U is for slow, F is for finance

GSS: Economists love the letter game. The recession created a downward stroke. If the upcoming recovery is sharp, there will be a V. Or it could be slow like a U, or flat like an L. As yet, the right letter looks like U.

The Breakingviews.com Green Shoots Spotter was up last week, but only from 2.0 to 2.2. That means it has been firmly in the “Getting less bad” range for all of its 14-week life. It will take much more good news to get up to the third level, “Not just stabilising but stable”. A rapid-recovery V would be 5.0.

But as yet the most appropriate letter for this recovery is probably an F. That’s not a failing mark – it’s much too early for any judgement on the massive government efforts to stop the rot. F is for the government-favoured financial sector. “You can’t rescue the credit system without benefitting some of the people in it,” as US Representative Barney Frank put it. Loan losses are still a problem, but most markets are up strongly and bonuses look set to flow freely. For example, a fancy New York steakhouse reports the first sale in months of a $4000-bottle of Far Niente wine. Hope for a trickle-down to the rest of the world.