Next Gen News

History would suggest that Sir Mervyn King, Ben Bernanke and Jean-Claude Trichet are right to be cautiously optimistic. Over the past 250 years, industrial capitalism has displayed a remarkable ability to regenerate itself. The mainstream view is that it will do so again, even though the severity of the shock to the financial system means the process will be slower than usual.

But the desire of consumers to pay down their debts means QE has so far proved ineffective as a cure for the woes of the real estate market. Other more radical solutions are now being canvassed such as federal loans for those homeowners whose mortgages are under water to cover the negative equity. While politically attractive to the Obama regime, this would have trouble getting through Congress even if the programme involved Washington getting a slice of the proceeds when house prices start to rise once more.

Finally, there are oil prices. Despite the slowdown of recent months, a barrel of Brent crude is still changing hands for more than $110, five times its price a decade ago. The expectation is that the cost of energy will come down over the coming months, boosting the spending power of consumers. But a return to the 1990s - when oil at $10 a barrel was one reason for strong global growth - appears to be over for good.