Global agenda: Instability looms
The annual parade of forecasts for the global economy in 2006 is still focused on the same basic topic as it was last year and the year before - namely the degree of imbalance in the global economy. However, there are two main differences between the debate currently underway regarding the outlook for 2006, and that of preceding years. The first is psychological and the second is substantive.The European economy is generating a stream of data that point to an ongoing improvement, especially with regard to its main bugbear of consumer spending.
Michael Hughes, the chief investment officer of Barings Asset Management. Quoting the American economist Hyman Minsky's famous remark that "stability is unstable," Hughes notes "what he meant by that is that the longer things stay the same, the more we expect them to remain the same and the more complacent we get. The result is that when things actually do change, the shock is that much greater."
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