‘GLOBE on brink of receivership’ screamed the headline in a national newspaper last week.

Such a headline would have seemed like the final act in the banking crisis had it appeared last October (rather than tolling the bell for the individual company).

But nerves have calmed sufficiently this year for the fear that the world was ending to be put back in its box.

Nonetheless, for all the recovery in equity and property markets, anxiety remains that the garden in which the green shoots are sprouting is still polluted, or that something will pour weed-killer over the sprouting crop.

There is a contrast between the better-than-expected (or feared) performance of financial assets this year and the still-depressed levels of activity in most developed economies.

Although it is normal for equity markets to anticipate economic turning points (real or imaginary), the fear and gloom were so deep last winter that the speed with which markets have rebounded has given rise to recurring worries that they have outpaced the improvement in the economy, forgetting that most equity markets have only retraced about half their losses.

There is a suspicion that the weak third-quarter output figures (if taken at face value) may reflect the effect of companies also taking an over-cautious view of economic prospects.

The speed with which the recession hit led companies to lay off workers and cancel investment plans unusually abruptly.

They have been slow to reverse these decisions, partly because of the pressure to reduce dependence on bank lending and partly owing to scepticism over the durability of the recovery.

There is a suspicion that this caution may have led to a continued run-down in inventory levels, which, if reversed in 2010, could create surprisingly strong growth, depending on the timing of any general recovery in corporate confidence.

Given the substantial boost to the UK’s competitiveness through sterling’s devaluation, hope of a material bounce in growth should not be abandoned. Nonetheless, such a benign outcome cannot be taken for granted.

The evidence that the recovery in equity investor confidence has not percolated through to company boardrooms suggests that there is a risk of activity sagging back once the impacts of this year’s rate cuts, lower oil prices (than 2008) and VAT reductions peter out.

Furthermore, the recapitalisation of the corporate sector (through bond and equity issuance) continues at a high level, as evidenced by the rash of bank issues across Europe since September.

The risk that this might stall, if central banks stop boosting the money supply before the banking sector resumes lending, also argues for continuing with the policy of quantitative easing.

Notwithstanding the pause for breath in equity markets, the economic healing process seems likely to continue, with the Bank of England helping financial markets to fill the void caused by reduced bank lending and with lower base rates helping borrowers start to repay debt.

With this in mind, greater selectivity and patience in choosing investments may be called for but not a flight to safety.