Financial markets are forward looking and comprise, amongst other players, of tens of thousands of analysts and fund managers that dissect corporate reports to get their heads around future earnings and thus calculate whether the current share price represents a bargain or is over-priced. Since March 2009 we've been in an upward price trend reflecting increasing confidence that businesses will do better as the global economic recovery gathered steam and the common fear of a second leg down into another recession in OECD countries, faded.

But be aware, the trend appears to have changed. After hitting a high at well over 11,000 the leading index, the Dow Jones, which captures the value of 30 huge US headquartered multi-nationals has been slipping steadily back since May 2010 on the back of economic data that has been disappointing, especially job growth. Today marks another important event as US data for June is revealed. If it confirms the trend, financial markets will slip further and are likely to enter a bear market where most investors read further price falls.

Generally these trend shifts, if sustained, are a portent of economic difficulties to come. It may be some months before the news filters into life on the ground and rising consumer and Government confidence takes a hit to the downside. What's spooking markets is the big and unresolved question of our time and which won't be answered for a few years;

Can heavily indebted countries like the USA, UK, Ireland, Spain, Portugal and the list goes on, implement austerity programmes that involve massive spending cuts and tax increases yet, at the same time, stimulate economic growth?

It's a real puzzle as both seem to contradict each other and getting the balance right will require Governments walking a tightrope, at risk to overplaying austerity and nose-diving economies on the one hand and becoming overwhelmed by borrowings on the other.

But the good news, if you can call it that, is really for those in cash looking for value because as markets flit around looking for the bottom over the coming months there will  be buying opportunities. Defensive investors huddled down in assets like inflation-linked bonds and gold should see some strengthening. So be prepared for increased choppiness in equities and especially in commodities over the summer months and don't be surprised if newspaper headlines in the autumn start snuffing out the positive the more positive economic headlines of recent days.

Right now my best estimate is that there will be a mild double dip followed by a modest and slow-paced global economic recovery, sitting beyond which is a date with a prolonged joust with high inflation and peak oil.

Government Speaks With Forked Tongue on Food

Oh woe the consumer, we gotta do something about grocery prices. So goes Government spin as soon as Eurostat revealed Irish prices are 20 to 30 percent above EU averages depending on whether you take the measure this year or last.

But the truth is the Government is scheming with the Irish food industry to erect old style protectionism that will reverse the trend in falling prices by restricting competition. Yep, as we sleep there is a plot to gouge out higher and not lower prices for Irish food. Surprised? Follow the money.

Through a classically misnamed piece of propaganda, a special "Code of Conduct" is to be made law that seeks to rebalance power to gouge out fat margins between participants in the chain between farmer and consumer in a pure arm wrestle between processors, distributors and retailers. It's beautifully clouded in the ugly language of nationalism, the small guy on the corner versus the big bad Brit multiple and so makes the perfect media smokescreen.

 The opposite direction is the one we should take but that requires Irish politicians facing systemic competitiveness problems and politicians don't do courage unless, like a rat, they're backed into a corner. So why is it that we produce surplus milk and meat but pay far higher prices than buying the exact same Irish produce in Spain or in just about any other EU country other than Denmark?

• Because in the chain between farm and fork are a plethora of business costs that are sky high compared to competitor countries plus fat margins for the most powerful players.
• Rents are locked into medieval lease agreements paying robber landlords crazy money while Government does nothing to unlock them.
• Energy prices are the second highest in Western Europe and levied by a dysfunctional, disorganised and hugely vulnerable energy market
• Rates, waste and water charges, levies, and oceans of Government red tape is levied by local councils and quangos

Look through the list of causes and what you find are prices and practices being gouged out by Government in all its forms and that includes labour agreements that pay well above minimum wage. These are passed through to consumers. Will it change? Fat chance, not until political leaders start taking on these powerful forces by reducing costs to business, reversing protectionism and telling the food industry to sink or swim based on free and open competition.

That would take a revolution in a political culture which coldly calculates that disorganised, uninformed and gullible consumers are far less a threat than business, agri-food and labour lobby groups. So don't be surprised to find prices will get worse despite the price pressures from a two year recession as the food industry pulls the levers of power.

Leaky Debt Group Follows Master's Scent

Reacting to last week's IMF comments about the pressing need for a targeted rescue of irrecoverable and bust residential mortgages, the Government debt advisory group has already started spinning. This week's leak about clamping down on banks ripping off those rescheduling tracker mortgages with higher interest rates, is a routine  job for the regulator and not this group. The leak instead is designed to mask the real issue;

• The quango is to funk any limited bail out of Irish families sentenced to a lifetime of un-repayable debt.

Taking its lead, presumably, from the hard right hawks in its midst and mindful of the wishes of the Government, this carefully planned leak signals that there is to be no rescue, merely a loosening of the mortgage support scheme. Was the group stacked to give the Government the answer it craved? What do you think!