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?

Direct and indirect foreign investors fled from Africa as the credit crisis sparked a flight to safety, or at least familiarity, but Ayo Salami, manager of the Duet Victoire Africa Index fund believes domestic demand can step in to underpin growth.

African governments have been hit hard by a withdrawal of investor money from the continent and need to make sure they remember reforms and avoid high inflation in their attempts to protect their economies, says Razia Khan, head of Africa research at Standard Chartered Bank in London.

Africa gets 3 percent of the world's cross-border flows, but BIS end-2008 data shows the region suffered the world's largest decline in cross-border financing due to the global financial crisis, Khan told a breakfast audience of politicians, bankers, investors and journalists in London today.

Africa needs the economic environment that will lure investors back in, she says.

"Financial markets in Africa have not shown signs yet of a significant recovery. "Maybe there is going to be some longer-term support for commodity prices, but governments have to guard against a deterioration of the fundamentals that have been in place to support growth," she says.

Across sub-Saharan Africa, South Africa will withstand the global recession better than other countries, she adds.

"African growth is still likely to be positive, but macro-economic stability is more of a risk in some countries than in others."

The long, lazy summer months are upon us, and banks who were already reluctant to lend to businesses for fear of not getting their money back may be even more unwilling. Crises have a habit of breaking out in summer — the Asian financial crisis started in July 1997, the Russian rouble crisis in August 1998 and the global sub-prime crisis in August 2007.

In Russia, which has already suffered many corporate defaults this year, around $5 billion in corporate debt is maturing by the end of the third quarter and may need refinancing, adding to pent-up demand for loans.

Money markets are starting to show an increasing pile-up in short-term deposits, as banks would rather keep their cash there than lend to risky enterprises.

In Saudi Arabia, where huge businesses Saad Group and Ahmad Hamad Algosaibi & Bros are restructuring their debt, overnight rates have been falling into negative territory, due to the huge demand for short-term cash.

In Kazakhstan, where local banks BTA and Alliance are also restructuring debt, weak bank lending and a skew to cash has pushed short-term money market rates down to early 2008 levels, according to Commerzbank analyst Luis Costa.

Short-term liquidity — is there too much around, and could it signal more troubles ahead?

People packing their bags and flying out to St Petersburg, Warsaw, and Prague this summer may not just be seeking an exotic vacation spot.

International property investors are inching back to emerging Europe, lured by prospects of higher returns in markets such as Poland, whose economy has held up relatively well in a global downturn, and Russia, which is bolstered by rising crude oil prices.

After posting strong growth for over 5 years, commercial real estate investments in emerging Europe had been a washout after Lehman Brothers’ collapse in Sept ‘08, with first quarter sales hitting a record low.

As our Moscow-based property reporter Yuliya Komleva and I wrote , major property fund managers such as Germany’s DekaBank, UK’s Aberdeen, and Hines from the United States have again looking for big buys in the region, although Hungary, Ukraine and the Baltics remain largely no-go zones.

Aberdeen Property Investors’ managing director for Russia, Charles Voss, even compared Russian cities favourably against London, where the once-booming UK financial services industry has been weakened by the global financial crisis.

"They don't anticipate all those jobs to come back immediately so the demand for office space will be weak (in the UK). Even though they are starting to get to the bottom, the growth curve in terms of additional value can be less than what can be in found Russia," says Voss, who sits in Russia’s cultural and historical capital of St Petersburg.

With property prices diving and driving up yields in London however, investors are looking to squeeze higher returns in emerging Europe, says Jones Lang LaSalle (JLL) head of CEE Capital Markets & Investment Tomasz Trzoslo.

(This JLL graphic illustrates European office yield movement in the past year)

“If you can buy in London for 6-7 percent, why buy in Central Europe? Central Europe needs to trade at a yield premium—my guess about 150-200 basis points,” Warsaw-based Trzoslo argues.

More than a “nice to have,” investor sentiment is running heavily on the side of environment, social and governance (ESG) factors, according to the latest Thomson Reuters Perception Snapshot.

Feedback from 25 global buy-side investors found that 84 percent evaluate ESG criteria to some degree when making an investment decision.

The remaining 16 percent say ESG issues are not considered until a company’s ability to generate high returns is hindered by these factors.

Some of the selected comments:

“ESG only plays a role to the extent that it is an overhang on the stock. There is no moral component to investing. We are value neutral when it comes to our investment decisions, but we are not value neutral in our lives. We have a fiduciary duty to our clients, to the people who give us money to manage to maximize returns, which means that we can not be limited by our own personal morality. If I see a cigarette company that looks interesting I may invest in it even though I might not like it
personally.” - U.S. Hedge Fund Investor

“I am convinced that companies that follow the philosophy of social and economic responsibility are performing better in the long-term than those that do not.” - European Core Growth Investor

The report dovetails with Tuesday’s push by U.S. President Barack Obama to push for tougher industrial standards aimed at lowering greenhouse gas emissions.

