and other assorted Masters of the Univers)
    Dunnocks = The Government
    Meadow Pipits = The regulators and legal authorities/sytem since they don't have much authority after all
    Eurasian Reed Warblers = the public

    Yes, we've been silently invaded

    Just heard Fred has invested in new silken socks - they are yellow but his face and riches are a dead give-away

  • Comment number 68.

    "worst economic conditions since the 1930s"

    On what basis do you make that statement? Yes, we're in a recession. Yes, economic conditions are not good. Yes, a lot of people are losing their jobs.

    But we've had plenty of other recessions in recent decades. What makes this one worse than the others? If you believe we really are in the worst economic conditions since the 1930s, how about some stats to back it up?

  • Comment number 69.

    # 18 Amused 2death

    Thanks for the chuckle.

    # 40 jd6969preston

    If only 20 years younger... New Zealand would be my destination.
    The cookoo's are late arriving this year, maybe they have sniffed the economic cold winds here and gone that way too.

    Unelected Crash is a cookoo sitting in a unstable nest, if green shoots don't appear... eviction is inevitable.

  • Comment number 70.

    Great - we don't need a "car scrappage scheme" after all. Mervyn's against spending, it'll help foreign cars firms and "new car" toffs, and dry up the supply of decent cars for common, working people. And now we can hear the cuckoos - just in time, eh?

  • Comment number 71.

    Thanks for the positive article Robert - hopefully you are the prophet of recovery just as you were the prophet (or cause?) of the collapse!

    Confidence is indeed dependent on either a virtuous or a vicious cycle - the concept of "self-feeding economics" is a demonstrable one:

    http://www.knowingandmaking.com/2009/04/self-feeding-economics.html

    It isn't about "lying to create confidence" - it's about the fact that current asset values are incredibly sensitive to expectations of future economic performance. A tiny adjustment in future expectations results in a big shift in asset prices. We saw this on the way down and we'll see it again on the way up.

  • Comment number 72.

    what on earth has got into the moderators? they are working at the speed of light; surely lunch break beckons, otherwise this is a gold-letter day

    just heard a chap from the National Housebuilders on Radio 4 who sensibly pointed out that the govt could embark on some REAL STIMULUS by building some houses; only 70,000 will be built this year and apparently the number of households will increase by 200,000 (due to more people living singly etc); the govt target (which of course it was left to 'market forces' to deliver) used to be 150,000and had a year or so ago was put up to abot 240,000 I think, but acual building has halved instead of doubled!

    building houses could:

    provide much-needed social and rental housing
    povide employment in a declining construction sector
    deliver good value on costs in a time of lower building costs

    the govt could also be buying up unsold houses; they say they are doing all this or are about to, but of course it's far too little

    if just a few billion were put into house-building it would provide an important ROI (return on investment) in all sorts of ways

    and could we do something about insulation grants, home energy audits, incentives to scrap old cars, renovation grants etc etc

    come on gov't DO SOMETHING

    as for the G20 $1tn stimulus it is FAKE; and whatever fraction of that $1tn is spent, it will be through the auspices of the IMF, who as we all know, runs an extremely anti-stimulus economic policy, forcing countries receiving help to retrench by closing public services etc

  • Comment number 73.

    All this market noise is from people desperate to make some money back. The truth is the Government is cooking the economy via its new found banks to tyr and save itself.

    It won't work, it will be seen through. This is a huge suckers' rally.

  • Comment number 74.

    Rob, you're out of touch - you need to get up to speed - here's what's coming next...

    http://www.pbs.org/moyers/journal/04032009/watch.html

  • Comment number 75.

    #68 disgustedofmitcham

    'worst economic conditions since the 1930s'

    journalism has a tradition of exaggeration and inaccuracy to uphold

    a V2 rocket hit my house here in North London just last night, you know; it's all being hushed up as part of a new LYING TO CREATE CONFIDENCE GOVT INITIATIVE

    apparently THE ENEMY (whoever they are) are trying to bomb our docks and industries but can't find any

    I'm looking forward to a SLOWDOWN IN THE SLOWDOWN to be honest

    hope things are ok down there in Mitcham; WHAT'S THE LOW DOWN ON THE LOW DOWN? I'd keep your tin hat handy

  • Comment number 76.

