Divergent fortunes and what they mean for interest rates
Despite many years of increasing globalisation in many aspects of business, finance and economics, the world seems to be diverging. So how has this happened?
Sitting in Berlin, I am reminded that even that formerly reliable engine of growth, the German economy, contracted by 0.2% in the second quarter. Italy has fallen back into recession. France was stagnant, as was even the Swiss economy - which isn't in the eurozone, but is clearly affected by it.
Plus, falling prices in Spain and Italy mean that the meagre 0.3% inflation rate in the eurozone is pretty much down to the biggest economies of Germany and France, which are now losing momentum.
So, the European Central Bank (ECB) which meets tomorrow faces stagnation and deflation.
They can make a small interest rate cut but there's not much more that they can do in terms of rates, which, after all, are virtually at 0% already. The bolder step would be to inject cheap cash via quantitative easing (QE) which I have written about before.
On the other side of the world in Japan, the economy is also struggling and the Bank of Japan is still injecting cash aimed at finally ending 15 years of deflation. There have been some promising signs in terms of wage and price rises, but not substantive enough to stop their efforts.
Rate rises expected
This is in stark contrast to the US and UK where the talk now is about when we will see the first rate rises, since the American economy may see full employment again by 2018 and Britain's growth is outpacing that of other major developed economies.
Economists seem to expect rates to rise first in Britain, probably early next year, before the US. This of course can change due to a lot of factors, notably productivity and wages. Both countries have seen lagging wage growth, which has been attributed to employers keeping workers at the price of low wage rises. But, that's far from settled.
The quality of the recoveries themselves - strongly supported by high asset prices (record high stock markets in the US and housing in the UK) - also raise concerns over their sustainability.
Plus, as soon as talk of rate rises starts, the question of what is a normal interest rate (i.e. not 0%) comes up. For Britain and the US, a lower rate than before the crash - at less than 4% - is bandied about.
Any forecast of where rates will be should be taken with a grain of salt and will differ for the two economies. But the emerging view seems to be that the still-weak recovery means a lower interest rate than before the crisis, and that rate rises will be gradual, given the fragility of the recovery.
Emerging economies also face divergent fortunes.
China's growth is forecast at 7.4% this year by the International Monetary Fund (IMF). I reckon that it will be 7.5% - in line with the government's target (as per usual).
In any case, the economy is expanding but risks abound. For instance, its so-called shadow banks may account for up to 27 trillion RMB (£2.7tn; $4.4tn) of assets, which is equal to one-fifth of the formal banking sector. In terms of size, that's bigger than Germany's GDP at around $3.5tn.
India's economic growth lingers below 6%, but 5.7% is its fastest pace in two years, which some view as a good harbinger of where the economy may be headed with the election of Prime Minister Narendra Modi.
But, given that the country is still considered vulnerable due to its external deficit and high inflation, risks remain. In any case, that's the good news. At least those economies are expanding - unlike Brazil, which has gone into recession.
The remaining member of the famous Brics, Russia, is experiencing problems much bigger than its economy right now. Certainly, the conflict with Ukraine and the associated sanctions have already affected the economy.
Even for those Bric countries doing relatively well, policy leans toward stimulating their economies, since China and India's growth are lower than they are used to. In other words, they all seem likely to contribute to a lower global interest rate environment.
On the other hand, emerging economies tend to follow the United States (many of their currencies are pegged to the dollar), so what the Fed does will affect their interest rates.
I told you to take any predictions of future interest rates with a pinch of salt. Divergent fortunes make for a complicated global environment.
Six years after the global financial crisis, the Greater Depression seems to have receded for most of the world - which is welcome.
But its legacy is a worrying divergence in the global economy and a complicated picture for interest rates.
For more on the health of the global economy, watch Talking Business with Linda Yueh. Broadcast times are found at: Talking Business with Linda Yueh.