The title of this post is taken from two sources. One was a headline in British tabloid, The Sun, in January 1979, when then-prime minister James Callaghan denied that strike-torn Britain was in chaos. The second was the title of a 1975 album by prog rock band Supertramp that famously showed someone sunbathing amidst the grey awfulness of the declining industrial landscape.

Are we now getting blasé about the latest crisis? Not so long ago, perfectly respectable economists and financial analysts were talking about a new Great Depression. The world was on the brink, it was said. Now, though, consensus appears to be that it is all over bar the shouting. The world is safe.

Wealth managers at Barclays have gone as far as telling their clients to get over it.

Move past the crisis .... The past year's events were deeply traumatic for most investors, but now is the time to move on, and take a more "business as usual" approach ...."

Such bullishness may not be comforting to the record numbers of jobless in parts of the world, but it is bordering on consensus. It is left to the likes of perma-bears such as  Nouriel Roubini to try to burst the bubble of optimism on which many are floating. The economist began one of his latest articles bluntly:

Think the worst is over? Wrong.

Roubini's main point is that unemployment is likely to get worse rather than better and that many U.S. jobs that have been lost will not come back.

Now, there can obviously be a disconnect between markets and economics, but the former tends to be based on assumptions about the latter. So which is right? Are we out of the woods? Or should Supertramp be firing up their keyboards again?

Pope Benedict issued an ambitious call to reform the way the world works on Tuesday shortly before its most powerful leaders meet at the G8 summit in Italy. His latest encyclical, entitled "Charity in Truth," presents a long list of steps he thinks are needed to overcome the financial crisis and shift economic activity from the profit motive to a goal of solidarity of all people.

Following are some of his proposals. The italics are from the original text. Do you think they are realistic food for thought or idealistic notions with no hope of being put into practice?

• "There is urgent need of a true world political authority. .. to manage the global economy; to revive economies hit by the crisis; to avoid any deterioration of the present crisis and the greater imbalances that would result; to bring about integral and timely disarmament, food security and peace; to guarantee the protection of the environment and to regulate migration... such an authority would need to be universally recognized and to be vested with the effective power to ensure security for all, regard for justice, and respect for rights."
• The economy needs ethics in order to function correctly - not any ethics whatsoever, but an ethics which is people-centred..."
• "Financiers must rediscover the genuinely ethical foundation of their activity, so as not to abuse the sophisticated instruments which can serve to betray the interests of savers. Right intention, transparency, and the search for positive results are mutually compatible and must never be detached from one another."
• "Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value... there is nevertheless a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference... What should be avoided is a speculative use of financial resources that yields to the temptation of seeking only short-term profit, without regard for the long-term sustainability of the enterprise, its benefit to the real economy and attention to the advancement, in suitable and appropriate ways, of further economic initiatives in countries in need of development."
• "One possible approach to development aid would be to apply effectively what is known as fiscal subsidiarity, allowing citizens to decide how to allocate a portion of the taxes they pay to the State."

(Photo: Pope Bendict, 1 July 2009/Tony Gentile)

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It's starting to look like the Summer of Love. Two reasons: The recovery is taking on a L-U-V shape globally, and it's going to require huge amounts of love and nurturing to keep growth alive.

• L stands for Europe, where slowness to confront deep damage and write down the remaining $500 billion odd in bad bank debt, mean rebuilding will be protracted and painful.
• The United States sports a U, bouncing along bottom right. But its financial giants swallowed harsh medicine early and the U.S. has the flexibility to stage an impressive rebound, if not undone by a fast-rising jobless rate at 9.5 percent and heavily indebted consumers.
• V stands for Asia (ex Japan), the surprise region showing resiliency, thanks to its rapid Q4/Q1 inventory workdown and huge infrastructure spend by China.

Like the Summer of Love 41 years ago, it is a drug-fueled affair. G20 governments are peddling $820 billion in stimulus this year, equivalent to 2 percent of GDP. Central bankers are spending even more. The Fed has doubled its balance sheet to $2.04 trillion the past 12 months.

These actions might have cushioned a severe cyclical downturn but the structural adjustment to a world of costlier credit is only just beginning.

Will politicians and central bankers have the wisdom or the stomach to keep the drug supply going long enough to prevent L-U-V from turning into an ugly W?

In much the same way that analysts have been debating whether equities are in a bear market rally or a new bull market, economists now have to deal with the question of whether the global economy is just bottoming out or is now actually recovering. The two things are obviously linked as BlackRock equities chief Bob Doll indicated when he said this week that equity markets will require the economic backdrop to actually improve rather than simply grow less bad if rises are to be sustained.

