Inefficient markets

The Slow Road to Recovery

Two months ago, the stock market was telling us that deflation was on the way and that the US economy would be leading the world into a global recession. Since then the market has staged a strong rebound and people are feeling more optimistic again. My feeling, however, is that the excesses of the late 1990s bubble have only partly been dealt with and that until they have properly worked their way out of the system, the real recovery will remain elusive.

At a recent conference in London, David Hale, the chief economist of Zurich…