In the shadow of the volcano
Last week I gave a presentation to my BBC colleagues on the business, financial and economic outlook for 2011. You can see it, by clicking here.
The central theme was that we shouldn't be gulled by the clear evidence of recovery into thinking it's business as normal again.
There are signs of new bubbles being pumped up - in China, for example. Perhaps more importantly, the structural flaws to the global financial system (banks that are under-capitalised and remain too big to fail, the excessive indebtedness of the West, and so on) have not yet been fixed.
World leaders are trying to move from treating the symptoms of the financial and economic disease to effecting a fundamental cure - but this very process carries dangers for the health of the patient, as we have seen in the form of recent turmoil in the eurozone (where any ministerial talk of transferring the burden of state or bank failure from taxpayers to commercial creditors prompts a flight of capital away from banks or states - such as Ireland or Portugal - perceived to be weak).
Similarly, a premature return to normal monetary conditions and normal rates of interest in the UK could wreak havoc on the finances of British households still struggling to manage record levels of personal indebtedness (a point also stressed in related presentations by Stephanie Flanders and Simon Gompertz).
There are reasons to hope that we will avoid a double dip back into recession. That said, the weight of debt bearing down on our economy raises the prospect that growth will be relatively anaemic for years, that a return to the 3% per annum enjoyed in the UK during the golden years of 1992 to 2008 may prove elusive.
The big point however is that the imbalances which built up in the financial system and global economy over the 15 years or so till 2007 were so huge (bank lending, for example, that grew out of all proportion to the fundamental needs of the economy) that the process of correction will take years. And in those coming years of returning the financial system to some kind of stable equilibrium, we'll be living in the shadow of a live volcano.