The serious decoupling of the economy between the US and Europe may be demonstrated furthest in the recovery time required from the deepest financial crisis in living memory. On the same day that the UK government is struggling to bring in the reigns on the nationalised Bank Northern Rock - where interest payments are being deferred on junior bonds prior to the restructuring - there are more optimistic macro factors coming out from the US.

The US mortgage market seems to preparing for a slow recovery. Much of this is a direct consequence to the prior pain that was faced up to by the US financial markets, while in Europe governments and private institutions were still pondering how to come up with accounting solutions as a way of solving the bad debt in a big PR campaign. Although even the positive noises out of the US need to be examined thoroughly. It is still unclear whether the recovery is meant to come from the employment sector, or the housing sector or neither - the latter being the more likely case. The average person is making adjustments, creating wider pressures. With income under stress, the adjustments are in terms of higher savings. Although the rates are dismal and there is a lower appetite for credit as well as general consumer consumption. Until this adjustment levels out, the impact on businesses higher up the chain will not be fully understood. The reality on the ground for the average business trying to expand or take market share with cheaper credit, is not so rosy with a great number of business loans being declined on a y-o-y basis. This is all in relation to new legislations still coming out in the US curbing the amount of credit being available to individuals on credit cards, while losses on credit cards are still creeping up. In the US the charge off rate for Credit cards reached 11% in the month of June on Moody's monthly index. While optimism seems to be in the air, the unemployment figures are still nearing the 10% levels and are likely to maintain there during 2010. If this is the US, then what about EU?

There is still a huge amount of bad debt that still needs to be restructured, in very much the same way as Northern Rock is. Most of the mortgages from 07 and previously are still struggling to refinance and the negative equity in most houses are not likely to go positive anytime soon, even if they have plateaued. The question remains if the positive frame of thought is just relying on China to crank up their factories to help the rest of the world out.