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Microsoft: 'No bounce'

Robert Peston | 11:51 UK time, Monday, 5 October 2009

There's a broad consensus that economic recovery is under way more-or-less everywhere.

Where there is considerably less agreement is whether that recovery will be strong and sustained, feeble and fragile or just the brief prelude to another contraction.

The message of stock markets - which have bounced between 40 and 50% in most countries from their lows of the spring - is that good times for business are just around the corner.

This is the biggest share-price boing since the 1930s - and is rational if company profits and dividends are set to surge very strongly in the coming two years, having fallen in the previous two.

Certainly many analysts and investors expect just such a rehabilitation. According to Bloomberg, they are anticipating a rise in corporate profits from 2010 to 2012 of more than 50% in aggregate.

Which would wipe out most of the recession losses.

But what about the business leaders who actually run the world's biggest companies?

Well, the ones I encounter are bemused by the optimism implied by the performance of share prices.

Robert Peston with Steve BallmerTake Steve Ballmer, the chief executive of Microsoft whom I interviewed this morning.

Microsoft ought to be more sensitive than most companies to economic conditions almost everywhere. And Ballmer does not believe boom times are near at hand.

Yes, we're over the worst, he says.

But he finds it difficult even to use the world "recovery" about where we are.

He says we're bumping along the bottom and will do so for a considerable time - which is presumably measured in years, because for him insipid growth is the new economic reality.

And then there's Michael Geoghegan, chief executive of HSBC, who - in an interview in this morning's FT - says he is anticipating the economy to shrink again.

So who's right - the investor bulls or the management bears?

Well neither have 20:20 crystal balls. And both have vested interests.

Any investor long of equities is hardly going to call the turn unless and until he or she has gone short.

And as for the Ballmers and Geoghagan, it's rational for them to dampen expectations of profits growth and then deliver more than promised.

Also in Ballmer's case, he has a double motive for being gloomy - since his sales pitch du jour, as per a lecture he gave this morning for the CBI, is that hard-pressed companies could do worse in their straitened circumstances than to improve productivity by upgrading (you guessed) their IT.

I suppose I could turn for adjudication to professional economists. But their forecasting record in the past few years on the stuff that matters has been so poor as to make weather forecasters seem imbued with godlike gifts of foresight.

So we're just going to have to accept that our vision is obscured by fog - although many, I'm sure, will have mentally said a big "yes" at the recent observation by the hedge fund pioneer, Crispin Odey, that there is a bubble element to the bounces in share prices, bond prices and commodity prices.

Or to put it another way, the massive exceptional monetary stimulus of central banks has lifted up financial markets rather faster than it has buoyed the real economy.

And the big unanswered question is whether economic reality will catch up with financial-market hopefulness, which would be the benign outcome, or whether the rising prices of bonds, commodities and shares contain an element of unattainable fantasy.

Update, 15:45: Here's why the stock market may be more rational about the prospects for big companies than Ballmer, as per a successful investor in global blue chips with whom I've been chatting.

First, the productivity of US companies has held up in spite of the sharp fall in economic activity - which implies that big companies are typically more efficient than they've ever been and will generate stupendous growth in profits on even modest growth in turnover.

Second, if China is true to its word and "rebalances" to stimulate domestic demand (albeit slowly and steadily), there'll be huge long-term opportunities for businesses with big brands such as Nike, Coke, pharma businesses and so on.

Third, the income-return on equities is so much higher than on deposits, lending to the government or property that the risks are priced in.

Which is all fine and dandy unless you think that there simply won't be any sustained economic growth and/or oil prices will rise so much as to persuade central banks that there's a risk of generalised inflation - which would lead to a rise in interest rates.

A rise in interest, if it came so soon, would be an agonizing blow to the bulls' vulnerable parts.


  • Comment number 1.

    It surely cannot come as a surprise to find that the 'fiscal stimulus' injected by many global governments into the banking system has wound up invested in the stock market, i.e. 'if we all pile in, the price will rise'. Not surprisingly this perceived recovery does not appear to be felt by those leading the businesses as real workers in the real economy are not spending like it's 2007. These shrewd investment bankers are of course thinking 'this is an unsustainable boom created by free availability of cheap (fiscal stimulus) money, but I'm smart enough to spot the peak and I'll dive out then'

  • Comment number 2.

    Our (small) company has noticed that a lot of projects that have been held for the last 6-9 months have started to come through now, so there is likely to be an increase in new business, but what has gone are the larger long-term orders and contracts that we used to see.

    One good thing about any recession is that it does clear out a few of the 'marginal' companies that give low pricing to get the work, they are a PITA, especially when their customers expect that same low pricing from other suppliers.

  • Comment number 3.

    I can't understand why you are posting general articles such as this one but not discussing more controversial issues such as the recent Barclays £7bn Cayman Islands toxic debt deal.
    "Dr Alistair Milne, an author of several books on the credit crisis, attacked the scheme as 'a return to the kind of murky deal-making that created the credit boom and subsequent global financial crisis.' He told The Daily Telegraph: 'Far from improving its standards, this deal suggests that the banking industry is back to its worst behaviour.'"
    I would have thought that you of all people should be following up issues such as this.

  • Comment number 4.

    "Concensus about recovery" and "Profits surge" are alien concepts for the millions out of work and the millions more struggling as they're confronted by a reduction in their living standards, hostile banks and the fear of repossession. And why is recession defined as 2 quarters of negative growth but "recovery" defined as the faintest, transient indication of improvement ? The "Green Shootists" talking up the economy are more likely to be doing so to justify their fat bonuses and rip-off rises in prices and interest rates rather than any real recovery as far as the majority of us are concerned. Caledonian Comment

  • Comment number 5.

    So we have had a crisis that brought us almost to meltdown of the whole financial system - but now a year on, a few billion thrown at the problem & everything is fine & stock markets are roaring ahead as if it never happened.

    I don't think so - reality will hit markets sooner or later, this crisis isn't over yet not by a long, long way.

  • Comment number 6.

    We must not forget the 'good times' were largely predicated on the availability of easy credit, which enabled everyone to 'feel rich' and spend on houses, cars, etc, etc. The growth in the stockmarket is presumably related to the free money been driven in by the Bank of England and other central banks. We (especially in the UK) are not producing more and therefore creating a surplus of wealth which can be reinvested. Infact all the talk is of cutbacks in public expenditure once the emergency plumbers arrive after the next general election to fix the financial leaks in the UK. I suspect we are in for a few tough years with a few false dawns whilst reality (you have to create wealth to spend continuously) is assimilated and adjusted to. So my vote is with the management bears; the investor bulls are merely opportunists trying to scratch a living in changed circumstances and the clever ones will make a very good living from it too.

