Someone is always optimistic

Just like the doubters that seemed to be saying unlikely things an economic crash during the economic boom of 2007 there are now those that say the current economic downturn will not last so long after all. A mid-2009 bounce back is predicted with more cautious among the optimists predicting a late 2009 come back.

Personally I do believe that late 2009 is a reasonable time frame for the economic policies currently being implemented to take effect at lower levels of the economy. The problem though is how low level the money will flow. With the sub-prime bubble a lot of mortgage brokers made money and even in Australia many mortgage brokering firms popped up and appeared to last with their fleet of heavily stickered company cars and moderately well furnished offices.

 

The bursting of the credit bubble have made a lot of those brokers disappear as well as a lot of paper wealth. Governments are now trying to resuscitate their economies by inflating their economies with cash piles they hope the banks will distribute. While banks are not doing that they they eventually will as people's short memories kick in and they start lending again to the benefit of the economy.

The question I have though is not when will we recover but when we recover will governments have the hindsight to do what they have not done in the past and control inflation and the excesses of previous cycle.