Over the past year, and particularly during the past couple of weeks, the foundations of the post-Davos model have been wobbling alarmingly. What was once seen as a historic transformation in emerging economies now looks suspiciously like a global bubble in commodities and credit, which will end the way bubbles usually end: by bursting. In the advanced economies—particularly in Europe, but also in the United States—serious doubts have emerged about whether growth can survive the gradual withdrawal of the monetary stimulus that took place in response to the crisis. And with debt levels high, additional fiscal stimulus also seems problematic.
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