    #62. jd6969preston wrote:

    "The Times (as did some of the other papers) did a story on March 22nd titled Coming to a bank near you: the 9% mortgage

    In the story the following was quoted..."


    Which may well be true, but it's a very long way indeed from your original assertion that "Lord Turner told us to be prepared for 9 or 10% mortgage rates".

    The Times is simply applying today's highest tracker mortgage margins onto worst-case projections for base rates in the years to come and coming up with a hypothetical 9% mortgage rate.

    Their hysterical projection has absolutely no basis in reality, and for you to then exaggerate that figure even further upwards and attribute the warning to Lord Turner is quite blatant and disgraceful mischief-making.

  • Comment number 77.

    Its good that there are at least signs of a slow down in the rate of decline.

    As somebody who subscribed to the doom laden view that the economy was in dire trouble for the next few years - and perhaps jobs won't come back as fast as they went - its reassuring.

    But .... if I understood Robert correctly he is talking assets in general.

    But on the issue of specific assets - if it is true that we still don't know the value and location of all of the toxic assets then surely the banks and finance will remain inherently unstable for a long time unless that problem is resolved and that then impacts on credit and thence business and thence jobs and thence confidence?

    In short there is the fear that we are being asked to turn around and face the glorious sunrise instead of the ice berg that holed us.

    I always was a party pooper I suppose.

  • Comment number 78.

    "And I've bored you rigid"

    We weren't going to tell you, Robert.....

  • Comment number 79.

    Finally! The Peston Machine hit's Positive town.... albeit ever so briefly!

  • Comment number 80.

    There are a lot of green shoot/first cuckoo of spring articles around this week. For the die hard pessimists - who call themselves realists but are not - the comments about the decline of the world economy keep coming with a few even suggesting that emigrating is the answer. How emigrating will get anyone away from a world recession I find slightly puzzling.

    The recession has been a different experience for all of us. I work in property and so we were one of the first casualties. Now that the bottom of the market has been effectively called and the buyers are back (at the right price of course) my sector will begin to emerge. Other sectors such as those that involve production where time lags are significant will have gone into the recession later.

    A very well made comment - number 45 - a lot of companies are using the recession as an excuse to get rid of dead word, streamline labour costs and negotiate costs of purchases.

    One final thought - for each one of us who have suffered in the recession there will be five or ten others who have not been affected at all. Their industries or jobs are immune and they now have more spending power for cars, housing, shopping etc - all sectors where the businesses are competing for their money. As an example I am selling people some houses at the moment at cracking prices.

    It would have been a very ill wind that had blown nobody any good.

  • Comment number 81.

    But of course Robert, the real cuckoo in the nest is the extremely high and unsustainable level of public borrowing. Spending cuts and tax rises are now inevitable, because of Brown's fiscal incontinence - the only question is for how long they can be averted and whether the fix for the public finances puts the UK firmly back into recession.

  • Comment number 82.

    Go to the High Street if you want the truth.
    Check out the growing number of empty shops.
    Look at the glum faces of the shopkeepers.
    Count the "Buy One, Get One Free" offers.
    Think about the dramatic drop in new car sales, reported only today.
    Check the unemployment statistics, and the forecasts.
    Check the growing number of bankruptcies and of companies going bust.

    We're barely at the start of this slump.

  • Comment number 83.

    Hmmm. I'm not sure that we can look for an early recovery in the housing market. Increased unemployment has yet to translate into desperate house vendors, which will depress the rental market still further. I think we're also going to see a hike in interest rates that will depress sales (and increase repossessions) further in the next year or so.

    I think it will be a while yet until we see increases, or even stabilisation in the uk housing market.

  • Comment number 84.

    OK let's take stock.
    Houses are only now becoming affordable to first time buyers except of course that lenders are advancing smaller LTV amounts, so there is still a big funding gap. But houses will only sell whene there are buyers throughout the chain.
    I am sure that an increase in house prices will improve "confidence" in the lending sector, but if this makes houses unaffordable again who wins?
    Surely a period of stability without getting back on the see-saw is required? If confidence can return with prices becoming stable this must be better in the long term. Of course negative equity is also a dreadful factor here, and house owners in this position need prices to rise to balance the loan/value equation. But with historically low interest rates many mortgage payers should be in a position to replace interest payments with capital contributions and hence start reducing the value of the mortgage. Lenders need to show flexibility here.
    Otherwise we face the lenders being the cuckoo evicting hard pressed owners from their "nest".
    I think it is true to say that talk of recession breeds recession, but the converse is that talk of recovery can also breed recovery. So please continue to monitor signs of spring. Perhaps you can use another metaphor next time?
    But I fear we will want to see too big a bounce for the long term good, as there is an inbred tendency only to look at the short term. Planning for recovery is crucial, not least to generate replacement and new jobs in the market, as only through confidence in the employment market will the downturn have truly run its course for many many people.