Obama ordered the U.S. auto industry, where the hand of government is firmly in control (GM and Chrysler, but not Ford) to make more fuel-efficient cars to cut emissions and increase gas mileage.

The House of Representatives started its debate on the 946-page Democratic bill on Tuesday. Republicans are arguing the legislation would burden the economy with higher energy costs.

Does that matter, when scientists reported on Tuesday that global warming’s effects this century could be twice as extreme as estimated just six years ago?

Massachusetts Institute of Technology scientists estimate the Earth’s median surface temperature could rise 9.3 degrees F (5.2 degrees C) by 2100. That’s up from the 4.3 degrees F (2.4 degrees C) estimate in 2003.

The U.N.’s Intergovernmental Panel on Climate Change said seas would rise by between 18 and 59 cms (7-24 inches) this century. But it pointed to big uncertainties about ice sheets in Greenland or Antarctica — one IPCC estimate was that this ice could add up to 20 cms to sea level rise.

Ministers and bankers meeting at the European Bank for Reconstruction and Development’s annual gathering in London tomorrow and Saturday have a sorry mess to scrutinise.

By the bank’s own (revised) forecasts, its region of central and eastern Europe will contract by over 5 percent this year. Many countries in eastern Europe took too much advantage of western banks’ lending spree, and businesses and households are struggling to pay back foreign currency loans.

Falling commodity prices have hit countries like Russia and Kazakhstan, and a burst consumer credit bubble is risking double-digit contraction in the Baltic states and Ukraine.

The bank’s 61 country members together with the European Union and its development bank the European Investment Bank will be discussing how to cope with the crisis and manage any recovery.

They will be looking at whether to continue giving help to several EU member countries which were due to stop receiving EBRD funds next year. Some countries may also be asking for an increase in the EBRD’s capital from its current 20 billion euros, to cope with the crisis.

The EBRD operates in 30 countries, mainly in the former communist bloc, and most recently Turkey. Those countries may be wondering if the bank could have done more to help them through the crisis, and seek more help now.

If Nigerian banks appear to have suffered disproportionately in the global financial crisis, maybe they have Heathrow Terminal 5 to blame.

Nigerian banks were advertising their services on billboards in Terminal 5 last year, and travelling investors felt it showed the banks were rashly trying to keep up with international investment banks in aiming for a global profile, causing many to sell, a banker specialising in Africa told journalists this morning over breakfast.

“Those adverts were a sign to sell Nigerian banks,” Luca del Conte, executive director in treasury and capital markets at Medicapital Bank said.

“We have about 100 institutional investors, and of 50 funds that we speak to actively, more than half mentioned this.  Once capital markets started shaking, funds did not ask any more questions, they just sold.”

Medicapital says the banking sector represents over 60 percent of market capitalisation on the Nigerian Stock Exchange, but daily volumes on the exchange have dwindled to $10-15 million a day, suffering also from a fall in the oil price, compared with $100 million a year ago.

It was Goldman Sachs who famously predicted oil prices to reach $200 a barrel last year, but there are a school of bullish investors who forecast a substantial rally in gold.

Take Gold and Energy Advisor, which predicts gold will soon reach $2,500 an ounce (from today’s $895) then to $5,000. The Florida-based firm argues that gold is the only asset class that’s not only private (as opposed to state-owned), but also liquid, portable, fungible, divisible, and valuable enough that a small amount can store a massive amount of wealth.

It also argues that of $11.5 trillion stored in offshore accounts and other assets, if one percent were transferred into gold, that would be almost four times the entire annual investment demand for gold.

Perhaps not as bullish, but Investec Asset Management also reckons that gold could perform well in either an inflationary or deflationary environment.

Investec also argues the potential areas of concern for gold investors: an increasing supply of recycled gold and the potential return of the “Goldilocks” scenario, where the economy sustains moderate growth and inflation in a “not too hot, not too cold” environment.

“This Goldilocks economy would completely remove the safe-haven investment case for gold as a form of insurance against inflation or as an alternative currency. Real yields could once again be obtained in cash and bonds, and equities could begin discounting economic growth,” it says.

Ministers from Iraq, from prime minister Nuri al-Maliki down, are in London on Thursday to attract investment into the country. Could Iraq be one of the few investment regions decoupled from the global economic cycle?

It was having a war while the rest of the world was enjoying economic boom. As well as signs of lessening violence now and the promised withdrawal of U.S. combat troops by August 2010, it does have oil.

The country has a $2.7 billion bond maturing in 2028, has written off much of its debt with the Paris Club and others, and is planning government bonds totalling $5 billion.

As one fund manager told me: “Iraq is a less correlated asset, it doesn’t have much debt and its bond is holding up reasonably well.” But he still added, “the political risk is the thing that makes Iraq stand out negatively from other credits”.