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rfmcdonaldAlpha Sources' Claus Vistesen wondered why he wasn't invited to the World Economic Forum in Davos. The predictions of some attendees that the world is set for a generation of strong growth are to blame; they're not quite supported by fiscal realities.
Claus was writing about First World economies. Conceivably, even if they stagnate (relatively) for the next generation, the world as a whole could still thrive, still enjoy a generation of prosperity, as it engages is catch-up economic growth. Hopefully; Third World debt certainly has been an issue in the past.
Go, read.
If governments choose to focus all their efforts on growth and let fiscal excess continue the already huge debt problem will become worse. And if they don't, they must face growth rates that are not only low, but perhaps even negative for a long period of time. A very recent shot fired across the bow today by the S&P comes in the form of the downgrade of Japan's sovereign debt.
I would then pose my spectators one simple question and ask to reflect on some simple issue. What is the trend growth in the OECD and her individual economies with a balanced fiscal budget? And once we have agreed on that answer the obvious next question would how the world will deal with a substantial part of its economies exhibiting negative trend growth rates for as far as the eye can see?
More than anything I think that this has probably yet to sink in to markets and policy makers alike. Indeed, after having pissed in the proverbial bunch bowl I would probably go on to talk about the necessity (although my praise for the apparent success of the Euro bond issuance) of substantial debt restructuring in the Eurozone.
Alas, at that point my microphone would have long been switched off and I would probably, to boot, have been taken out by the in-house Davos sniper tasked with the elimination of any spoilers of the good mood.
Claus was writing about First World economies. Conceivably, even if they stagnate (relatively) for the next generation, the world as a whole could still thrive, still enjoy a generation of prosperity, as it engages is catch-up economic growth. Hopefully; Third World debt certainly has been an issue in the past.
Go, read.