  • Comment number 85.

    Share price rises? you have the graph the wrong way up, if not today then tomorrow!
    This is surely just a 'dead cat bounce' as refered to by #36.

    Nothing is fixed except the potential availability of credit.
    Why does no one in the financial world do real root cause analysis?

  • Comment number 86.

    Is this good news i hear? Propertry prices rose slightly, and that was nationwides take, but the day after the halifax reported a decrease. Isnt it not too soon to tell if there a green shoots? Markets here were also down from Thursdays rally after the g20 summit on Friday, is that investors realising that the summit did not produce what they initially thought?

  • Comment number 87.

    Yes, most markets and resultant credit flows are a confidence game, its the inherent instability behind economic cycles (boom and bust - which GB claimed was at an end).

    Improving perceptions and therefore expectations could well turn things around superficially; however, if its just for another bubble based on specualtion, especially around house prices, is it actually an end to the problem or just a licence to yet more debt.
    It seems currently its either personal debt, government debt or a combination of both.
    Basically the like that we're better off than we are.

    The solid long term answer would seem to lie in productivity and efficiency. Producing more while using less,, a net gain and real wealth.

  • Comment number 88.

    I have to agree with BerkshireTerrier that memories are not that short! Easy credit was used to generate illusory results in the last ten years, boosted the City and financial sectors and consumers will not expose themselves like that again.

    If borrowing remain at a lower level permanently, the recession will be long. Credit might confine itself, as it ought to, for well-thought out applications and borrowing will be vetted more carefully.

  • Comment number 89.

    What a load of tosh, this 'cuckoo' will do nothing to redress the massive global trade imbalance. It will do nothing to stop a big drop in living standards in the west to be more aligned with the producing east, unless the producing east fancy lending us more money to spend on their goods...utter madness.

    It will do nothing to stop the next round of loses through the defaults of the recently unemployed.

    the 'cuckoo' will allow those in the know with a Common Purpose to suck a bit more money out of the system then short sell before it heads on down again when the above underlying factors 'kick in ' again, when G20 is forgotton etc. has any body looked into RP's support of the Common Purpose group yet?

    This 'dead cat bounce' just represents a slight impass, a gap between the financial crisis and the crisis in the 'real' economy. The negative feedback loop of the real economy slowdown (unemployment , short time working etc) has not fully kicked back into the finacial sector yet. By the end of the summer it will.

    Thats my take on it anyway and I am not a city analyst, I have just read the economist for the last 3 years and live in the real world. If i am right will somebody out there give me a £1 million a year salary plus bonus and pension please....

    Poor joe public is being taken for a ride again by the financial and media elite cuckooos indeed.

    Jericoa

  • Comment number 90.

    Recovery has to be a steady curve, we can't get back to a little normality without some time passing. These "cuckoos" aren't very helpful. Any quick growing "green shoots of recovery" may well turn out to be just a bunch of weeds.

    We don't want to jolt the housing market. No jolts please. I'm fully aware that there are groups of people who want to rock the boat to earn lots of money, e.g. house price crash doom-mongers who want prices to fall by 50%. Some of these people want this to expand their rental/investments portfolio and get even richer - keeping more good homes out of the reach of the first-time buyer.

    And how do you stop people just being generally selfish?

  • Comment number 91.

    Robert

    I think the indications are that we're also going into a dangerous volatile shaky period where some regions/sectors of the economy will grind to a halt and others will race ahead. Deflation/inflation/stagflation/ and energy-fuel shortages are just around the corner. The result - a kaleidescope complex economy with hot spots and extreme cold spots that the Bank of England cannot handle (even if M King is left to get on with without interference) without a new remit and powers.

