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The last two years have been extraordinary for the global economy. The bursting of the credit and house price bubbles in the US and some European countries, following the eruption of the subprime crisis in the spring/summer of 2007, has brought the US economy, and the whole of the world economy owing to a domino effect, into a deep recession. An unbalanced world has found itself on the road to evil, particularly in the aftermath of the Lehman Brothers bankruptcy in September 2008. Fiscal and monetary authorities all around the world, albeit with a different magnitude, have had to implement tough expansionary measures to avert an economic collapse.

Some signs of economic recovery have emerged in the last few months but a rapid end of what is considered the worst recession since the great depression is far from certain. The economist’s consensus is for a world economy that will experience subdued growth in the years to come, but a lot of unanswered questions remain in place: when will the current recession end? What kind of growth can we expect? Will the crisis result in a more balanced and less leveraged world economy? What will be the likely repercussions of the economic stimulus packages approved in the US and the UK on the public budget? Is deflation the real threat or will the monetary stimulus spark an inflationary spiral? What will be the consequences of a more regulated financial world?

Finding an answer to these questions will be crucial to taking the most coherent investment decisions going forward. We will try to give our contribution to finding the right answers by analysing the main economic events from the perspective of a European economist and investor. However, the commentary in this blog in no way constitutes a solicitation of business or investment advice.