Is the economy like permafrost?Permafrost (as far as I can remember from my school geography) is a fragile latice of delicate, icy connections - it is extremely delicate. Regenerating very slowly.
I have a mental image of a diagram of how they built oil pipe support struts to sit above it - so it could remain undisturbed.
Once its crushed - it takes years to regenerate and grow.
I wonder whether western consumer economies aren't like this. The leverage and debt on which they were based were a fragile network of trust - and to a certain extent "blind eye" turning.
Will they ever regenerate? Given the lack of appetite for credit risk, the uplift in saving rates, my generation's pension black hole and long term government debt.
Trust is such a human emotion. The FTSE continues to rise on the assumption that we're through the worst and that this belief can be artificially restored. It could take a generation. And if it does. Then the FTSE should be closer to 3000 than 5000.
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