We are just having an air pocket needed to reflate confidence and give the impression that we are past the worse. A stabilization , yes but to plunge or not to plunge by end year that is the question.
So today the ECB cut interest rates to historical level, yet housing price are falling and credit growth is contracting very fast. Note housing price will continue their downward trend, of course it won't be in a straight line and the media, some banks and some economists will add noise around it.
Regarding Banks, they are not tightening their lending standard, far from that - they are desperate to find people to take debt... Remember as well that the government is still keeping the old housing stimulus in place and is still guaranteeing about 85% of housing loan (no wonder why banks are not afraid to lend as it is the state i.e the tax payer that is holding most of the risks ... ).
Coming back to the tax payer...not only is under the threat of be fired but he is kindly ask to continue on piling up debt (to keep his standard of living stable while is income has barely progressed through time, when adjusted to inflation and real of life: food, rent, electricity - note that all those price are more or less controlled by the state or cartels and are not involved in a well functioning market since distorted by players that put self-interest before the people).
In some cases, the tax payer is kindly asked to review his salary down by 20% or choose the only other alternative is being lay off.
In some other cases, the tax payer is warmly asked to reduce its yearly income by not coming to work for few months in order... to save the company from past mistakes of the directors and past greed driven by outrageously high salary and unfair stock options scheme.
So do we have a recovery....don't be fool , what is currently happening is that the little future growth that was in the pipeline has been shifted by few months as the economy was clearly collapsing. It was really scary, I have to say, especially in the last quarter of 2008.
Well one will have to pay for the stimulus that governments have been engaged on. Higher tax in the future and higher inflation down the road.
Bottom line, we are stabilizing, for the moment, albeit at a low level, with no inflation threat for at least 3 years then in the next decade you will have to be used for higher inflation and higher tax...the perfect ground to make the young pay for mistakes taken in the past decade by finance ministers and greed driven bankers.