It is only from Davos, amidst decadent heaps of Beluga and the clink of Belgian flutes brimming with Dom Perignon, that one could have come away thinking, as Harvard economist Kenneth Rogoff evidently did last month, that “nothing could go wrong with the global economy.” Now, the professor recently told The Wall Street Journal, it seems possible that the U.S., and by implication the entire world, “will not have the solid year everyone had been expecting.”
What could have caused the bright optimism of Davos to evanesce so quickly? The answer will be clear to anyone other than the banksters, benighted eggheads and business muckety-mucks who attended last month’s conference for the too-rich-to-be-famous. For in plain fact, the supposedly strong global economic recovery never went any deeper than the fragile illusion sustained by artificially inflated stock and real estate prices. Now, with both falling, the brazen lie of recovery has been laid bare.
Lest the dumping of stocks around the world start to snowball, we anxiously await whatever Rube Goldberg stimulus the feather merchants can contrive. With interest rates already at zero for Davos-level players, it’ll take one helluva trick to raise optimism to the blithe pitch that obtained barely a month ago.