Interpreting the present situation  Since August 2007, markets have become increasingly discriminating with regard to the risks posed by the real investment projects underlying a wide range of securitised credit. This new attitude is reflected in the large rebounds in risk premia that I have noted in my charts.
Furthermore, Goodhart and Pradhan point to population ageing in most advanced countries as another complicating factor. In particular, an ageing population is prone to conditions like dementia, which unlike cancer and heart disease does not necessarily lead to lower longevity but requires a lot of human resources for eldercare. Therefore, demand for low-skilled labour in advanced countries is expected to grow.