Global downsides: 1 high debt; 2 Lack of growth and deflation; 3 Fragile EM...

Rajan: "Today, debt is making it difficult for developed countries to resume pre-2008 growth rates" http://t.co/hi4QoAqSA8

Today, debt is making it difficult for developed countries to resume pre-2008 growth rates, let alone restore the levels of GDP that would have been attained if the subsequent Great Recession had not happened. Meanwhile, industrial countries’ overall debt/GDP ratios are continuing to grow.

In emerging markets, slow growth in the advanced economies has shut down a traditional development path: export-led growth. As a result, emerging markets have had to rely once again on domestic demand. This is always a difficult task, given the temptation to over-stimulate.

The abundance of liquidity sloshing around the world – the result of developed countries’ ultra-accommodative monetary policies – has made the task more difficult still, as the smallest sign of growth in an emerging economy can attract foreign capital. If not properly managed, these flows can precipitate a credit and asset-price boom and drive up exchange rates. When developed-country monetary policies are eventually tightened, some of the capital is likely to depart. Emerging markets will have to ensure that they are not vulnerable.

Read more at http://www.project-syndicate.org/commentary/outlook-for-global-economic-growth-by-raghuram-rajan-2015-01#IzLc6M4B0GbHyQzj.99

The IMF downgraded its outlook for global economic growth. See changes to its key forecasts: http://t.co/6vZC9aAiHf pic.twitter.com/dPgcGyxyi9

Now, the growing gloom in the global economy has many analysts worried about spillover to the U.S. “What happens around the world is no small matter to American consumers and businesses since trade represents a greater share of the economy than ever before,” MarketWatch noted. “That’s why worries about the global outlook spooked U.S. stock markets last week.”

https://www.blanchardgold.com/investment-news/the-longview/top-fed-officials-worried-about-lack-of-global-growth/

Fear of deflation intensifies worldwide http://t.co/VmUho7yMSK pic.twitter.com/RZDKV2FLAu — Bloomberg VisualData (@BBGVisualData) January 20, 2015

Emerging market combined debt ratio is record 175% of GDP Rising USD will crush Them. Will They drag equities down?

Just hours after the Federal Open Market Committee announced the end of its bond-buying program, Xinhua News Agency issued an article explaining how China’s economy was put at risk by the long-awaited move. Beijing, among emerging market capitals, is especially nervous about the Fed’s exit from the six-year, $3.9 trillion effort.

Ma Guangyuan, an independent Beijing-based economist, told Xinhua, the official media outlet, that two things are certain in the wake of Wednesday’s announcement by the Fed: the dollar will go higher and dollars will flow from emerging markets back home.

At first glance, China should be relatively immune from a strengthening greenback. After all, the renminbi is essentially tied to the dollar as the People’s Bank of China , the central bank, makes sure the Chinese currency trades near a mid-point it fixes every trading day.

Consequently, there should be no rush out of the yuan, as the renminbi is informally known, into safe-haven American money. Yet China is only theoretically immune from the crises that ravished East Asia in 1997 and Russia in 1998, both triggered by a strong buck.

http://www.forbes.com/sites/gordonchang/2014/11/02/dangerous-scenario-strong-dollar-to-take-down-weak-china/

Top 0.1% of Americans hold as much of the country's wealth as bottom 90% #inequality #Davos http://t.co/U3jLG01Bue pic.twitter.com/jHVaCE9tSD

Global downsides: 1 high debt; 2 Lack of growth and deflation; 3 Fragile EM; 4 Technology displacing job: 5. Rising inequality; 6 G0 world

Yves here. Some technology enthusiasts predict that as many as 47% of current jobs will be displaced in the next decade. Candidates include not only trucking and bus driving (to be eliminated by self-driving vehicles) but more and more white collar work, as computer get better at the sort of information scanning and analysis that is now done by entry and low-level workers. This post examines different scenarios for how that might play out in Europe.

Of course, the elimination of more and more analytical jobs raises the question of how will professionals learn a craft? This has been a complaint on Slashdot for years, that there are comparatively few entry level information technology jobs in the US, and that we are ceding the IT industry to China and India because we won’t be replacing the current crop of seasoned professionals. What happens when yeoman roles no longer exist.

We also have the problem that economists like to worry about: where do the jobs come from? As we’ve said before, if you have a system in which people must sell their labor as a condition of survival and you don’t provide enough opportunities to do that, you have sown the conditions for revolt.

One bit of cheery news in this post is that, to quote William Gibson, while the future is here, it’s not evenly distributed.

http://www.nakedcapitalism.com/2014/07/technology-displacing-jobs-european-case.html

Socialism Is Legal Plunder

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

The Law

/Bastiat

6. But the grand nostrum will be a public debt…

7. It must not be forgotten that the members of the legislative body are to have a deep stake in the game. This is an essential point, and happily is attended with no difficulty. A sufficient number, properly disposed, can alternately legislate and speculate, and speculate and legislate, and buy and sell, and sell and buy, until a due portion of the property of their constituents has passed into their hands to give them an interest against their constituents, and to ensure the part they are to act.

11. As soon as sufficient progress in the intended change shall have been made, and the public mind duly prepared according to the rules already laid down, it will be proper to venture on another and a bolder step toward a removal of the constitutional landmarks.

Rules for Changing a Limited Republican Government into an Unlimited Hereditary One

/Freneau

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