Photo: World Economic Forum, Flickr
We’ve been saying for a while that the age of crisis was coming to an end. And now the world’s elites have made it official.
The economic crisis is over.
The hive mind of Davos has concluded that the financial crisis is done, finished. The new worry: a bubble in the credit markets.
There is no official declaration, or even a formal survey. But the chatter at the World Economic Forum in Davos, Switzerland, is about the end of the financial crisis that began in 2008 and dragged on through last summer’s spike in Spanish and Italian government bond yields. “There’s a crystallization of thought that the financial crisis is over,” says Scott Minerd, managing partner and chief investment officer of Guggenheim Partners, a Santa Monica (Calif.) firm with about $160 billion under management.
So why has Davos decided to look on the bright side? I’d sum it up as follows:
There’s a sense that the world economy has turned the corner, and after four years, the financial crisis is finally behind us. Not only are people much more attuned to the new environment of risks, but also, there is a sense that the downsides are nearing their limits. Sure, the eurozone is suffering through record unemployment and a bleak economic environment–but defaults or a eurozone breakup didn’t pan out. A double-dip recession in the U.S. never materialised. The threats are still disparate and uncertain, of course, but it feels like the cataclysmic possibilities are off the table for the time being.
The mood at Davos echoes what we’re hearing from non-Alpine pundits, like Mohamed El-Erian and others, who have been talking about how the ‘New Normal’ might be coming to an end. Even earlier, economists like Jan Hatzius at Goldman had been calling for 2013 to represent a big global economic turning point.
Great news. (Except if you’re in the news business!)