  • Comment number 7.

    The excess liquidity in the first half of this decade led to the housing price bubble - the herd noticed house prices rising, and soon everyone was piling in.

    Now the excess liquidity caused by governments pumping money into the economy is looking for a home. The herd notice share prices rebounding (as they were bound to do after such a fall) and so they pile into shares.

    Excess liquidity + Herd Mentality = Asset Bubbles = Crashes

  • Comment number 8.

    Until all the toxic debts come to light, and until we start reducing personal, corporate and government debt, there will be no recovery. Quite the opposite will happen; all we have done is to prime the broken pump, but our can is nearly empty.

  • Comment number 9.

    "There's a broad consensus that economic recovery is under way more-or-less everywhere."

    Oh yes, where would this be?

    In the financial houses in the city?
    In parliment?
    In journalists minds?

    The reality is that 'Economic recovery' is not solely based on the financial system alone, nor the wistful thinking off politicians and the media.

    The reality is that jobs are still being lost (and by more than 'expected' in the US).

    Surely the 'Economic brains' of our world can't be so stupid as to think that the steady fall in jobs is not going to feedback into the demand for services, goods and lending?

    Surely not...

    ..and what is going to be the effect of swathing public sector cuts by the next Government? (and it doesn't matter which one, they're all planning it)

    The more this crisis goes on the more it's apparent that not one of the 'brains of the country' actually has a clue what they're talking about (or they are so mixed up they confuse hope with actual reality)

    If we're on the road to recovery then why is Merv. and his possee leaving rates at 0.5% and considering starting up the printing machines again.

    Is this your view Robert? Do you really think this is 'economic recovery'?
    What about the fact that in the 90's recession we actually had a quarter of positive growth before sinking back to negative growth - caused by the jobs lag perhaps? - or perhaps we're now discounting history as having any lessons (do some still think we've cracked Capitalism and stopped the boom / bust cycle?)

    I think history has answered your question here:

    "This is the biggest share-price boing since the 1930s "

    ...and what was that bounce followed by Robert? Ah yes, 10 years of steady decline (what we now call a depression).

    Maybe we're simply trying to prove the ole adage that you can fool all of the people some of the time.

    What has the bailout done - except moved the bubble elsewhere.

    We'll see what happens to the housing market over the next 6 months as supply begins to lift as all those who have put off selling for a year now put their houses back on the market.

    ...or have we also changed the rules of supply and demand over the last 10 years too?

    I don't know, I go away for a week and when I come back the world has been infected with an idiocy of the brain.

  • Comment number 10.

    When do we get to talk about the tax 'avoidance' of the BBC staff? I am very interested to hear how the BBC can produce an un-biased view on taxation when many of their 'employees' are in fact opting out and using contract law to reduce their tax bill.

    One rule for the rich......

  • Comment number 11.

    "There's a broad consensus that economic recovery is under way more-or-less everywhere."
    Not in my house there isn't.

    #5 - Nail on head.

  • Comment number 12.

    Is this not just the herd mentality of investment bankers. One makes a move the rest rush in headlong for fear of being left behind, or missing out. After all bonus season is almost upon us and all those 2nd homes, fast cars & women need mainatining

  • Comment number 13.

    At least I know now why I am a bear. I had thought it must be due to my inherited gloomy Caledonian disposition but now I realise it is because I am a manager and have to deal with reality.

    The so-called recovery derives from the massive injection of capital into the money markets by governments around the world. Please remember we are being told that this is a consequence of actions lead by one Gordon Brown, who shares all the proven success at economic policy with the navigation skills of the captain of the Titanic.

    He has saved the world for the moment by the simple process of reinflating the bubble. We are now being told that the green shoots of economic recovery are just around the corner. No, no, no, no, no!

    We will be fortunate if we just have a number of years of bumping along the bottom. Alternatively, if our beloved government fails to tackle the growing fiscal deficit we could have a massive hike in interest rates to minimise a run on the pound with the associated collapse in investment and further unemployment. On the other hand, if the fiscal deficit is tackled we can expect a further collapse in consumer demand due to the prospect of further unemployment among public sector workers.

    In other words the UK is in a complete economic bind whose Gordian style knot can only be unpicked by a courageous and clever government. Is there the prospect of such? Not that I can see, but then I have become utterly dystopian.

    I am very fearful of a second recession for as long as the money markets see what is happening as a recovery rather than the positive side of a generous rescue package funded by the taxpayers of the world, then it will become intellectually impossible to implement the necessary strategies to effect an actual recovery for many years to come.

    We remain in damage-limitation territory and need to be very aware of that fact. Perhaps we should impose a green-shoot tax: anyone who says they have seen one should pay VAT on the perceived value.

  • Comment number 14.

    It is not a contradition to see markets enjoy the run they've had and for the recovery going forward to be sluggish.

    Many share prices earlier this year were still assuming virtual financial meltdown and this has become increasingly unlikely. I therefore think that they are now valued at a level that better reflects the current position but we shouldn't expect much improvement over the next 6 months or so.

  • Comment number 15.

    It would seem inevitable that at some point in the very near future interest rates and taxes must rise or we will not be able to borrow on the world markets.
    It seems extremely unlikely that wages can rise to the same level.
    The conclusion seems to be inescapable... unless you are a banker or a politician.

  • Comment number 16.

    #1 knows what is going on.

    From my economically uneducated armchair perspective I get the same uncomfortable feeling about the stock market rise as I did about the prices of houses from about 2003 to 2007. It just did not make sense on a grass roots common sense level. I did not buy a house.

    The markets and banks have been saved by the taxpayer only for them to use that security to stoke the market, suck in the populous again ( 2003 to 2007 style) and make a load of cash (again) then ring fence it off before it goes pop along with many of the current 'zombie companies' out there, leaving the small investor desperate to get a bit of interest on their savings to pick up the pieces afterwards.

    My bubble detector is tingling again, it seems to be pretty reliable, so if one of the large institutions would like to ditch their army of mathematical analytical nerds and simply employ me and my ' bubble detector' at a tiny fraction of the cost I would be open to offers.

    Funny how noboddy takes me up on that is it not! The obvious truth does not pay it seems, why have the truth when you can generate a profitable illusion of unpenetrable complexity maintained by armies of analysts who probably dont know how to boil an egg in the real world.

  • Comment number 17.

    Manufacturing often lags the recovery but there is no real bottoming out yet in some sectors of industry. The trend to cut costs and globalisation is having a savage effect on parts of the supply chain; it is hard to envisage that some sectors will ever recover.

    We are struggling to find our position in the global economy, having insufficient volume to achieve the efficiencies to be truly competitive.

    There is still little light at the end of our tunnel.

