Forget the froth, the recession ain't over yet!

Far from being over, for ordinary people the recession is only just beginning...

Duh, for a moment I thought it was 2006 out there again. I was reading the business pages, and they were full of stories about soaring stock markets, seven-figure banker bonuses and rising house prices.

It was almost as if the credit crunch had never happened.

Naturally, I rushed out to secure myself a 125% self-cert mortgage to buy a new-build buy-to-let shoebox, then came to my senses.

Woolies was still boarded up, my bank had hung a sign in its window saying "No mortgages today", and buy-to-let investors were lining up for free soup. Only Poundland was thriving.

In the real world, it was still 2009.

Why can't we all work in a bank?

Incredibly, some people are acting as if the recession is already over. Bankers are spraying their staff with fat bonuses, while Fortunes Have Been Made in Just 10 Days as the FTSE enjoys its best performance for years.

House prices are rising again, and the number of homebuyers taking out mortgages leapt 25% in June.

But we should ignore the froth, because the recession isn't over yet. For ordinary people with debts, jobs and bills to worry about, it's only just begun.

And it will be a long time before the benefits of any recovery filter down from the wealthy few to the rest of us.

Only printing money can save us now

Don't believe me? Just look at the latest unemployment figures. The jobless total increased by 220,000 to 2.44 million in the three months to June. Measured by the dole queues, it is 1995 out there.

The total number of unemployed is expected to breach 3 million before things start to get better, taking us back to 1984. Plus another million people have been forced to work part time, because they can't get a full-time job.

And now a cheery report from the Audit Commission predicts a rise in domestic violence, alcoholism and drug abuse, triggered by long-term unemployment.

The Bank of England knows we have a problem, that's why it surprised everybody last week by pumping another £50 billion into the flagging economy. It also claimed this recession will be the worst in modern history.

Tell that to the bankers.

Eek!

So don't be fooled, this recession has a long way to run. House prices may be rising, but activity is low, primarily because homeowners are sitting tight, leaving a shortfall in supply.

As Cliff D'Arcy has argued in How job losses affect house prices, the higher unemployment rises, the further property prices are likely to fall.

The economy is also being sustained by a massive fiscal stimulus package, and I dread to think what happens when that wears off.

I also dread to think of the state spending cuts and job losses that Alistair Darling has postponed until after the next election, but are heading our way whoever takes power next year.

Rising taxes, as we attempt to reduce the debt we are bequeathing to our great grandchildren, will be a further blow.

It's not all doom and gloom

Sorry, this isn't meant to be a counsel of despair. There is also some positive news out there. Rising stock markets at least suggest that investors see some economic light at the end of the tunnel.

And although I would like house prices to fall to a more sensible level, I'm glad they aren't crashing through the floor.

Falling base rates have given homeowners 11% more spare cash than a year ago, and as the Bank of England indicated yesterday, rates may stay low well into 2011. Floppy sterling should also salvage the UK economy, by boosting our international competitiveness.

We're not dead yet.

You can beat the recession

My advice to you is, be careful, because unless you're an investment banker, the hard times aren't over yet.

If you have been lucky enough to benefit from falling mortgage rates, don't squander your good fortune, use it to follow our Five Steps To A Richer Future.

If you're tempted to catch the stock market recovery, fine, I've been dabbling myself, but don't get carried away. It might not last. You should also put some money aside somewhere safe, and learn How to beat low savings rates.

Keep looking for new ways to slash or spending: It's 5% cheaper if you switch energy today. And pay down your debts, because you Can demolish your credit card debt in six steps.

If you lose your job, don't panic, because there are 7 things you should do if you're made redundant.

Look forward, not back

It may be 2006 for investment bankers, 2009 on my high street and 1995 in the dole queues, but your sights should be set on preparing yourself to meet the great financial challenges of tomorrow.

More: Five Steps To A Richer Future | 7 things you should do if you're made redundant