Bull markets climb a wall of worry. Bear markets slide down a slope of hope.
—A venerable investment adage
THE MAIN RISKS to the world economy and the global system in the years after the 2007-09 crisis can be classified into three groups. The first group consists of the short-term economic threats that could still abort the global recovery and cause a double-dip recession but will probably be dispelled before the end of 2010. The second set of risks are medium-term issues that are likely to dominate public policy in the three to five years after the crisis: excessive government deficits; paralyzed banking systems; a need to rebalance global growth, especially between America and China, and between Germany and ...