Why You Should Be Worried About The Global Economy

Martin Wolf provides his interpretation of the historically low interest rates that Germany, Britain and the US are paying for their debt.  Its a flight to safety by investors who have reasons to seek safe havens for their funds.  He calls it a contained depression.  It has been contained by the monetary policies of central banks, and by the willingness of governments to absorb a large share of private savings by households and businesses.

Europe is the wild card in his analysis.  Everyone knows that a breakup of the eurozone will create problems for the global economy. Nobody knows, however, how bad the problems might be. There would be less fear among investors if they believed that leaders in the eurozone understood how to deal with their problems, and had the political will to take the necessary steps.  That is not what they observe in the leadership.  Fear and panic is a rational response to the current situation.