I still hear various voices stating that economic recovery is not here yet. The proof they usually offer is our still too high unemployment rate. Well as any economist will tell you, employment is a lagging indicator, in other words employment follows economic movements, rather than lead them.

Meanwhile central bankers around the world agee that we have stopped the financial downward spiral brought on by erroneous valuations of collateralizesd debt assets. The reason we could do this in short order is precisely because the delauations were erroneous. As soon as the false devaluations were put to the test, i.e. public funds used to rebuild bank capital positions, the downspin was arrested. It took brilliant managers of the public funds to do this and my hat is off to them. Not everyone agrees with this and many still say the banks holding securitized debt are still undercapitalized. They say they can still run into problems. Well as long as we stay away from using false valuations for these assets, we will do just fine.

It is true that the overall economy is still catching up to the correction of our financial markets. But it is coming. The OECD, the economic organization of the richest countries, has stated that recovery is happening this quarter, i.e. as you read this note. This recovery should bring along employment by the end of this year, so the biggest Christmas gift for many may be a new job.

As I have said from the beginning, this is an economic down-turn that we could have avoided. The problem was that our great new source of credit, securitized debt, was such an unknown and unmeasured phenomenum, that when we saw some relatively minor problems developing, we panicked into trashing these so-called “toxic securities” and in the process brought the world’s economy to its knees. The only way to avoid a reoccurence of this distaster is to make sure that we develop transparency and rules for this key source of credit.