  • Comment number 18.

    It's all very well to talk about economic recovery, which may or may not be under way (well, whenever I read the news I see that another 200 employees here, 1000 workers there are about to be laid off - there's never anything about companies actually taking employees on. And aren't 2.5 million of the British workforce currently unemployed?), but I wonder when all of this is going to translate into some kind of recovery for sterling, especially when the financial markets are (apparently) doing so well at the moment.

    Living in the eurozone as I do and watching developments over the last year or so from a distance, I've had to put up with the effective value of my savings in euro decreasing by some 25% over the past year as I was unable to access them, due to their being tied up in long-term bonds and the like, while the pound was tumbling from 1.45 to 1.10 and even lower. And I thought it was only going to be a temporary drop, but the pound is still drifting along around 1.10, and so the problem remains ....

    I wonder whether anyone knows what further conditions would have to be fulfilled before some kind of improvement in the exchange rate can be expected.

    I certainly lay no claim to being an economic expert (and so welcome more "general" articles like this one), but I know when I've been ripped off by the financial system, which for me is enough.

  • Comment number 19.

    Peak oil, which will happen soon (why does no one ever talk about it!?) will result in rocketing fuel prices and knock us into another deeper recession. Be prepared!!

  • Comment number 20.

    #13 and #15 You're spot on. Will history see this as the "denial" blip before the guys with big pockets have to face up to the new reality? If there is no further decline in the economy, it will mean a bigger crash in the near future. Got to take our medicine!

    Microsoft are in a poor position anyway. Their current Vista operating system actually had declining sales last month and has failed totally to attack the business market; Office 2007 was not much better and is under increasing pressure from Open Office. Big vessel but lost its way.

    As another measure of the economy, take our business - over the last 22 years it has always done well in bad times and we have sometimes starved in good times. We are busier than ever now. QED.

  • Comment number 21.

    "Or to put it another way, the massive exceptional monetary stimulus of central banks has lifted up financial markets rather faster than it has buoyed the real economy."

    A massive stimulous was necessary, but was it implemented in the right way? If money had just been handed out to ordinary people or to "real" businesses, then they could have used it to pay off their debts and to spend on consumption/investment.

    Instead the money has just been pumped into the banks, which as we all know would much rather pour it into the next asset bubble than lend it to individuals or manufacturing companies.

    The financial crisis and the resulting "gap" in the money supply could actually have been seen as a one-off opportunity for the Government to print money without causing inflation and spend it on real infrastructure investment etc. The opportunity has been wasted.

  • Comment number 22.

    Here's a great example of

    "Bolted - horse - stable - closing - door - after"

    Well done to the British Property Federation (no I hadn't heard of them either) for winning this years prize for stating the blindingly obvious once it rides up and smacks you in the face and leaves you lying on your backside.

    This ends the reign of the the current encumbant - Mr Ridley Parsons who stated on September 6th 1666
    "There is a serious fire risk in London city"

  • Comment number 23.

    The stock market has never been a good guide as to the state of the economy..they are no different to the punters down at the betting shop they all think they are on a winner but in reality they have little idea.... more important is what happens when quantitative easing draws to a close and when the oil price starts to rise...

  • Comment number 24.

    I must have dark glasses on. I can see no shoots of green or a return to happier days with work.
    And unfortunately I can see no reason for various people saying that it is all over. I put it down to 'I have a job, so I am fine'. Unlike the rest of us.

  • Comment number 25.

    "The message of stock markets - which have bounced between 40 and 50% in most countries from their lows of the spring - is that good times for business are just around the corner.

    This is the biggest share-price boing since the 1930s"

    And how did that one work out?

    Was it immediately followed by prosperity?

    I've forgotten. People never talk about the forties, so I can only assume that the decade passed uneventfully with peace, freedom & prosperity for everyone in Europe.

  • Comment number 26.

    I think you can do better than this Robert. You know full well that what we're seeing here is another bubble, and the worrying thing is we've got a whole discredited bunch of financial cheerleaders wishing it higher and higher. You know the Christmas season'll weed-out many companies barely getting by at the moment. You also know there's an election in the air and the market can't quite make up its mind about where economic policy will take us during the long road to recovery (and it will be long). One thing is certain though, there's a lot of easy money out there at the moment with few avenues for 'investment'. Like it or not there's going to be quite a few sore heads when the market crashes again. This country of ours is well and truly ... .

  • Comment number 27.

    14. At 1:49pm on 05 Oct 2009, CockedDice wrote:
    "Many share prices earlier this year were still assuming virtual financial meltdown and this has become increasingly unlikely."

    mmmmm - I'd be careful about writing off the financial meltdown - unless you work for the Labour party.

    The market works on a reactive basis - which sometimes looks like being pro-active because the news is leaked often in advance.

    However with the amount of lies and counter-lies going around the business world at the moment this leads to increased volatility as the markets jump to react to events.

    I mean, did the markets price in the failure of Northern Rock - or did they react after the event?

    If you look across time the markets always miss the crucial events - in fact they very rarely tell us something that we didn't already know.

    That's why you have 'market analysts' falling over themselves flip-flopping from one stance to the other at the moment.

  • Comment number 28.

    "Certainly many analysts and investors expect just such a rehabilitation. According to Bloomberg, they are anticipating a rise in corporate profits from 2010 to 2012 of more than 50% in aggregate."

    Robert can you please give me your opinion as to the percentage of stock market participants actually investing in company shares in anticipation of rising dividends in 2010 onwards as opposed those day/week/period traders who may or may not buy shares in advance of mmediate dividend payouts?

    I would be surprised if your answer favours the former over the latter!

  • Comment number 29.

    Great Robert

    Should I start being profligate with my spending?

    In all this analysis, where does QE fit?

    Someone has to pay for it, and I find your article stunningly naive

  • Comment number 30.

    Well, my reading of it is –
    the broad consensus in private is that any perceived economic recovery is all smoke and mirrors.

    The £175 billion that has been hoarded by the banks over here, the trillions of TARP and the suggestion of mischievous and artificial stirring of the markets in the USA by heavyweight players (conning buyers and sellers alike into dreams of growth),
    all goes to suggest that there is now a parallel economy to the real one, and that one of them is in denial.

    One day they have to converge again, and I don't see anyone in UK or US control/influence prepared to trigger the pain now. The longer this is delayed, the worse it will be for all of us.
    I just hope that, when the day comes, no-one is more equal than anyone else.


    PS who listens to Microsoft (or Ryanair)?
    MicroSith's Vista is shortly to be replaced by '7' a much more Windows XP-like operating system. Vista's unnecessary launch and subsequent failure has hit them hard, and Google's determination to make inroads into MS Office and Explorer and everything else, suggests Stevie Boy is looking to make friends nowadays. Changed times.

