"If many unexpected problems have surfaced over the last few years, many expected problems have failed to materialise. Whether this means the fears were not justified in the first place, or rather that problems have continued to build under the surface, remains to be seen. Perhaps the greatest of the unrealised fears has been that the US economy would slow down sharply before spending elsewhere had recovered sufficiently to support the global economy. This has not come about, in large part because of the continued strength of consumer spending in the United States. But the coincidence of declining private saving rates and a widening current account deficit is a matter of continuing concern. If investors became less willing to hold the rapidly expanding external debt of the United States, a falling dollar might increase nascent inflationary pressures in the United States, even triggering a hard landing. Fortunately, this has not happened, though the sharp rise in the yen in the third quarter of last year and last month's CPI statistics provide illustrations of how quickly the unexpected can arise."
Doug