Weekend reading: Recession cessation edition

This week we saw more signs that the world was moving out of recession. Well, that France and Germany were moving out of recession.

Both countries posted +0.3% GDP growth figures for the second quarter, causing economists to splutter their croissants and sausages all over Le Monde and Der Spiegel.

In difficult times one has to put aside one’s Little Englander mentality and be grateful for good news, even if it falls at the feet of the Germans and the French.

After all, what happens across the Channel will surely soon follow here (leather shorts, saying ‘Ciao!’ and a sensible attitude towards alcohol excepted).

Both nations are strong exporters, so it makes perfect sense that they are the next to splutter back into life after natural resource economies like Australia and certain emerging markets have been resurrected.

Now it’s time for the UK to start doing what we do best – flogging stuff through financial innovation and arty media campaigns, and buying it, too (France and Germany will lurch back into the red if the U.S., the U.K. and other English speakers don’t join the party soon).

Unemployment is still rising everywhere, but don’t worry too much about that (unless you lose your job, of course).

Unemployment is a lagging indicator. Companies who lay off workers won’t re-hire until they’re sure the good times are back ‘to stay’ (or for what economists would call a two to three year expansionary phase).

In the meantime everyone is still working twice as hard due to ongoing recession rations and the threat of losing their jobs, which means a huge boost for productivity and margins.

No wonder shares have soared.

I know, I know, that bloke on CNBC said the stock market rally was all hot air. It’s not – to paraphrase Clinton it’s the business cycle, stupid – providing that at each step the next gear of growth kicks in.

A few clunks and misfires along the way are acceptable, but if something goes seriously wrong, such as inflation taking off early or GDP declining again as the government stimuli are withdrawn, then all bets are off.

This is a more uncertain recovery than usual, so a big snag is more than possible, but I think we’ll get there in the next 12 months.

Don’t worry too much about the distant future from an national economic standpoint, by the way. I know we owe gazillions and taxes will have to rise and property is still too expensive and kids don’t respect their elders but in my experience there are always big problems.

There are also unknown problems, and more importantly known but rarely discussed opportunities. Over the medium term it all tends to cancel out.

As for the long term, we’ve just lived through a worked example of the uselessness of long-term forecasting and what happens when it fails. The best you can do is set aside something for a rainy day.

This week’s money blog post round-up

• Wealth Pilgrim has a simple tip for being nicer and getting rewarded for it. I used to do this a lot when I employed staff and freelancers, and it’s all true.
  

• Oblivious Investor sets out eight ETF-based ‘lazy’ portfolios. They’re based on American models, but easily adapted for the UK or elsewhere, as I did with the Yale portfolio.
  

• The Finance Buff is a new blog to me. This post is an excellent look at rebalancing in a bear market.
  

• Rental property as compared to REITs by MoneyNing
  

• Frugal Dad introduces the useful concept of a dream budget. (Aside: As an admirer I wish he read Monevator. Are you out there Frugal Dad? 🙂 Perhaps I’m too wordy for him – dads are busy people! )
  

• Fabulously Broke named me last month as one of her new favourite blogs, and happily I think her blog is a riot too, though not really aimed at the likes of me. If you’re American and especially if you’re a hip young-ish woman, go check it out.
  

A few mainly UK-focused articles from the big boys

• Like me with small cap investment trusts, Matthew Vincent in the FT has been looking at discounted investment trusts. (Remember, there’s no guarantee those discounts will narrow!)

• Also in the FT, David Schwartz flags up small cap value share Alumasc.

• Still value in corporate bonds after the sharp rally, says Mark Dampier in The Independent.
  

• The Independent has put together a property boom piece on the back of some curiously vague research on future house price hot spots.

• The Motley Fool casts an eye over Land Securities and British Land, in a week when bid fever perked up shares in the sector.

• Tories would end banking’s bonus culture, claims George Osborne (BBC)

• Students have seen no benefit in terms of teaching quality from the introduction of tuition fees (BBC)

Let me prepare your weekend reading for you every Saturday! Subscribe (for free) via email or RSS for regular updates.