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Bubble Trouble?

Traders in Sao Paulo’s futures and commodities market. Photograph: Dado Galdieri/AP

Everywhere the story is the same. Gold: at a record high, above $1,100 an ounce. Shares: 50% up since March. Oil: back to almost $80 a barrel. Bonds: yields on two-year gilts at a record low. Average UK house prices: up £11,000 this year.

Around the world, asset prices are booming. Relief that the global economy has avoided the Armageddon feared in March, combined with large dollops of virtually free money, have helped put a smile back on the faces of the speculators. Too big a smile, according to some experts, since the buoyancy of asset markets is not reflected in the real economy.

Away from the frenzied financial world, among struggling firms and cash-strapped families, signs of recovery from the worst downturn since the 1930s have been much patchier.

The US returned to growth in the third quarter, thanks to Washington’s cash-for-clunkers scheme and tax breaks for first-time homebuyers. But unemployment is at its highest level since 1983 and the number of Americans losing their homes is still rocketing, so Fed chairman Ben Bernanke still has plenty to worry about.