Moreover, it seems likely that the volume of funds managed by managers with potentially unhealthy incentive structures has grown with the increased popularity of hedge funds. But increased uncertainty about durability of benign conditions? To sum up, there has been a broad-based decline in many measurable risks and much of this development reflects factors that are welcome and sound.
Some of them are being encouraged to erect trade barriers in order to protect favoured national sectors from foreign competition. But experience shows that such beggar-thyneighbour policies not only impose costs on the rest of the domestic economy, they also undermine global economic welfare. Other policy-makers are being advised to forget about structural reforms in the short term, for fear of exacerbating economic weakness.