IF THERE is one lesson from last week’s stockmarket debacle, it is that there is no short-cut out of the gloom. Governments and central banks have tried pumping money into their economies and slashing interest rates.

In every case, instant elation has been followed by a yet bigger relapse as fear reasserts itself. You’d think they’d have learnt by now.

Last August I wrote: “While it is impossible to be precise, I believe we are heading for a five and ten bear market - somewhere near 5,000 for the FTSE 100 and below 11,000 for Wall Street’s Dow Jones Industrial Average.”

That is not going to be too far off the mark. There will be more falls in share prices, but the big question is how long the misery continues. If we’re lucky the mood could lighten this summer.

If not, it could go on until around spring next year. Much hangs on the banks announcing half-yearly or yearly results unblemished by write-offs for bad debts. Once they can do that they’ll have the confidence to start lending again, breathing life into stock markets.

You usually get the big sell-offs, like last week’s, near the start of a bear market - not the end. Then there is a long period of bottom fishing as investors buy at what look like attractive values, only to be disappointed by another downward lurch. The sudden recoveries in 1975 and 2003 were driven by exceptional events.

Markets don’t know where they are. The Footsie whipsawed 400 points on Tuesday – down 240 then up 160 – on hopes the Bank of England will cut interest rates, then the next day fell 200 at one stage on fears that the Bank won’t cut.

George Soros, the man who famously broke the Bank of England 15 years ago, said it’s going to be difficult for either Britain or America to avoid recession. He sees the upheavals as part of the long-term shift of global power and influence from Europe and the US to China and India.

Does that mean we should all pile into emerging markets funds? No.

Certainly, have some cash in Asia, but only if you can afford to forget about it for a decade or more. Redmayne Bentley, a stockbroker, has a China option for child trust funds (CTFs) and last week added routes into oil and gold. But charges are high and I’m wary of tying money up in CTFs for the sake of tax relief.

So far, although the credit crunch has hit consumer spending, its effects on the commercial world have been limited. As long as companies can maintain their present dividend levels, there are opportunities for investors.

According to data firm Digital Look, shares in Bank of Ireland, Barclays, HBOS and Royal Bank of Scotland all yield more than 6.5%. If those payouts are cut when the 2007 figures are out next month, the whole market will sink like a stone.

Rock solid?

IF bank shares are a little spicy for your taste, how about a bank fixed-interest bond? I am indebted to Ian Spreadbury, manager of the Fidelity Moneybuilder Income fund, for pointing out one paying no less than 24.5%. Yes, the decimal point is in the correct place – 24.5%.

Okay, it comes from Northern Rock which, unless you’ve been living anywhere other than the third rock from the sun, you will know is in a little difficulty.

But it looks like a deal is being hatched for the government to limit the bank’s losses so that someone – hello, Sir Richard Branson – can buy it. That should keep the bonds intact.

There are undoubted risks, not least that you would have to hold the bond until it matures in 2015 to get the full benefit. But the price has come up from £61 to £71 as word has spread.

The bond has a coupon of 5.625%, the return an investor would receive at the par price of £100. At £71, that yield rises to 7.9% a year. The rest of the 24.5% annual return is the 29 pounds capital gain – 41% – spread over the seven years remaining before the bond matures. If you are interested, ask a stockbroker or go to selftrade.co.uk.

Another offbeat option attracting serious consideration is Zopa, the US-backed website that brings lenders and borrowers together with a much smaller cut for the middleman.

In theory, everyone benefits, but Zopa took a while to become credible for the reason that lenders worried they might not see their money again.

However, to cut risk Zopa checks on borrowers’ repayment records and spreads lenders’ money, using collection agencies to chase the few bad debts.

Lenders can receive 7%-10%, depending what standard of borrower they are comfortable with. It is certainly worth a look.

Small print

While stock-market crashes have been grabbing attention, the Office of Fair Trading’s case against banks’ unfair charges has been plodding on for more than a week.

Whatever the outcome, a possibly very significant trend has been spotted by a lawyer for the consumer group Which? He notes that QCs for at least three banks have had trouble explaining their clients’ terms and conditions to the judge, who we can take it is several degrees better versed in legalese than the average bank customer.

As the banks are well aware, this small print is vitally important because it defines what service they are and are not legally obliged to provide. It has long suited them to keep this vague.

I predict that the banks will have to simplify their small print, now that educated people have had to take the trouble to read it – and struggled.