Is the economy like permafrost?Permafrost (as far as I can remember from my school geography) is a fragile lattice of delicate, icy connections - it is extremely delicate. It regenerates 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 crushed - it takes years to regenerate and grow.
I wonder whether western consumer economies aren't like this. The leverage on which they were based, a fragile network of trust.
Will they ever regenerate? Given the lack of appetite for credit risk, the 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.
