Heavyweight economists, politicians, businessmen, and journalists are waterside on Lake Como, Italy this weekend attending the Ambrosetti Forum, an annual conference on world events. So far, economists have espoused doom, especially for the U.S. economy, while the hotel they’re enjoying espouses this on its website: “Experience the splendor, the grandeur, the intrigue and the magic of Villa d’Este–an opulent hotel overlooking glorious Lake Como. Hailed as one of the best hotels in the world by Travel & Leisure, Condé Nast Traveler and Forbes Traveler, this famous resort destination has been widely praised for its beautiful gardens, exquisite cuisine, gala celebrations, impeccable décor and extraordinary hospitality.”
Haven’t seen this kind of juxtaposition since world leaders discussed the global food crisis over an 18 course meal two years ago. Notable Ambrosetti Forum concerns about U.S. and global economies are below:
—Many of the growth drivers in place since the collapse of Lehman Brothers are winding up or have ended, including not only the massive stimulus spending but tax breaks, schemes such as the “cash for clunkers” program and — for some countries like Russia — high commodity prices.
—The stimulus deemed necessary to jump-start moribund economies soon causes deficits and debt, upsetting the markets enough to spur austerity — which undermines growth.
—Most of the world’s growth stems from a developing world led by China — which is so dependent on exports that it needs the West to continue to buy, and so will suffer if recovery in the rich world proves short-lived.
—Europe continues to lose competitiveness partly because of the euro, which — for all the fretting over its dip earlier this year at the height of the Greek debt crisis — remains high in purchasing price parity terms versus the U.S. dollar.
—The sector that is widely seen as the spark of the global recession — U.S. real estate — has not recovered, with house-buying flat and the mortgage market, with its related financial instruments, essentially still in ruins.
— The jobs picture is not improving and in parts of the developed world — such as Spain, with some 20 percent unemployment — it is disastrous.