The economic rescue may work but watch out for the recession
After a couple of days when the sky was blue and the birds were singing, stock markets around the world lurched lower today with concerns that even if the recent rescue package does stabilise worldwide markets the threat of recession is still very real. Reawakening the international money markets and releasing mortgage liquidity to the property sector is all well and good but it only rebalances economies and does not ensure that they avoid a further economic slowdown.
Many people seem to be under the impression that the success of the rescue package and avoidance of a recession are one and the same - they are not. The rescue package is all about injecting confidence into a market which has hit rock bottom. Once this has happened then we will be able to review the direction local economies are moving in and take the necessary action.
There has even been talk in the UK about Gordon Brown calling a snap election next spring to try and take advantage of an expected pickup in the economy. However, those who think it will be that easy may be in for a shock over the next few months.
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