Finland’s resistance is weakened by the level of household debt and the rise in wage-related costs in the corporate sector. Falling housing prices and the weaker employment outlook could encourage households to save, in which case consumption growth would be weaker than forecast. The negative impact on employment would start to be seen fairly soon, particularly if export demand was believed to be weakened on a long-term basis.
The general government surplus will begin to decline rapidly after the end of 2008 due to the termination of the cyclical upswing, cuts in taxation and the growth in expenditure pressures that can be expected to begin in a couple of years as a consequence of demographic ageing."
Last year while most economist were positive and confident, including Erkki Liikanen, I was not. That's exactly at that time, I created this blog, as too much wrong messages and disinformation were sent to the common people.
I decided to highlight critical informations the reader should aware of. The importance the credit crisis, the false asumption of decoupling and the fall of emerging markets and their impact on the global economy
The assumption were mainly driven by one main component: CREDIT and its related DEBT EXCESSES.
Too much debt were taken while interest rates were too low, a policy mistake that is now costing the world its stability, send oil price to the roof and overheating emerging markets.
It distorted all asset prices as too much liquidity, amid fraud and greed, were flooding the world markets.
Should the U.S. fall into a recession it will have a ripple effect on the world economies. The first hit will be China, major exporter to the US and Europe. Europe is already sharply slowing, with Spain and Ireland collapsing... And as a domino, more economies will fall into recession forcing the ECB to cut rate drastically to a point where it will create the next bubble, not in real estate, ...