Global financial markets have, repeatedly over the past three years, displayed bouts of intense volatility, reflecting uncertainty about the sustainability of economic recovery in the US, the eurozone and Japan. Key contributing factors include underlying inflation anxieties; exceptional levels of national budget deficits and external debts by many countries; and, most importantly, questions about the ability of our political leaders to not only manage all these complex matters, but to forge sustainable economic growth paths.
The catalyst for much of the current concern has been the combination of very high national budget deficits and national debts accumulated by countries on both sides of the Atlantic. Sovereign debt crises used to be confined to developing nations – no longer. But the lessons from those past crises are key in confronting today’s problems. For too long many of these lessons have been ignored.
