Well, certainly the global economy has bottomed. I think that's pretty clear now and we've seen a lot of positive monthly indicators and actually seeing positive GDP data in a lot of markets, even in the second quarter and certainly we're looking for the third quarter to be pretty good. I think the interesting thing, though, is what's driving that and we see a couple of things happening around the world. One is the restocking story. So businesses which were effectively not producing anything late last year/early this year because their warehouses were full, they're resuming production and that's clearly a good thing for the world. Then the second thing that is happening is all of the policy push that we saw late last year, the slashing of interest rates, the big fiscal injections that we saw, they take time to have an affect but they are now definitely having an affect and you can see that coming through. So that's all great. I think the question is whether that's going to persist through into next year and the year after. I think there the story is a little bit more nuanced because clearly, it's all very well resuming production and filling your warehouse back up, but if no one is buying the stuff you're going to shut down again. Similarly, if governments are spending a lot of money, that's wonderful but what happens when that stops. There is a question about affordability there which I think is a big worry for a lot of Economists. So next year may not be quite as good as people are assuming. The next six months are great, but after that, it could be a bit more difficult.

There's lots of debate around that at the moment and you're seeing, particularly in terms of monetary policy. There's quite a lot of commentary in the financial press around how if central banks keep up with their liquidity injections, inflation could get out of control. Do they have an exit strategy? And you can see central banks responding by talking a lot about how they might try and rein in some of this liquidity down the road. But I think in the short-term at least the issue is not when to take away the stimulus, the issue is to keep pushing as hard as you can because we don't see anything going on in terms of final demand at the moment that's not driven by the public sector. So all this restocking is brilliant, but that will run to an end. Everything else has come from the government. Take that away and there may not be any growth left. So I think the issue right now is to keep on pushing. Now when are we going to see tightening? It does depend on the market. I think in America and Europe you're likely to see policy tightening in the second half of next year, on the monetary side at least. But there are a number of instruments in play here. One is around interest rates and one is around liquidity injections. I think it is quite plausible that you could see interest rates actually start to rise while liquidity injections are continuing. There are other markets that will move earlier. I think Australia is one there and some smaller markets - Israel has already moved. But some countries are doing better than others and they will tighten early. But in terms of fiscal policy, I think you're going to see the pushing stop because effectively they're going to run out of money. But in terms of retrenchment, when are we going to see really serious action to try and raise taxes, rein in public spending and draw the public finances back towards balance, that is a long way off. I mean, government is going to take a very long time to correct the fiscal imbalances that we see at the moment. So I think monetary policy, liquidity injections, probably second half of next year. You'll see some tightening there. Fiscal policy is going to be very hard to rein back. You'll certainly see no more additional spend, but to pull back is going to be tough.

You're certainly seeing that in Asia and to some extent in other markets. In Latin America, Brazil is doing rather better than many people expected. Eastern Europe still looks pretty weak unfortunately. But if you look to Asia, it's very strong and it's not just the China story. People talk about China all the time, but if you look at ASEAN, South East Asian economies, they're looking pretty robust as well, lots of really good recent data. I think in terms of what's going on there, a lot of it is policy driven. Those governments really did step up to the plate and inject a lot of liquidity into their economies. There has been a lot of fiscal expansion, public works, that kind of thing. Particularly true in China and of course China has supplemented that with this massive push in terms of bank lending too. But other governments around the region have been doing similar kinds of things. Now, obviously there is a question mark about how long that can continue and these economies do have a very big trade exposure and all of the time that America and Europe stays weak, of course there's an issue about how self-sustaining can this be. But I do think, particularly when you look to China, that there are some signs that the domestic economy is developing some real strength there. In fact, there is a dangerous bubble emerging in the property market and the stock market and of course a lot of other economies in Asia feed off the back of that. So I think it is actually sustainable for Asia to do rather better over the next couple of years or so than perhaps the OECD economies are going to do and this gap in growth between the emerging and the developed world is going to stay in place.

When you look at companies, I guess the latest reporting season is suggesting that companies are beating expectations, a big hurrah. Stock markets generally have been doing pretty well up until about a couple of weeks ago or so. So that looks pretty good. Actually, of course, results are much, much worse in absolute terms than they were 12 months ago. So beating expectations is not difficult when the expectations were pretty low. But I would say when we go around and talk to businesses what we do see is there's a bit of a separation between the wheat and the chaff. There are some companies which are clearly struggling and are going to continue to struggle for some time. And there are other companies, certainly no one is saying to us they're doing brilliantly well, but there is plenty of companies out there now who say the worst is behind us. We can see a strategy over the next couple of years or so which is going to lead us to putting profitability back on track. Indeed, some businesses are starting to think about international acquisition, international expansion. I think it's particularly interesting at a time when asset prices around the world, depending on the market, can be quite cheap and depends on the currency in which you're doing the buying. But there are lots of opportunities, particularly, again, in the emerging markets. We see the stronger Western businesses are saying, 'Well the future is definitely in China, is in India, is in Asia, it's in Brazil and we want a piece of that and we think now is an interesting time to do it'. Only strong companies are in that position because clearly financing is still pretty difficult to obtain. But if you've got a lot of cash on your balance sheet, this is a good time to buy. Whereas six months ago, probably a better time to buy but most businesses were just too frightened to get their wallets out, now that's starting to move a bit. So I think you are seeing some companies being a bit bolder, but other companies continuing to struggle and unfortunately, some of those companies are going to fail. So I think as we go forward there is going to be a lot more bad news on the bankruptcy front, a lot more bad news on the unemployment front, but you will start to see other businesses turn things around.

I guess the things that we look for, I guess the public sector finances are a really big issue for us at the moment because clearly the private sector has taken this tremendous balance sheet wallop. You've seen this enormous collapse in asset prices. We know that debt was astonishingly high. The private sector, the personal sector particularly, but in the corporate sector to some extent. To the extent that those problems are being alleviated, in some extent they're alleviated because the government is taking those issues over. They're nationalising the banking system, they're bailing out General Motors. There is all that kind of stuff and so the public finances are starting to look pretty sick indeed. The fiscal deficits are very, very big, so the US is looking 12 maybe 15 per cent deficit over the next few years, debt stocks rising very, very quickly and that's got to raise some issues around public sector solvency and those issues, unfortunately, tend to get corrected through much higher long-term interest rates, potentially weaker currencies, maybe higher inflation in the longer term. So there is a whole nexus there that we're worried about in the long-term about what's the public finances look like, what that does that mean for long-term interest rates, borrowing costs all that kind of stuff? So there is big worry there. Then the other thing we've got to be worried about is what's going on with the dollar because, of course, so much international trade is denominated in dollars. The US is still a vitally important market. Their fiscal position looks particularly soggy because they have all this stuff related to the economic crisis but then they've got all this stuff related to healthcare and social security which is going to lead to this gradual further drain on the public purse. That's got to raise questions about the value of the US dollar in the longer term and of course really sharp movements in their currency clearly would be very disruptive for world trade and so we do worry about that. And, of course, the more stories we read in the press about how other people are worried about it, that makes us even more worried because those markets might start to get a view that the dollar is over valued. Then we start to see some pressure coming on.