To answer the question we need to analyse the analyse the reasons for our falling into the situation.It doesnt require an einstine to figure out that one of the major reasons of this economic slump was the high indebtness of major economies around the world which were crippled with the burst of the housing bubble that was hithertho financing the relatively high standards of living in developed counteries.This fact was coupled by the fact that most developed counteries had stop becoming major producers of goods and services and their economies remained boyant on debt,and strong technological base.The recession is infact the answer of economic cycle to rebalance the equations and allow for the paridgm shift in world power and economy.
A close analysis at past recessions shows that almost all recessions start with tightness in liquidity conditoins and deepen with decreasing consumer confidence which leads to decreased initiative to produce and thus a viscious circle which only stops when we achieve bargain prices in goods and services that makes it almost irresistable to keep money in bank accounts.
Therfore if we are coming out of recession the leading indicators that we should look at are:
1)Decreased Bond Yields
2)Increased Retail Sales world over
3)Increased consumer confidence
4)decrease in job losses or creation of jobs
Lets see how what these indicators suggest in the present scenario.With the FED's announcement of pumping about 1 trillion dollars in the bond markets have responded in a mixed manner with bond yields falling but not as much as the FED targeted
Next we have seen a mixed bag of data in retail sales while US saw a sudden jump in retails ASIAN economies particularly Japan still report -ve nos.Infact the increased retail sales in US may just be a temporary phenomena with all economies across the world still reeling under pressure
Above all we still remain bearish on job losses and consumer confidence but things are improving
So the leading indicators give us a mixed picture with no definate stand.Therfore let us probe the matter a bit deeper.Fundamentally if we are to come out of the mess its important that money be avaliable for the businesses to run their operations and for people to buy goods.THe FED might pump as much money as it wants in economy but it wiuld be useless as long as it continues to come back to it via way of bond investments by banks insted of being disbusrsed to public and business.In this respect we are still far behind,while the US seems to be doing a good job by asking and taking steps for banks to disburse more ECB hasnt taken any such steps.
Secondly we cant come out of this recession till theres a marked improvement in consumer confidence which will happen only if there is decrease in job losses.You could have loans at 0% in market but nobody will take them until they are sure of continuing their jobs which can be made possible by increased capital expenditure by governments and decreased corporate taxes etc.
So far we are not really seeing any improvement in any of the above with only gradual improvement.If Obama succeeds in persuading banks to lend more we might see the first rays of revival in ecomnomy by mid June and prevent further deepening of recession but until then we are still in recession and would move to depression if nothing is done either by way of channelising funds or direct expenditure on infra,power,technology etc by government and as far as markets are concerned ..they wont revive until conditions are bullish :)