HONG KONG — It is a measure of the nervous mess of world financial markets that when the Financial Times reported last week that China was reviewing its assets denominated in euros, the markets promptly plummeted. The very next day — when China denied any such euro-review — there was a massive rally in equities and commodities and a bond selloff.
This occurred in the week when the Organization for Economic Cooperation and Development forecast returns to healthy economic growth in the rich industrialized countries of 2.7 percent for this year and 2.8 percent next. Overall global growth is expected to be 4.6 percent after a fall of 0.9 percent last year.
There are good reasons why some people are twitchy. When you look at the real economic world of 2010, there is a lack of balance. Too many countries are pursuing the same objectives in which they can't all succeed. Indeed, in many cases there is an internal conflict between policies pursued inside individual countries. Politicians in countries as diverse as Greece, Germany, China and Japan have not realized that only in an Alice in Wonderland world is it possible for everyone to do impossible things.