3-D Economic Hurricane of Debt, Deficits and Demographics Heading for All Developed Economies

"Today's Outside the Box is from an old friend, but one who is new to my readers. Jason Hsu is a partner at Research Affiliates and helped create the Fundamental Indexes with Rob Arnott. Starting at Cal Tech, he went on to a PhD in economics,and is now a professor at UCLA and teaches in China and Taiwan. Wins all sorts of awards and has won the Rising Star of HedgeFunds award. In short, he is really smart...

The 3-D Hurricane and the New Normal*
Jason Hsu

Debt, deficit, and demographics -- the 3-D hurricane -- is heading to the shores of all developed economies. It threatens to derail the lukewarm economic recovery and to alter forever the heretofore path of robust growth for the developed world. In a sense, debt, deficit, and demographics will reset the world to a "New Normal" -- an extended period of lower economic and return expectations for the aging and debt-ridden developed world. In contrast, emerging economies with healthy government and household balance sheets, responsible fiscal policies, and young labor forces will be the drivers for global growth and will compete with their developed counterparts for economic and political leadership. More importantly, the emerging economies will demand their fair share in the consumption of resources and goods. That competition for resources and goods will lead to higher prices at a time when developed countries are less able to further finance their consumption..."

at http://www.marketoracle.co.uk/Article28942.html