Group items tagged

Top Trends for 2009: On our GloboTrends wiki homepage, we will keep an updated list of global macro trends that we think are the most important to keep an eye on. Some of this list are statistically unlikely to occur, but if they did, it could cause global disruption. These unlikely events were dubbed Black Swan's in a book by Nassim Nicholas Taleb , or might be called the "fat tail" probability in statistics. Others trends we are watching in the GloboTrends wiki are currently ongoing right now (such as our coverage of the credit crisis, deleveraging, margin calls, etc), and we will talk about how they happened, and predict their likely outcome. The format of a wiki makes the document dynamic, so any of our community is welcome to help shape our views of these important developments. Please log in to our wiki, and feel free to comment... In no particular order, here are the global macro trends that we think will be most significant in the coming year (2009): 1. credit crisis of 2007/08 will continue on into 2009...this one is clear...but, how long will it last? how will it fundamentally change international finance? Add your comments to our wiki... 2. fiscal stimulus and crisis recovery 2009 3. deleveraging of Financial markets will continue. In my opinion, this is the most destructive of all the trends. 4. Risk of deflation in the US as Fed Funds target rate approaches zero (other analysts see the opposite risk of potential hyper inflation). Add your comments.. 5. more... add to this list.. Predictions-for-2009

Instead, America's consumption binge drew support from two major asset bubbles-property and credit. Courtesy of cheap and freely available credit, in conjunction with record housing price appreciation, consumers tripled the rate of net equity extraction from their homes, from 3 percent of disposable personal income in 2001 to 9 percent in 2006. Only by levering increasingly overvalued homes could Americans go on the biggest consumption binge in modern history. And now those twin bubbles-property and credit-have burst, and so has the US consumption bubble: real consumer spending fell at an unprecedented 3.5 percent average annual rate in the two final quarters of 2008. While the original excesses were made in America, the rest of the world was delighted to go along for the ride. With the United States lacking in internal saving, it had to import surplus savings from abroad in order to grow-and ran massive current-account and trade deficits to attract that capital. This fit perfectly with the macro-imbalances of the export-led developing countries of Asia, whose exports exceeded a record 45 percent of regional GDP in 2007-fully ten percentage points higher than their share ten years earlier, in the depths of the Asian financial crisis. China led the charge, taking its exports from 20 percent, to 40 percent of its GDP over the past seven years alone. The export-led growth in developing Asia could well be described as a second-order bubble-in effect, a derivative of the one in US consumption.