The Great Moderation (view that in the West we have entered a period of good growth with low inflation) has come unstuck with a thud.  We are if anything entering the age of unprecedented volatility.  It is like a stretched rubber band when stroked causes vibrations – the longer the band the higher the vibrations.  In real terms, the G5 went on to become G7 to G11 and at last count has become G27.  So there is 5 times as much saving and consumption to deal with; without recourse to a central banker that can administer policy on a global basis.  And it is more than just capital, it is increasingly also labor that is impacted.  Transnational immigration on the heels of de-growing populations in the West is bringing home volatility to the main street.  Send-people-send-them-back policies are creating stress on both sides which invariably leads to protectionism further aggravating dis-balance. 

We are in the uneasy adjustment period where we are only about beginning to grapple with global mass movement of capital and labor.  We don’t know how to approach it, much less what levers to pull on – not just the European Union, welcome to the Global Union!  It is interesting that the impact of this volatility will have an immediate concentrated impact on – the US as the consumer, China as the manufacturer, India as the servicer and OPEC as the energy provider will face unequal impact and challenges to its economies.  While we are in the midst of the first global shock, it will take us a few more to finally get a handle on this.  Perhaps as an impact of the first shocks you will see the consumption and manufacturing getting spread more widely as a way of naturally de-risking the system.