I find myself speculating the flow of the market. I am not quiet too sure what direction I would look to and my reasons are given below.

Before you continue, I would like to say that this isn't meant to be a doom and gloom critique. Its just observation.

For a long time now, property would appear to be overvalued. Which is why people have talked about the property bubble bursting. If property, however is a major indicator of what is happening in our economy then what is left to be the driving factor?

The problem that I think that exists is that in a effort to prevent property prices spiralling downwards even more so; there have been a number of measures to stabilise the economy.

Firstly, the quantative easing measures of the governement have diluted the value of our currency slowly and steadily. This means that whilst property may appear to be maintaining value - relative to other currencies it has depreciated.

Is this also to ward off possible deflation?

The next thing is that our current interest rates are artificially low in a move to keep mortagages affordable so that there isn't a bigger default rate. Thereby reducing the effect of falling house prices.

My issue is that whilst interest rates are low this does not sort out the problem of balancing the books. In the longer term, Britians debt is getting greater and greater and will continue to get worse and worse. If interest rates are as low as they are where is the incentive to save and invest? Furthermore, the more that Britain looks to have too many liabilities on it's book and with rising debt concerns - where is the interest from foreign investment to encourage and bolster the economy? It's certainly not going to come from property where more and more retailers are finding that they can no longer afford their rentals.

And if there is a lack of confidence in the currency (the pound) brought about by the poor health of the uk economy and a shift of emphasis to other monetary units as a safer and more stable investment - doesn't this just exacerbate the problem?

With the pound looking to be taking a series of knocks and on a gentle descent of value, which will in turn increase the cost of imports and effectively our goods. And with Britain being largely too risky a proposition to be likely to have a growing manufacturing industry or see a rise in local produce. I cant help but wonder where this leaves us. For if things were to continue on the path they are on, could we be walking into a period of high inflation or worse still hyperflation.

I am finding it hard to be optimistic of Britain's economic outlook and don't like the fact that there appears to be many undesirable conditions out there not working in our favour.

Where then would a sensible direction to invest? For those that are investing in gold seem to be creating their own little bubble waiting to burst. You would of thought we would have learned from the experience of the bubble just gone before creating another calamity.

Your thoughts would be appreciated.