The green shoots of an economic recovery are said to be emerging, or is it all just wishful thinking? It has without doubt been a difficult two years (one year for those based in the Gulf area, which seems to lag the rest of the world by at least a year) and anything is better than what we have just been through.

However, when one looks at the upward movements in the price of oil, gold and the general optimism on the stock markets, something just doesn’t seem right. What is all this optimism based on? Where is the ‘beyond reasonable doubt’ evidence that backs up the positive numbers? Is all this optimism just wishful thinking?

We entered this crisis partly because of massive over-leverage both at a consumer and at an institutional level. People and companies (banks included) were living way beyond their means and forgot about the simple laws of supply and demand. They also assumed that the cycle of boom and bust had been broken.

Do people still think that their debts are going to be forgotten or disappear? It is has only been 18-24 months and banks and businesses are still suffering. The economic damage is going to take a long time to repair. Those who suffer from economic amnesia need to see a fiscal physician.

Now, if anyone ever succeeds in proving that it can be done (the ultimate economic utopian ideal), then I suspect that it will be around the same time that a scientific breakthrough which allows people to live forever will also take place. Immortality, the dream of kings and a few age-obsessed Hollywood types.

However, for the rest of us, life and death is all Darwinian stuff. People forget that life and death, profit and loss, supply and demand, boom and bust are all part of the hard facts of life and the sooner people (investors) face up to that reality, the sooner some sort of rationale will return to the financial markets.

We are still in the worst economic mess since the Great Depression of the 1930s and while the future is always brighter (if one waits long enough, it will come around again), it would be wrong to ignore the lessons of what we are going through.

George Santayana said that those who cannot learn from history are doomed to repeat it. Maybe we need to take stock of what led to this mess and then work hard to make sure it is drilled into the brains of everyone with an interest in making the world a better place. Too much misplaced confidence helped create the economic mess.

“With massive liquidity injections well in excess of the anaemic state of end-market demand in this post-crisis world, financial markets are again ignoring tough fundamentals,” Stephen Roach, the Chairman of Morgan Stanley Asia wrote in the Financial Times recently.

Roach warned about short term memory loss, something that is especially prevalent in a generation that is experiencing its first recession. That could be put down to naivety and youth, but I would add that there are still plenty of people around who remember other recessions and apparently did not learn from what happened then. So much for experience.

I am against over regulation, but I am all for ‘over-education’. US Federal Reserve Chairman Ben Bernanke is a depression-era scholar. Enough said.