Of course, there are no simple solutions.
“There’s a widespread belief that the U.S. economy is going to grow vigorously, that Europe will solve its problems, and that emerging markets will propel a global recovery in the year ahead. Over the near term, it may not be a bad idea to lighten up on the bearishness. Nonetheless, I do think that the U.S. economy will grow only about 2 per cent next year and that core inflation will continue to decline.
I’ve been a long-term bull on bonds; I see no reason to change my viewpoint now. I think all these notions are questionable. Let me explain what I see as the biggest threats to the sunny consensus for 2011.”
– U.S. home prices fall further.
– U.S. state and local cutbacks
– A spike in U.S. Treasury yields.
– Europe hits problems – again.
– Bad news out of emerging markets.
– Sharp increases in energy prices.