The financial world is locked into a circle of imbalance. It is imbalanced because the US is booming while running a huge external deficit. Meanwhile, Europe and Japan struggle and run external surpluses; Asia and the Opec members boom by selling to the US. It’s a circle because Japan and Asia and Opec recycle their surpluses back into dollars. And thus the financial world goes round – after a fashion.
So, despite relatively modest growth in the OECD, the share of profits is at or near its historical peak and the cost of capital is near historical lows.
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