World economic forum special report

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Another record year for financial institutions suggests no end to the boom in financial markets. But a correction in the global imbalances that have so far sustained the boom threatens economic growth and could have painful consequences for global capital markets. Are we on the cusp of a downturn?

The world on the cusp
Another record year for financial institutions suggest no end to the boom in global markets. But will an economic downturn cause a severe correction in global capital markets? Clive Horwood

Savings glut: the end game and the last bubble?
The May-June 2006 markets crunch was a dress rehearsal for an eventual liquidity implosion. And in an alarming trend, the Eurasian savings glut is increasing, sustaining Goldilocks short-term but aggravating the potential global demand deficiency. A hard landing followed by poor recovery is the natural consequences of the Eurasian savings glut. Charles Dumas

Global imbalances: The bears zero in on Goldilocks
The causes of unprecedented global financial imbalances are complex, and understanding them is key to predicting what happens next. But do global economic prospects boil down to a simple question: will Americans stop wanting to borrow and spend before Eurasians stop wanting to save and lend? Brian Reading

China: The pitfalls of playing catch-up
China is the world’s largest-ever catch-up economy. It will soon be the world’s largest economy, period. But policy makers in Beijing face some tough choices in the years to come to cope with the strains that industrial revolution brings. Diana Choyleva

Europe: Will Europe burst asunder?
Europe’s economies are split in two: the surpluses of the centre and the north, versus the deficits of the UK, France, and the Mediterranean and accession countries. As the imbalances exacerbate, is there a get-out clause for the continent’s likely downswing? Charles Dumas

Pensions: How much for the baby-boomers?
The looming pensions crisis means individuals will have to take more responsibility, work longer and begin to save. If the US goes from a nation of spenders to a nation of savers, as it must, what will the impact be for the global economy? Gabriel Stein

India: Asia's new giant emerges
India’s recent rapid growth masks the fact that it still lags far behind China in terms of its economic development. It’s catch-up potential remains huge, and its growth could be even faster. Diana Choyleva and Maya Bhandari

Geopolitics: America’s hollow hegemony
Major errors of concept and execution in the Iraq war have severely weakened the United States: a sharp lesson in the limits of what seemed like limitless power. Its allies have been discredited, its enemies strengthened. Its actual or wannabe rivals, China and Russia, are new global power centres. Other regional powers must steer a careful course in a more complex world. Diana Choyleva, Gabriel Stein and Charles Dumas

Global warming: Stern’s suspect spanking of the sceptics
Charles Dumas warns of a ‘reverse Robin Hood’ situation which will hamper any attempts to tackle the economic impact of dealing with global warming

Conclusion: The ultimate bubble?
Is the post-Goldilocks crash inevitable? If the savings-glut chickens are finally coming home to roost, why no market crash? Maybe the bubble refuses to burst. Charles Dumas