The Risk Pendulum of Globalization

Here are a few facts I thought worth sharing with regard to globalization's continued march through all corners of the world despite the crisis:

• 2008 marked the first time that the "developing" world consumed more energy than the developed world.
• The United States, Canada, & Europe will combine for less than half of global economic output in 2009 [according to the Centre for Economics and Business Research].
• One wealth manager notes that the "developing" world has larger foreign reserves & less indebtedness. (1)
• Additionally, he notes that many of the emerging countries have better GDP per capita growth & superior savings rates. (1)
• Does this change the perception of risk usually associated with the emerging world?
  (e.g., "Have Asian banks been more or less risky than American & European ones?", "Are countries with greater debt more or less risky?" (2)

These trends may continue to redefine asset class risk in the near term, and therefore skew people's general association of risk with asset allocation. As globalization continues to redefine the world economy, changing our ideas of risk association also becomes important.


(1): "Of Inhuman Bondage" by Tim Price, June 15, 2009, PFP Wealth Management, http://www.pfpg.co.uk/site/newsroom/publications

(2): "Comment of the Day" by David Fuller, June 16, 2009, Fullermoney, http://www.fullermoney.com/x/default.html