Just as hopes were being raised that the worst of the recession might be over, the lunacy of the market strikes again.

Dubai’s rich borrowed to finance a speculative construction boom—building palaces in the desert and islands in the sea.

Across the globe, the rich invested in luxury apartments and visited a glitzy new world of luxury hotels and casinos.

Rather than “once bitten twice shy”, banks and corporations rushed back to the casino table at the first opportunity and wagered billions of pounds.

British construction firms, banks and businesses came to the fore to lend money, invest in property and bid for alluring contracts. Dubai World has said it cannot pay its £35.7 billion debts. British banks are thought have sunk up to £20 billion into the United Arab Emirates.

Economist and author Graham Turner looks at the statistics – and finds that the City’s belief there will be a fast recovery is not based on economic fact

“Unbelievable, literally”. That was the response of one economist at US investment bank Goldman Sachs to the news last month that Britain was still in recession.

The Office for National Statistics (ONS) had just announced a 0.4 percent decline in real GDP – the sixth quarter in a row that the economy has shrunk.