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2011, Business As Usual?

What’s going to be economically important (in the macro-sense) this year? I’m going to place my bets on these ones:

– The Euro Crisis continues because the politicians and ECB leaders still have not come up with proper solutions

– Growth in Germany and other European countries will weaken as a result of the crisis

– The US economy will be surprisingly strong

– 50/50 chance that prices of oil and other commodities will jump, leading to a slowdown of growth in China

Previously I wouldn’t have thought that the current expansionary phase of the business cycle could end before 2013. Now I’m not so sure anymore, as growth has been surprisingly strong in many countries recently. This global economic expansion could perhaps be even shorter than 1970-1973 and 1975-1978. Let’s see how the Euro Crisis develops. A second banking crisis in three years could derail the whole global expansion. Much will depend on whether politicians finally realize what they have got to do. The E.Col.I remains on the second-highest alert level for now.

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