  • Comment number 31.

    BTW - I don't know why Microsoft are worrying about anything. They have proven they are prepared to cut the competition rules to shreds in order to gain and abuse a monopolistic position (look at the EU and other body rulings against them).

    You can't loose when you're the only supplier in town and you've managed to convince some of the largest Governments in the world to install your operating system in their pulic service arena (right Tony Bliar?) giving you a 'recession proof' market allowing you to out live all your rivals.

    One thing Microsoft are epxerts on however is crashing and maybe they can give an insight on how you reboot and Economy without spending hours on the phone to customer support!

    UNIX - it may be ugly - but at least it works.

  • Comment number 32.

    An old phrase, Don't count your Chickens before they've hatched comes to mind.

    One thing this crisis has emphasised is the need for Business and Government to adopt Honourable behaviour.

    Alas the City with its Short sellers and Dodgy Mortgage backed debt has still missed this point.

    But the Government should be setting an example.

    For example, when it has already spent Billions of Pounds of Taxpayers money on propping up Bank Directors and Dodgy City Traders, why would it be dishonourable in dealing with the Public Sector ?

    Apparently, it and the Opposition are Hell bent on tearing up long standing agreements on redundancy and other compensations for the Public Services, in order to enable them to drastically cut Public Services in the next couple of years, on the cheap.

    By Cheap they talk of a figure (£500million)that is less than the total Tax Payer subsidised bonuses of the City Slickers that have brought on this terrible Recession.

    They say this is to stop Fat Cats benefitting. Well, the average Public Sector pay is under £24000 and the ones likely to be made redundant are on far less than that !

    No Fat Cats are likely to lose their Ivory Towers.

    Just the ordinary Workers who deal with YOUR needs from the Government.

    But this Labour Gov't and the Tory's do not value service to the ordinary Public.

    They only seem to value Financiers who are creaming off the wealth of our Nation bit by bit to their Overseas estates.

    Remember, every Service that is privatised will cost more or do less.

    The Private Company's profit margin takes service away from the paying Taxpayer.

  • Comment number 33.


    Your analysis does not seem to be backed by any FACTS.

    Have you considered the following story in your analysis?:

    Once you wade through the jibberish and pick out the actual numbers from the 'how are you feeling today' surveys - you can see that we have started a recovery, in Banking.

    ...but not building societies mind you...

    ...or any other sector of the Economy....

    ...and we're talking about "Business increased in three months to early September" - but not what business this is or where it comes from....

    ...oh and this rise comes after the record low volumne of business we have been expereincing....

    ....all backed by the Governments 'bad loan' scheme, it's actual capital injections and QE.....

    Look how this sentence
    "On balance, 36% of financial services firms are more optimistic about the general business situation than in June."

    "For the first time since June 2007, banks are experiencing an upswing in confidence," said Andrew Gray, head of financial services consulting at PricewaterhouseCoopers. "

    When you put it all together - despite the record injection of money into stimulate the Economy - and nearly 12 months on - we only have 36% of financial firms looking upbeat (and they are ever the optimists), only 7% have reported an increase in business since the last quarter and the building societies are feeling more downbeat.
    Don't forget these were the main recipients of the injections - the rest of us got nothing except a devalutaion of our savings.

    .....all designed to decieve Robert - and you as a Media luvvie are implicated in the conspiracy.

    I can spend all day demonstrating the manipulation of language and the inference in reporting on the BBC - all designed to con people into thinking the recovery is here.

    ....fortunately (if this blog is representative) - no-one actually believes it this time. The people have longer memories than the Government and Media give them credit for.

  • Comment number 34.

    Why is the BBC marketing Microsoft yet again? Why is my license fee being used to market the launch of Windows 7.

    There are many other organisations that deliver IT-based solutions that contribute to a smarter planet. How about more coverage of those and not such blatant advertising for Microsoft?

  • Comment number 35.

    The recovery has begun, but it won't feel like one for the general population. The loss of corporate and personnel tax revenue has been enormous and may never recover to previous levels, thus we face years of high levels of tax and a rapid decline in public spending.

    We have had a massive credit binge, now we will have the hangover...

  • Comment number 36.

    Parts of the global economy may be showing recovery, and asset bubble sin the UK may be reinflating.
    Triggering those with a vested interest in talking the market up to suggest recovery.

    But with Britain consuming vastly more than it produces, with massive and ever increasing levels of debt the underlying situation would seem to be continuing decline.

  • Comment number 37.

    This government has spent 10 years working on the premise that if shares and house prices are going up, then no one will actually notice anything else.
    The current stock market bubble is totally unrelated to the wider economic situation, and is based on the belief, fostered by the government, that all can return to 'normal'. But what is 'normal'? Is it the conditions of 2003 - 2007 that the government would have us believe? I think not and I hope not, for if property prices and real inflation continued in that vein, we'd all be penniless billionaires in a few generations. It's totally unrealistic to assume, as the government has done, than it can engineer a scenario where inflation is held at a rigid level and there is a limitless supply of money for everyone to borrow what they want.

    I'd be betting on a lot of burnt fingers by the end of the year.

  • Comment number 38.

    I'd not be inclined to follow any prediction made by Steve Ballmer aka Monkey Boy. He has a long history of calling just about everything wrong in the IT sector. Microsoft have consistently been behind the curve when it comes to search or anything Google-related. And who can forget back in 2007 when the iPhone was launched and Ballmer said that "There's no chance that the iPhone is going to get any significant market share. No chance." Last time I checked, the iPhone confortably outsold Microsoft in the smartphone market. No I'm afraid I'd be checking the tarot cards for more reliable predictions than Mr Ballmer's. Personally, my feeling is that the data out there is not strong enough to make any strong predictions about the future other than it's more likely to get better than worse. All that seems in doubt is the slope of the curve and how much "noise" is still in the system.

  • Comment number 39.

    The only thing that has recovered are the delusions of gradnderr that formed the basis of the greatest financial ponzi of all time [too big/small for most to see like the elaughphAAAnt in the room .

    The banksters have written down their toxic assets thus forming A NEW BASIS POINT for the calculation of another set of bonuses for recovering old territory on which the old and now unrecoverable bonuses were originaly paid out on .

    This time the unborn taxpayers and future non index linked pensioners [destined to be rewarded with a good plucking that they will never forget] are backstopping the ponzi input funding which forms the bassis of the latest asset bubble

    By central banks policy of colapsing interest rates [following the japanese model] a flight to the safety of "assets" causing an new asset bubble became inevitable,particularly so now that governments are addicted to debt and wish to avoid the compound debt interest trap with permanently low interest rates for themselves [equivalent to a near zero percent to infinity and beyond credit crunch card]

    In return for governments[taxpayers]bailing out the financial system by purchasing its toxic assets the financial system will now be required to buy the governments toxic assets dressed up as gilts ...and the show will go on until imports become to expencive as the currency value declines and we are forced to scavenge on landfil sites for what is left of yesterdays wealth .