    This also I think shows the huge benefit to the economy of the pension funds as their stock buyers have their pick of the market and now switching investments and starting to buy stock in the high demand areas eg good banks, energy, fuel, utilities, green companies, commodities and most important stocks are probably the best inflation hedge with property being weak and low interest rates. So these are market reaction adjustments as the sectors become more volatile and investors expect that there will be some growth i.e. the first real terms growth/signs of green shoots in the high quality stocks.

    The politicians will jump on this at some stage like yelling 'Recovery' but overall the situation will likely be very patchy and uneven and overall the economy is likely to be flat for a few years to come. Many people will loose out heavily on their investments particularly on pensions if their units are invested in the slow lane.

    We have to look at the stocks and sectors which are lifting the FTSE index the most to see what is really going on but it is obviously some good news to see some gain and that the stock market and its pricing mechanism is robust.

    More importantly let us hope that the next budget does something with pensions and the housing market buy allowing pension investors to buy a residential property with their pension pot with suitable CGT and IHT concessions. Brown proposed extending SIPP's to allow this a couple of years ago and then backed out when he realised he would lose some tax revenue and would have been a good thing for pensioners as they could downsize more easily and that decision now looks like another serious error as the pension side would have been likely to have kept some activity in the housing market over the last year. This doesn't need a global solution - it needs a change of UK government and a competent Chancellor and government.

    We need a bold budget to lift the ordinary tax payer's pension options with the availability of property purchase whether they are paying into a private or company pension or both - on this we need ideas, initiative, vision, competence and DELIVERY.

  • Comment number 92.

    Robert
    please, the most important piece of news anyone needs to remember is that RECORD amounts of debt are now being repayed.As many members are noting ,there is no appetite for borrowing and people are using their
    cheaper mortgages (where they have them) to repay their credit cards, loans and or pay more off of their mortgage.Everyone knows interest rates and or taxes will rise and jobs may go, so the penny has finally dropped with people, to do what Gordon stated but never did "be prudent".
    So your cuckoo may well sing a bit but in a land of clouds

  • Comment number 93.

    Much as I hope that things are getting better I fear I agree with many of the posters in their thoughts that we are a long way from recovery.

    I am with Churchill after Alemein. I think this is the end of the beginning rather than the beginning of the end.

    On a positive light lower interest rates are starting to help free up cash. The downside is that most people, myself included, are using this extra to pay down debts on mortgages or credit cards. We can all see both higher mortgage rates and higher taxes coming soon.

    On a negative side food inflation is 18% according to the Grocer. I for one am noticing a huge increase in the cost of my weekly shop over the last 12 months. Also there was another 2p per litre duty on petrol and diesel last week with diesel back over GBP 1 a litre in most places.

    April is the start of annual direct debits for local support bils. My water bill has gone up 5.5% and will start to hit me from this month. Council tax has gone up again and just to hit the middle earners, like me, who are mortgage holders the National insurance Upper Limit has gone up by 10 times the tax allowance increase.

    I'm determined to go on holiday this year and if I'm one of the 20% less than last year still going to the Eurozone this summer my pound is likely to go 25% less than last year. If I go to the States it is even worse.

    Don't expect any extra spending from me or many others this year. I'm also not going to be replacing my car this year. It will last at least another year. If yesterdays figures are anything to go by I'm not alone in this either.

  • Comment number 94.

    Mr Peston - I am surprised you are not more overweight.

    Having read your article I would suggest you have not had to leave your computer to write the article. Hardly prize winning investigative journalism??

    The facts that suggest you have heard a cuckoo?

    'The survey claimed that in the first quarter of this year there had been a slight increase in the availability of loans to companies and a less-than-expected reduction in the supply of unsecured credit to households and small businesses - although the supply of mortgages shrank again.'

    So a slight increase in availability (not actual loans).
    A less than expected reduction.
    A shrinking of the supply of mortgages again.

    'And there may be other cuckoo-ish noises; there's been contradictory data on what's happening in the housing market in the UK - whose underlying message may be that prices aren't dropping as quickly as they were - and a less-than-expected fall in US motorcar sales (though today's news on car sales in Britain is dismal).

    I am being parochial, and economic stats from around the world remain pretty dire.'