The less-dreadful-than-feared syndrome has been around for some time. U.S. markets, for example, found themselves cheering the loss of  539,000 jobs in April simply because its was the smallest since October and looked to be an improvement.

But talk of green shoots, a somewhat overused euphemism for the start of economic revival, has also been on the increase: European Central Bank President Jean-Claude Trichet spoke on Monday about the pick-up in GDP evident in certain areas; China said its efforts to boost growth were working; and a lot of institutional investors are acting as if the worst is over.

So, bottoming out or on the way up?  Comments below please.

(Reuters photo: Danish Ishmail)

If you’re one of the 539,000 people who lost their job last month, do you have reason to be hopeful today? The stock market seems to think so. And many of those who work in the financial sector say the April jobless report, which included an unemployment rate at a quarter-century high around 9 percent, indicates the economy is near bottom. One analyst said, “May looks much more favorable”; said another: “You can make the case that the panic layoffs that we saw at the turn of the year are starting to ease.”

Not everyone was optimistic. “The big question is has the peak in job losses hit? I am somewhat skeptical that we have seen the absolute worst of it, but you can’t rule that out,” said Jay Mueller, a senior portfolio manager at Wells Capital Management.

What do you think? When it comes to job losses, is the worst behind us?

Most Americans felt investment pain in 2008 as the value of retirement accounts and other assets dropped along with the economy. But older Americans are feeling particularly hard-hit by the financial crisis and many now say they must now postpone their retirement, according to a survey by the AARP, which represents older Americans. The survey, released on Friday, showed 57 percent of those who were employed or looking for work and who lost money in their investments over the past year expected to delay retirement and work longer. It also found 36 percent of workers had stopped putting money into their retirement accounts in the past 12 months.

Have you decided to postpone retirement because of investment losses? How much longer will you have to work to afford retirement? Is the concept of retirement a thing of the past?

The economy lost over half a million jobs in December and shed the greatest number of workers in 2008 since the end of World War II. The grim news didn’t stop there: the unemployment rate jumped to 7.2 percent, the highest in 16 years. Many analysts say it will only get worse before it gets better.

“The job situation is ugly and is going to get uglier. There’s no reason to expect hiring anytime in the next three to six months,” said Richard Yamarone, chief economist at Argus Research in New York. Tempus Consulting’s Matt Esteve agrees. “No matter how you look at it, those are dismal numbers,” he said.

How does all this make you feel about the nation’s economy and your own personal job and financial situation? More importantly, how is the economic environment making you change your behavior?

On the wider stage, do you think the dire unemployment picture will be President George W. Bush’s legacy and will it get better under President-elect Barack Obama?

Private employers are slashing jobs and the services sector, which powers most of the economy, is in its worst slump ever. “It’s impossible to find any ray of light here,” Joel Prakken, chairman of Macroeconomic Advisers in St. Louis, Missouri, said of the job losses last month.

With the government working to bail out banks, and possibly automakers, and with a top adviser to President-elect Barack Obama underscoring the need for an economic stimulus package, do you think things will get better and when?

As part of our Year in Review package, we’re inviting you to place a virtual bet on the outcome of what we think will be some of the top stories in 2009. Clicking on one of the questions below will take you to the Hubdub news prediction site, where you can place a bet on the outcome and peruse other questions set by Reuters.

The graphs below reflect the current betting by the Hubdub community. We’re also inviting you to set your own questions on 2009 events, either via Hubdub or via the comments field below. We’ll feature the best ones here and add more of our own questions in coming days. If you create a 2009 question on Hubdub, you can flag it to us by sending a challenge to the Reuters account. We’re 100 percent likely to check it out.

Question 1:

Which G7 economy will record the strongest growth in the first quarter of 2009?

Question 2:

What will President Obama’s approval rating be after his first 100 days in office?

Question 3:

Will North Korea come under the control of South Korea in 2009?

Question 4:

Which of the “Big 3″ US automakers will declare Chapter 11 bankruptcy first?

Question 5:

Will there be a takeover of Yahoo in 2009?

Question 6:

Will the cheapest iPhone cost less than a barrel of oil at the end of 2009?

Question 7:

Will the U.S. close the military prison camp at Guantanamo Bay in 2009?

Question 8:

Will the U.S. unemployment rate reach 8.5 percent in 2009?

Question 9:

What will be the highest close for the DJIA in 2009?

Question 10:

Will Israel bomb an Iranian nuclear site during 2009?