The end of the credit crunch?

The Bank of England's bi-annual look at the UK's financial state says conditions in the markets are set to improve gradually and low share prices should persuade investors to take the padlocks off their wallets and start buying again. But this comes with a warning that banks have moved from taking too many risks to being too cautious about their losses and the mortgage-backed securities that have caused all this trouble are now heavily underpriced.

But is this good news or not? It's actually really difficult to tell. The report is couched in such as way so you could read it as saying we are on the road to recovery (as the FT does).  Or you could read it to just be stating the bleedin' obvious that one day things will get better OR that this is actually a warning that we're on the edge of a precipice if the banks don’t stop being such scaredy-cats.

I question whether the Bank of England would waste its time writing this if there wasn't something substantive behind it (i.e. they did mean things are about to get better). But then predicting the behaviour of the Bank of England is a fool's game so I'm stuck.

Anyone who can read between the lines better than I, please let me know whence we are bound.