    It would be tragic if it were not so funny.

  • Comment number 40.


    Historically the total package given to many public sector workers, taking into account job security, additional holidays, favourable sick pay arrangements,and especially pensions was equivalent to that in the private sector.
    However, the focus on achieving parity in basic salary over recent years has increased the value of many of these packages well above those gained by private sector counterparts.

    New "initiatives" have lead to the creation of more and more public sector jobs, not just in core services but in the creation and expansion of numerous "agencies". To say that all of these provide services we "need", that they're run efficiently and that the country receives value for money is delusional.

    And the ever increasing public sector remuneration packages apply to these new roles as well.
    We coped without such a bloated public sector in the past, so why do we "need" it at this size now?
    The rest of the economy is weighed down paying the additional cost of the ever expanding public sector.
    Yet in many ways, in order to cope with demographic trends the public sector needs to get more efficient and focus on the thing that really matter.
    The country cannot afford additional bureaucracy, inefficiency and roles that contribute nothing to delivering required services.

    As to the failings of private sector service provision, the profit margin is indeed lost to the taxpayer, and depending upon the provider possibly to the country, PFI in particular doesn't add up and smacks of paying more in the long-term to defer debt showing on the nation's books.

    However, much of the failing of private provision of public services can be put down to severely flawed procurement and specification processes.
    Also, TUPE arrangements, where contractors are forced to take on public sector employees, retaining their terms and conditions instantly hamstring them in terms of delivering maximum efficiency gains.

    The best approaches I've seen to this allow new organisations to take over running a service and receive most of their profit from proven efficiency gains... which are then treated as a new baseline, to be improved upon for further bonuses.
    However, public sector unions stifle how much efficiency can be delivered by seeking to be paid off for any change to existing systems that are failing the country. The political agenda of many public sector unions says much about where their priorities lie.

    Unfortunately individual "empires" in the public sector lead to a defensive approach and pet projects being pursued, sometimes against the greater good, and often resulting in an incoherent overall approach diverting from the core goals of organisations.

    Its actually quite infuriating to see so many willing and capable people in the public sector either wasted due to organisational structures and suffocating internal bureaucracy or spread thin and prevented from making a real difference due to covering for others who don;t pull their weight and hide behind the "job for life" mantra.

    Until we achieve balance, with a level of public sector we achieve, receiving fair and comparable remuneration (in total) for doing equivalent work in an efficient focused way, the economy will not achieve balance and we will struggle to find a way of competing and thus maintaining the standard of living we have come to expect (although perhaps not have earned).

    The big question is, in order to pay our way, what do we do /produce, other than financial services that the rest of the world wants?
    We used to rely on owning assets around the world in order to drive wealth back to Britain, but recently we've been net recipient of inward investment, propping up the economy in the short term, but taking wealth out over the longer term.

    Unfortunately too many people think they have a right to the best of everything, rather than having to earn it; whilst such attitudes pervade our society, the future for the economy and the nation as a whole os far from bright.

  • Comment number 41.

    This is not a recovery, but another bubble caused yet again by government intervention and short-term speculators, but the stock market will collapse within weeks and with it the mirage of a recovery.

    Worldwide quantative easing and other daft short-term strategies like the car scrappage scheme have merely postponed the inevitable, i.e. the collapse of the whole economy. The false assumption - given that the whole world economy was purely driven by consumption - is that these are merely temporary measures until the economy recovers of its own accord, but the economy cannot recover of its own accord because it was nothing but an illusion. Without borrowing from tomorrow we could never have created all the businesses, jobs, and lifestyles. Unfortunately, tomorrow has now arrived and our politicians are left desperately clutching at straws.

    But look on the bright side, the consumption/production model, which was destroying the planet is dead and buried and this crisis will force us to move towards a new, more mature way of thinking, where we will look at how we all can contribute rather than how we can all take.

  • Comment number 42.

    It is so heartening to read that there is a broad consensus that recovery is underway more or less everywhere.

    What a pity that consensus does not include the Bank of International Settlements,the US Congressional Budget Office, the US Federal Reserve or the US Treasury Department.

    Perhaps they are all communists!! Or maybe they just don´t have access to the same quality of information as the BBC

  • Comment number 43.

    Fairly balanced article but no forecast, just hedge sitting. I am involved in a small business as are many friends. Corporate world is very different from ours. No doubt in a any of our minds that it is going to remain tough for months and then, if we are lucky, it will basically bounce along flat.
    We all know that without fail that government spending will be cut, unemployment will rise and taxes will increase substantially. This is as certain as night following day.
    There is lots more blood letting to come and whoever says differently is quite simply foolish and.

  • Comment number 44.

    The UK is showing signs of reverting to the language of boom and bust in use for the last twelve years: vis. - a strong housing market - meaning house price inflation etc. etc.. The media and the pundits have learnt very little from their recent errors.

    Are not the lessons of the 1870's (or the 1930's) more relevant as the scale (i.e. numerical size) of the financial disaster is more akin to these slumps? The 1930's housing slump was not finally put behind us until 1951 (when the US Home Loan Corpn was eventually would up). The numbers suggest that the recovery will include many false starts and mini-booms and busts.

    It will take time for the upwave's rules to be unlearned by the market, pundits and the rest of us. The old certainties of, for ever rising (fake) personal wealth based entirely on house price inflation will take time to forget (and by the time they are forgotten it will be time to remember them again - but not for ten to twenty years or more!)

    Robert Peston: Interest rates will return to a rational and sensible level of ten times the present level (0.5 to 5.0). The present (mini) boom in house prices is substantially supported by the current zero interest rates and the mini boom will inevitably turn to dust with interest rate rises, but we have to price money sensibly as soon as possible to return to(start!) a real recovery.

  • Comment number 45.

    The reason stock markets have bounced is that the yield on equities is relatively high and the interest on deposits is historically low. Quantititive easing has pumped new money into the financial markets, but current dividends do not fully reflect losses yet to come through as the full impct of the slowdown works its way through. Moreover the impact of unemployment is yet to be felt and the significant impact of huge cuts in public spending is still to come. Add to that the fact that everyone has to save more and spend less and you have an expectation of further difficulties followed by a long slow haul, which must include a major rebalance of our own economy from state to private and from service to manufacturing. There will be good investment opportunities in all this but any assumption that it is business as before with another bubble in asset values will lead to a further crash from which there will be little money to effect rescue.

