By Andy Mukherjee
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
When China announced its decision to claim a wider air zone that encompassed the disputed Senkaku/Diaoyu Island territories, the East China Sea erupted into conflict reminiscent of the Cold War era. In response, the United States and Japan declared the zone illegitimate and flew military aircraft through it, while China deployed fighter jets to identify them.
Is America’s economy adrift in the doldrums? Lawrence Summers, perhaps the nation’s most inventive applied economist, thinks so. Speaking to an IMF forum last month, he described America’s current condition as “secular stagnation” in which we are stuck in a rut of weak demand, low growth, and low employment. This is the “L-shaped” recovery, or -- strictly speaking, non-recovery -- some warned about after the financial freeze of 2008. It is also sometimes dubbed “the new normal.”
By Shadi Bushra
After years of basking in their reputation as high-return hot spots, 2013 could be the year emerging equity markets finally lost their magic touch. Last month continued the litany of losses -- seventeen of the 20 emerging markets listed on S&P Dow Jones indices ended November in the red, the index provider says. Contrast that with developed markets' fortunes last month-- 18 of the markets listed by the index rose, while eight fell.
At a time when economic optimism is growing and stock markets are hitting new highs almost daily, it is worth asking what could go wrong for the global economy in the year or two ahead. The standard response, now that a war with Iran or a euro breakup is off the agenda, is that some kind of new financial bubble could be about to burst in the U.S. But a very different, and rather more plausible, threat is looming on the other side of the world.