World Economic Forum special report: Contents
If the savings-glut chickens are finally coming home to roost, why no market crash? Some possibilities:
The slowdown is not a crash – non-housing US demand is only likely to give way gradually, probably under Fed pressure;
And the Eurasian savings glut is growing;
Whatever central banks may do, the two preceding points mean bond yields are being driven down;
Hedge funds and private equity have grown massively on the basis of leveraged booms – they are not about to roll over and play dead.
When would we admit we were wrong? If US GDP growth is at 3% (or more) from 2006 Q4 to 2008 Q4 and inflation eases back on a core basis to 2% during 2008, we would be wrong. Bonds would...