  • Comment number 46.

    Don't know what the worry is! I heard something today that gave me real cause for optimism. I'm told, by someone I know who's very "high up," that they have now put an end to Boom and Bust! Yippee! Just how fantastic is that??? (I know they said it before, but now they really mean it, because my friend even showed me a graph to prove it. Just brilliant!)

    Spread the word!

    (I know I just can't believe it either, but it's true, because they all say so. The tele', the papers and my estate agent, oh and my 19 year old bank "manager" and, wait-for-it, The Stockmarket!)

    Hang-on, the Stockmarket aren't they great mates with...the banks? Oh no I'm logging off quick before I spoil my own happy half hour.

    Jeez what a downer

  • Comment number 47.

    Perhaps we should change the rules for calculating GDP, and exclude any sector that doesn't qualify as having a "socially useful" purpose? So throw out the whole of the finance sector. And the land and property speculation sector and so on.

    Look at what's left and see if there are any "green shoots". I very much doubt it.

    I would guess that if you did the same thing retrospectively, you would find there wasn't actually all that much growth between 2000 and 2007 either.

    All smoke and mirrors. But we need to see what's actually going on before decisions about winding down the stimulous and paying back government debt can be made.

  • Comment number 48.

    We're back in the bubble and anyone with an iota of commonsense new this was happening several months ago.

    Of course they are talking up the stock market for they are now sucking in the small investos who are the only ones left they can hustle any money out.

    Everyone needs to keep their head and listen to HRBC.

  • Comment number 49.

    Many small companies are experiencing an improvement in their order books.

    It is perfectly possible that this can happen even though there is little sign of improvement in the sectors in which they operate. Many of their competitors, especially those who relied on credit for working capital, may have gone out of business or are no longer able to compete effectively, because of lack of cheap credit.

    Not everyone will have lost everything in the crash. They will be reluctant to spend and will be looking for a safe haven for their cash. Hence the increase in the savings ratio, the slight recovery in house prices and the increase in stock market prices, which appeared too low a few months ago.

    These are normal effects in a recession, and should not be regarded as a sign that the worst is over.

  • Comment number 50.

    It just goes to show the reality of the "fantasy story" written by financial experts, and that most financial activity is a variant on good old gambling. Better to put your wealth on the next horse race than listen to advice from an investment consultant, who in all probability is looking at commission over and above all else.

    The financial institutions of the world have proven themselves to be self-fulfilling fantasists, bull or bear, they run around like lunatics in an assylum looking for the next epiphany of monetary greed. Employers will always look for the greatest return for the smallest investment, and while the fiction of governmental intervention continues to support the fantasy the psychosis will not be addressed. Yes, intervention was necessary to stop a global return to the 1930s (well that experienced in America and Europe anyway) but the reaction of the same old money hungry processes has not been solved, as exampled by the stock markets; bank share values and return to bonus culture. The fiction of great wealth created by treating debt as asset when it only matures on payment; the charade of currency exchanges manipulating commercial activity (I seem to remember several years ago most of the monetary prophets saying that Sterling was over valued by at least 25-30%; that house prices were inflated by 30-40%).

    Reality for the individual remains the same; workers to the expedience of employers; managers shackled to the necessity of profit/share value; politicians slaves to opinion (whether real or by lobby of interest/media vogue); public services to the whims of media fancy (one moment extolled, the next berated, then castigated to destruction). Any notion of a long term plan (1-2 years in financial return; 4-5 in political innitiative; three weeks in media attention span), attention to generations has long gone, probably with Henry VIII wanting to establish the Tudor dynasty.

    In all the furore about money (a fiction created many millenium ago as a convenience) we forget that the planet is inhabited by people (with apologies to animal rights, but they rarely spend money) with a collective dependancy far outstripping the financial gaming. Slowly the rights and individuality have been stolen from the majority of human kind by a clique, initially chieftan/royalty/religious, then astutely through wealth gained through the efforts of others. We now all prosper or not at the whim of 0.001% of the world population who control by ownership or influence 95% of everything. Globalisation leads to a shielding of the seats of influence in all aspects of society, and that which truely controls everybodies existence.

    Mr Peston indicated that a successful investor of his acquaintance predicted China/India's development of internal consumption will provide opportunities for the western economies through big brand sales. I feel this ignores, yet again, some of the realities that the major producers of fake western goods are these very countries (no profit there then). As for pharmaceuticals, western medicines are in the main anathema for their populations who prefer more traditional remedies (so again no profit).

    Too long we have seen speculative talent as oracle and ignored self-reliance. Britain still lives in the shadow of its empire that provided in excess for its population's needs, since the collapse of the nations world influence we have sunk into a moribund Americanisation in all things (a sattelite of the new world order). It is time for the producers and purchasers to combine (across the planet) and shrug off the American Dream which in reality is based on robber barons/gangsters grabbing excessive wealth through whatever means available (and sometimes creating the means for themselves). A seed change in American corporate enterprise coincided with the liberation of Cuba by Fidel Castro and the return of Mafia money to mainland America (without which Las Vegas would be a small desert town).

    One of the world's biggest trading activities is in illicit drugs, sponsored by criminal activity across the globe, profits laundered into legitimate enterprise but with secure outcomes. When this trade is used for political convenience, as in the case of the Reagan administration in its fight against legitimate governments in Central America (see Col. North's testimony to Congress), it becomes legitimate. So maybe a better guage of world recession and recovery would be the rise and fall of street values and access for drugs. Though the market place could become muddied by the influx of designer alternatives, but surely that reflects the true entreprunuerial spirit of global trading and possibly the success of the expansion of higher education globally.

  • Comment number 51.

    There is so much extra cash being pumped in at present that if Cameron stops it he is going to be more hated than Thatcher.

    One way he could handle this is to ask Public Sector workers to take a cut of 20% across the board saying that this is the only way to prevent unemployment.

    Of course alternatively the hard working public sector people could name their less hard working colleagues if they did not think their 20% pay cut was fair.

  • Comment number 52.

    I do know where they ARE hiring...the government.

    Obviously, since that is where I work, and it has good opportunies, it has not lost employees (hiring 150 new employees in my job just this year--in my city)

    Also, there are healthcare and other opportunities for hire. So, perhaps building on positive things, our economy and yours could start growing and in ways that will benefit the consumer.

    Perhaps, the USA needs seasonal employees who Would receive unemp. during the 3-4 months of off just needs to adapt---more training, more flexibility...thinking outside the box..for once.

  • Comment number 53.

    Oh and yes, liberal economics will prove to be in vogue ...if Obama is successful,

    So why not contribute to the possibility of a bounce back and push Obama economics and socialist ideas and be more self reliant, not whining about the lack of government perfect ideas?

