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A pandemic of green shoots, a world infested by signs of hope of recovery, and a big market rally. The FTSE All-World index has risen by 31 per cent since its March low. The VIX index – a gauge of market fear – has more than halved from its year-end high, although it still remains well above pre-crisis levels. Best of all, the interbank lending market is creaking open. The so-called Libor-OIS spread – the premium over expected central bank interest rates that commercial banks charge each other for three-month money – is down to 80 basis points, a quarter of its crisis peak, although still more than treble what Alan Greenspan, for what his opinion is still worth, believes is “normal”.

Investors no longer talk about Great Depression II. Instead, the world merely faces Great Recession I. Immunised by pessimism-beating cheap money and higher government spending, confidence has returned. The risk of a swine flu pandemic? A run on face masks, not on markets. Chrysler’s bankruptcy? At last! For now, there is no such thing as bad news; the optimism is self-fulfilling.

Economic apocalypse deferred, gold prices have dropped. Even a 56 per cent rise in UK company failures left the London stock market unmoved on Friday. For the first time in almost 20 years there is also more invested in low-yielding US money market funds than in equities. Johnny-come-lately investors could take the market higher still.

Yet this is largely a trading call. Cheap credit and government largesse are palliatives that at some point will be withdrawn. The financial system is not fixed, merely stabilised. Housing markets have not yet touched bottom. Unemployment is rising, as are taxes. Even China can’t save the world by itself, and the chance of an emerging markets crisis, given the withdrawal of cross-border lending, remains high.

More immediately, government bond yields are rising, as are corporate bond spreads. The best of the rally has already passed.

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