It is nearly five years since financial turmoil broke upon an unsuspecting world, in August 2007. So how are crisis-stricken high income countries doing? Badly, is the only answer.

Of the six largest high income economies (plus the eurozone), only those of the US and Germany are above previous peaks. Since the US was the epicentre of the early shocks, its recovery has been relatively good. Yet none of these countries can be happy with its performance. While US gross domestic product has been more buoyant than that of these other countries, its unemployment rate more than doubled, from 4.7 per cent in July 2007 to 10 per cent in October 2009. Since then its unemployment has fallen only a little. But the US has still had a better performance than the eurozone, whose economy is stagnant and whose latest rate of unemployment is 11.1 per cent, against 8.2 per cent in the US.

Economies stagnate, while policy is aggressive. The highest short-term interest rate offered by any of the central banks of the big high-income economies is the 0.75 per cent offered by the European Central Bank. Balance sheets of central banks have also doubled in the big high-income countries, relative to GDP, since 2007. Japan, the US and UK continue to run very large fiscal deficits for peacetime. Yet despite huge fiscal deficits, long-term interest rates on Japanese, US and UK government bonds are very low, at 0.8, 1.5 and 1.6 per cent, respectively.