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Just to keep everyone up to speed, here’s a checklist of the big things that are currently worrying investors about the global economy:
- A possible Greek exit from the euro—aka “Grexit”—following elections later this month. On the bright side, there’s not much fear any longer that this might produce contagion that blows up larger economies like Italy and Portugal. On the dark side, that lack of fear might very well be a mistake. Panic was still contagious the last time I checked.
- Recession and a deflationary spiral in the eurozone. Germany, which pretty much runs the show in Europe, is still doing its damnedest to prevent the European economy from showing any signs of life, which means that stagnation there could last a long time.
- A slowdown in China, possibly accompanied by a property bust.
- Problems in emerging economies with lots of dollar-denominated debts thanks to the continuing strong dollar.
All of this combines to make investors worried about the US as well. The American economy is a bright spot right now, but it can’t drive the world economy all by itself. If everyone else goes kablooey, then the US economy will eventually suffer as well, and this could cause the global economy to go even further into recession.
So….those are the things you’ll probably be reading a lot about over the next few weeks and months. Now you know.