    So Contradictory data on what's happening in housing market (??????)
    May be that prices aren't dropping a quickly as they were (or may be that they are as the only other possibility!)
    Less than expected fall in US car sales (so a fall but not as big as expected)
    Dismal UK car sales figures
    Pretty dire stats from around the world.

    The facts your whole article are based round are all negative APART from the fact that share prices have gone up.

    Perhaps these 'cuckoos' in the City who have stolen all the food from our tables are the cuckoos you can hear??

    I can only hope the dead cat lands on them.

  • Comment number 95.

    I think Warren Buffett originated the phrase financial WMD.
    I don't want to take anything away from Max Keiser.
    I recently saw him on Aljazeera suggesting an end to 'usery'in the banking system as in sharia law. It took the other guests a while to recover from the shock before agreeing with him. I think I remember him saying "lets stop calling it credit it's debt" on his bbc world news show The Oracle.
    Wow remember when credit used to be a good word.

  • Comment number 96.

    I'm told by a reliable source close to N10 that El Gordo is a cuckoo fancier and is breeding them. Also the same souce tells me that Sir Bob is also starting in this arena. Apparrently its the new black and is very fashionable amoungst the power that be. This cuckoo's only prey is that from the Hawk known as Ecomomic Reality. These used to be on the endangered list, as they were poisoned by many a commentator in the press, but they are being breed in large number by Mr Joe Public

  • Comment number 97.

    85. At 1:09pm on 06 Apr 2009, _gemba wrote:
    ......
    Nothing is fixed except the potential availability of credit.
    Why does no one in the financial world do real root cause analysis?

    --------------------------------------
    Looks like someone is attempting to...

    74. At 12:50pm on 06 Apr 2009, grave_sniffer wrote:
    Rob, you're out of touch - you need to get up to speed - here's what's coming next...

    http://www.pbs.org/moyers/journal/04032009/watch.html
    -----------------------------------------------------

    and the root cause is called de-regulation leaving the way open for systemic fraud on a massive scale.

    Is the above link just a 'sour grapes' opinion Robert or is there any substance in it worth some journalistic investigation?

  • Comment number 98.

    #91 - not sure I can support the residential property in SIPP's idea.

    The mistake govt made was stating they would be allowed as a SIPP investment then the last minute U turn; but in my opinion should not be in. Would just lead, for example, to more Lake District properties being owned by rich individuals down south and not lived in whilst the locals live in caravans and small terraced houses.

    IMO everything should be being done to deflate property prices as quickly as possible to readjust our whole economy - a very hard sharp shock that leaves us all on our knees for about a year but with a firm floor from which to build, invest, develop and have sustained growth which everyone will believe in knowing we have reached a floor. To make this happen Interest Rates need put up to a realistic level that will hurt badly those who have overborrowed. The risk is social unrest but I do not believe the current strategy is going to end in anything other than that anyway, just later.

    What we are going to get is exactly the opposite - a succession of false dawns, weak recoveries, periodic slumps and a desperate searching to find a bottom that is actually a false floor - as many many people have commented before the fact that there is an election in about a year makes my scenario unpalatable to the government so they are hoping that they get lucky and find a false floor at the right time.

  • Comment number 99.

    What a splendid metaphor

    The cuckoo drives out its host. Bad money drives out good.

    A crisis amongst the bloated and decadent institutions left a beautiful opportunity for radical reform for the 21st century, and new, updated financial institutions. The cuckoo driving that out and strangling the productive economy is the government's unfair competition: massive bailouts, politically-driven artificially low interest rates, and printing money. All in a vain attempt to keep house prices inflated and a generation (of non-cuckoos) priced out.

  • Comment number 100.

    This is the expected illusion when lots of funny money is pumped into the economy.

    It is a fictitious state where only those gambling on the stock market in the expectance of high inflation to come are benefitting in the short term

    Of course it will appear as if things are improving in the short term. How can they not?

    Everyone needs to be cautioous whether it be buying a house or spending on high value assets for in the longer term interest rates will have to rise dramatically to stem the inevitable inflation.

    It is highly unlikely that wages will rise to keep up with the rising prices so we are going to feel and be much worse off.

    This is only a short term fix which we will have to pay the price for later.

    Most of us have seen through Brown's conjuring tricks. No doubt there will be many more in the coming budget.

    Once bitten twice shy.

 

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