    The government is never perfect and never has total is mainly in the hands of the rich--when or why is that going to change?

    I want (or believe in) liberal economics and how is it going to succeed if we just sit on our assets and not contribute?

  • Comment number 54.

    Dead cat@ bounce!

  • Comment number 55.

    If there was an economic recovery going on then the oil price would be going up like a train... It isn't .... ergo there is no real economic recovery.

  • Comment number 56.

    I am not sure Microsoft with all their competitive pressures and recent technology howlers are a good surrogate for the stock market. Before we get carried away with sneering at the 'irrational exhuberance' of the last three months, it is worth pointing out that the FTSE index was around 6300 only 20 months ago and is around 5000 now. Nice but hardly worth breaking out the Bolly for just yet. If you take a ruler to the stock market graph of the last thirty years you will see the FTSE is still way below long term trend (not surprisingly).

  • Comment number 57.

    Dead cat bounce, save the oil price save the UK, O dear......

  • Comment number 58.

    # 40
    I agree with much of what you say, particularly as regards the bloating of the public sector. There are a lot of people currently engaged in pursuing things like "diversity" and "targets" rather than doing anything likely to be of advantage to the taxpayer.
    I agree too that "in order to cope with demographic trends the public sector needs to get more efficient and focus on the thing that really matter". Please tell Ministers to stop requiring their civil servants to pursue silly but "eye-catching" initiatives!
    That said I'm not sure about your remark that "the focus on achieving parity in basic salary over recent years has increased the value of many of these packages well above those gained by private sector counterparts". My experience as a retired civil servant is that I am getting better pay rises now from index-linking than I did when I was working. You may be looking at figures which appear to show average public sector pay increasing compared with the private sector, but which do not bring out that the average is affected by the transfer of low paid public sector jobs to the private sector.
    I'm also unhappy with your negative view of the fact that "TUPE arrangements, where contractors are forced to take on public sector employees, retaining their terms and conditions instantly hamstring them in terms of delivering maximum efficiency gains". So indeed they do, at least until the contractors can work their way around the rules.
    But is that really the private sector definition of "efficiency"? Not actually doing things better, but just cutting the pay and conditions of the lowest paid workers for the even greater enrichment of the bosses?

  • Comment number 59.

    Robert to state that "There's a broad consensus that economic recovery is under way more-or-less everywhere" seems to indicate you have learned nothing from the events of the last 18 months. Of course you get a boost when you have virtually free money available and a massive fiscal stimulus.

    But its just another credit fuelled bubble, just like the last one. There is no underlying reason for a sustained improvement. There is negligable wealth creating industry in the UK to underpin it.

  • Comment number 60.

    The Labourink classes [together with their have done their best

  • Comment number 61.

    The Labourink classes together with their QE'err friends in high places have done their best to embalm their Par rot and nail it to the perch so that they can pretend its pining for the fjords before the next election

  • Comment number 62.

    Oh Robert,

    I suppose I could turn for adjudication to professional economists. But their forecasting record in the past few years on the stuff that matters has been so poor as to make weather forecasters seem imbued with godlike gifts of foresight.

    Sounds about right.

    We are stuffed and we all know it. The stock market guys rockin' on down and happy. Remind me of where that takes us....

    Interest rates are about to fly.
  • Comment number 63.

    Without a job for over a month now, only the Investment Banks and Government seem to be recruiting IT staff, and , at least 3 roles I've gone for I would have walked into a couple of years back, now I get told they have too many high quality applicants, or if NHS, you have to have NHS experience before you can get an NHS job, will experience as a patient do I wonder? Put that together with all the Offshore staff who are appearing in certain Govt owned banks, I wonder when I'll next find an IT a job, I suppose I'll have to look for one of thiose 'High Value' jobs offshoring/outsourcing is supposed to bring - Sainsbury's Shelf Stacker I fear. Still, I look on the bright side, less than 300 days before I can send my MP into retirement and enjoy a pre world cup extravaganza as Labour at least are toasted, I pray (and I'm an Atheist too!!) that the Tories and Lib Dems get almost as well toasted. If that happens I may become an Agnostic

  • Comment number 64.

    10. At 1:23pm on 05 Oct 2009, writingsonthewall wrote:
    When do we get to talk about the tax 'avoidance' of the BBC staff? I am very interested to hear how the BBC can produce an un-biased view on taxation when many of their 'employees' are in fact opting out and using contract law to reduce their tax bill.

    One rule for the rich......
    I wonder if IR35 is applicable? Still, Avoidance is legal, AND not just for the rich, evasion isn't, and funnily enough that isn't just for the rich either, but even better is to be above the law, and that isn't for the Rich or Poor, but only MPs, who voted to ensure that they were so. It makes one proud to be British to think that, despite the Centuries that have passed, some things don't change, and Oliver Cromwell could probably still recognise a modern MP by his/her morals.

  • Comment number 65.

    Many on this Blog, like me have gone back to basic instincts and simple common sense rationalisation of this "Crisis"

    We know that we have lost trust in both Politicians and Banking Institutions, not only here in UK but World-Wide. The Media and many Pundits, Leaders of Industry and Commerce are talking uo the Economy and the Global Economy. Yet job cuts are roaring ahead in the Western World with all the massive long term consequences to wealth, social cohesion and well being.

    For myself, it feels like I am living in the Titanic and someone just woke me shouting "The Ship is fatally damaged" My first thought is "rubbish" as nothing happens and we do not appear to be sinking. But I have a nasty feeling in the pit of my tummy.

    Each and every month now the UK balance of payments is so bad that we are aout £15 or £16 BILLION in the red, every month going forward. The government is doing nothing about this at all. No attempt is being made to cut this deficit, nor cut Public Expenditure roaring out of control.
    No noe is at the Helm as the Captain seems a "Zombie in the lights"

    Over two thirds of us are going to vote Conservative at the Election as a protest against Labour, showing our distict lack of enthusiasm. We are dulled and worried by too much information and conflicting views and advice. No one expects their standard of living to fall permanently, vbut that is what is about to happen to Millions of us. Governments have flooded the international finanical system with funds and liquidity with NO END GAME except political survival over the short term.

    Once the Oil game is no longer transacted in US Dollars, watch the fur fly. Little old Britain with its Pound will be in the teeth of the storm, yet to come. Where do we shelter from this storm?

  • Comment number 66.

    "..broad consensus that recovery is under way more-or-less everywhere."

    The people at the top, that you're always talking to Robert, HAVE to say this, it's their job to "spin it" so that people like you then wander off and communicate this rubbish to the ordinary man in the street.

