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?

Finance ministers from the G20 are meeting in London on Friday and Saturday to discuss the next steps in battling the world’s worst economic and financial crisis since the Great Depression.

Reuters correspondents from around the world will be at the event, taking you behind the scenes and and providing unprecedented coverage through this live blog.

Readers of MacroScope who live in the northern hemisphere will be gearing up for some summer reading.

James Montier, the market psychologist who is also an equity analyst at Societe Generale, has come up with his annual recomendations of what to read. The full list is here, but for the current economic and market crisis he has this to offer:

My favourite book in this category is Bill Fleckenstein’s ‘Greenspan’s Bubbles’ – an excellent exposé of incompetence during Alan Greenspan’s tenure as Fed Chairman. The next choice in this group is Whitney Tilson and Glen Tongue’s ‘More Mortgage Meltdown’. This book explains clearly how we ended up in this mess (and is based on the authors — real time experience), and an added bonus is the insight into Tilson’s investment process provided by the case studies. My final choice in this section is Jim Grant’s ‘Mr. Market Miscalculates’. I’ve mentioned this excellent book before, and I believe it deserves a place on all investors’ bookshelves.

Montier got MacroScope thinking. There must be many more crisis books, or related ones, that are worthy of a read as the summer rolls in. How about John Kenneth Galbraith’s ‘The Great Crash, 1929′ or Tom Wolfe’s ‘Bonfire of the Vanities‘, which still has one of the best descriptions ever of how bond traders make money.

So let’s have your suggestions. What should you read to mark the crisis?

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.

Was letting Lehman go down the biggest mistake of the crisis? Many, including George Soros in the Financial Times, have argued that letting Lehman go down sowed panic to markets, consumers and businesses.

Not so fast, says Harvard historian Niall Ferguson, in an interview in Davos:

"My position is this is a typical error of historical understanding in which a single event is blamed for much more than it can possibly have caused. You can say ‘Hank Paulson is to blame for my troubles' and if you can change one thing in the story it would have a happy ending.

It's like saying if only Princip had not shot the Archduke Franz Ferdinand in 1914 there wouldn't have been a First World War.

If you go through the events of September of last year you will find it incredibly hard to produce a counterfactual scenario in which it could have been possible to save both Merrill Lynch and Lehman. There is one bank which could be bought by Bank of America but there couldn't have been two.

This is a crisis of too much bank leverage which began in August of 2007 and indeed had it roots far before. A bank leveraged 25-1 only needs a 4 percent decline in their assets to have their equity wiped out. And the notion that saving one investment bank could somehow have prevented or mitigated the crisis is a fantasy. The problem would have happened at some point somewhere else. There is a fundamental problem of bank solvency."

Ferguson argues that without another buyer for one of the two, one would have needed to have been taken into a kind of Treasury conservatorship, as Fannie Mae and Freddie Mac were. But those were already quasi-government and such a move would have required Congressional approval, which given that Congress turned down the first version of the TARP, was not likely.

"Historical arguments need to be based on a credible counterfactual, " Ferguson said. "Nobody has been able to tell me a credible story about how both Lehman and Merrill could have been saved. It wasn't possible."

My view is that the "Oh no, they killed Lehman" meme is just part of the denial phase of grieving. Few in financial circles wanted, or indeed want, to believe that things have changed fundamentally and that the good days won't be coming back any time soon. Blaming mom and dad is the last first refuge of the adolescent.

Jim Saft is a Reuters columnist. Any views expressed are his own.

John Taylor, former Treasury Undersecretary for International Affairs in the Bush administration, speaks with Thomson Reuters Markets Washington Bureau Chief Corbett B. Daly about Republican White House hopeful John McCain’s $300 billion plan to help struggling homeowners.

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