Germany and France announced their latest victory over the crisis last week. Both countries showed slight economic growth of 0.3 percent over the summer months. Enthusiasm that they had pulled out of recession revived stock markets, fueling their upward climb. In actuality, there is no reason to start talking about the end of the recession. The positive figures only reflected a seasonal spike — one that happens every summer. The vacation season is always accompanied by a jump in consumption. And many stores, which during those months did not place new orders, simply exhausted their inventories. Now they are ordering goods, and when their inventories are full the situation will seem bad again. More important, the market is absorbing large amounts of cash allocated under state anti-crisis programs. The crisis will take over once those resources are spent.
The people who are making loud announcements about the end of the recession know as well as I do how bad the current state of affairs actually is. But they are making optimistic speeches with full knowledge that their words will very soon be contradicted by actual events. What is the reason for this rash and essentially infantile behavior?
20 August 2009
The Moscow Times