    The ordinary man in the street calls it, at best, pulling the wool over!

    The people at the top now rely, so heavily, on ordinary people getting into debt to fuel their own company's growth that they have to keep fuelling the illusion that everything is getting perpetually better to try and give the ordinary punter some confidence that they can borrow (stupidly, if sensibly won't keep the economy afloat!) That's how it's "worked?" for the last 30,40 years, perhaps more. If you've been doing it that long, well as they say, you can't teach an old dog new tricks! (But our one trick bunny approach to running an economy has been and will continue to be our undoing!)

    That's THE PROBLEM with the UK economy, when it comes to "recovery" our ONLY tool in the box is to borrow, (and hope it works.) Yes, in a balanced economy some lending is important, even essential. But when banks are lending 8 or 9 times salary or at 125% the value of the asset, or to people who patently could never afford to repay, things have gone BADLY wrong! The only people winning in that situation are Property Developers! Why aren't they coming to Britain's rescue, when they've done so well in the last 10 years?

    Answers on a postcard

  • Comment number 67.

    I hope you are going to an analysis of how Australia has appeared to sensibly manage the slide in their economy, hand out money to the right people and keep realistic interest rates (at a time when our government just lost the plot entirely).
    They may have minerals and aggregate wealth, but we have oil. So what else have they managed to do that we haven't?


  • Comment number 68.

    What's going on? The FTSE100 and the price of gold are now going in tandem whereas they used be contrary to one another. Gold is headed for new highs as many have predicted.
    I believe this is a new phase. The QE money has been going into the stock market bubble but it seems now that investors are beginning to hedge against a dip in the stock market. With the stock market so buoyant this is probably going unnoticed by many investors. What it signals to me is that the FTSE is headed for a fall, but the way this bubble is going it could go all the way back to 6700 or higher before that happens. I reckon there will be a black day for the stock market and sterling soon (between now and, say, February) when reality finally sinks in.

  • Comment number 69.

    In previous recessions, stimulus money was put into the economy, then used by the population to buy goods and thus passed to others in the country. Now, everything is bought overseas, so what is the multiplier for the stimulus (it used to be around 6 before it went back to the treasury). Even the public works is buying rail products from Italy to Japan, building materials from China etc. I am not against international trade, I don't understand how the UK will recover by speculating on property prices again.

    The Employment Offices are taking on more staff on 18 month contracts, so any recovery is some way off.

  • Comment number 70.

    The only broad concensus that I can see is the reaction, in this blog, to Robert's latest article. Mr Peston must feel like a conductor of an orchestra wondering why there is no sound when he waves his baton.
    The lesson he should be learning is that a recession caused by debt cannot be saved by going deeper into debt.
    Earlier this year I heard a quotation which will stick with me for the rest of my life. "We are all sucking on the rear teat of a dead cow!"
    Yes, the stock market may be rising, but it is doing so only based on nostalgia for the good old days.
    The penny will eventually drop that we cannot continue with growth in everything for ever, and that the human race has to take sustainability seriously rather than using it as a smart sound bite. Politicians of all colours do not have the faintest idea what sustainability truly means, because it woud probably result in political suicide.
    The alternative srategy is to stick with a"growth agenda" and lead the lemmings over the cliff!

  • Comment number 71.

    Are the Dollars day's numbered? What will the effect on the Oil price be?

    "In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese Yuan, the Euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar, the Independent reports."

  • Comment number 72.

    Random Thought is right. Why has money created at the stroke of a pen ( Quantative Easing) been given only to the producers of goods and services- Banks and Car Manufacturers- and none given to the hard pressed Consumers of goods and services? Yes it would put even more pressure on the Pound , but that is happening anyway. The 175 to 250 billion given to the People would end the Recession/Depression overnight. Or is it because the Champagne Socialists would loose their control over us and no longer be able to fulfill their PC ambitions.
    Pay the "Danegeltd" Gordon or we will vote your party out of office.

  • Comment number 73.

    The bubble element in the markets is a reality, and while there are such enormous sums of money (many trillions of dollars) under management in the investment and speculative community, this will continue. Stock markets fell a long way very quickly, and, with interest rates so low, the investment money was bound to find its way back in on a massive scale, thus distorting the price. Money managers love a trend, even if it is one they started, and have to be on board. If/when the predicted recovery doesn't materialise, the stock market is likely to return to its March 2009 lows. The weight of money in and out of makets can only increase volatility, creating and bursting bubbles.
    I also have concerns about oil price inflation, and possible stagflation. Oil was overcooked at $147 a barrel just over a year ago and fell like a stone to under $40 in less than six months. It has since nearly doubled in price. The geo-political influences on oil have certainly not got better, and a $100 a barrel price might be something we have to get used to in the future, which will affect all out lives and economies.

  • Comment number 74.


    'Interest rates are about to fly.'

    Depression it is then, only a fool would increase them now. Enter one David Cameron!

    Caveat emptor: 5% is an acceptable arbitrary amount, even 8% plus will kill what survived the first wave.

  • Comment number 75.

    Or else there's simply a continuing disconnect between the financial world and the real world.
    Perhaps if the chancellor had taken Keynes advice properly and put the momey into public works (as in the 1930s), it would have helped employment and industry in the real world instead of merely making things cosy for the banks.

  • Comment number 76.

    Someone here said, that this "expansion" is artificial. Well, we DID go thru a recession first, so maybe it starts artificial, then convinces the public and turns into a real expansion.

    That is one theory of Economics, that has previously been forgotten. For instance, Reagan (don't know about Thatcher) used that process.

    And Clinton, interestingly enough lowered interest rates--by balancing the budget, leading to a healthy economy. So, this could turn into a real expansion, but afterwards someone needs to put the breaks on debt.

    That is a more positive and (having a degree in economics--tho let me tell you, one has to keep reading and reading to get anecdotal evidence after school) perhaps, more reasonalable reading of this situation.

    Are people in Britain all doomsayers, hoping for political change? Or are they too deep in their own psychological depression to respond rationally, reasonably to this possibility--a bounce back?

    I do think, if the US, France and Germany, etc in Europe do bounce back what will keep Britain from also bouncing back. Watch this next election, what will the economy do for Brown.

    He could squeek by, because of the alternative (uh ohhh nooo) and because of the British economy making a passable impression of recovery.

  • Comment number 77.

    Microsoft is a high quality stock that over the long run will continue making money for its shareholders. But one must be able to time the entry and exit in the stock as it tends to trade within ranges.

    The best way to do it is through a market timing system, such as

    Its daily DJIA index trading signal is up a respectable 65% for the year (as of October 29, 2009) and it is free of charge for individual investors.

  • Comment number 78.

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

  • Comment number 79.


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