The dreary dawn of 2012

More than four years after a wave of delinquencies on subprime mortgages in the United States triggered the gravest financial crisis of modern times, the global economy is still reeling from the fallout, with no end in sight. At the beginning of 2011, hopes of a gradual strengthening of the macroeconomic outlook were nurtured by exceptional policy measures, central bank interest rates in major developed economies being either virtually at zero or slightly above, and the balance sheets of the US Federal Reserve, the European Central Bank (ECB) and the Bank of England expanding massively to flood the banking system with liquidity. Yet, one after the other, the economies of all major developed countries stalled in early 2011 following disruptions in the global supply chain from the earthquake and tsunami in Japan, the Fed announcing the end of its second round of ‘quantitative easing’ in the US and the jump