by Mike Stathis

Although the global economy has mounted a superficial rebound from the trough hit in 2009, increasing risks remain, both intermediate- and longer-term.

The intermediate-term risks are based primarily on faulted economic policies intended to deal with the economic collapse. These actions have resulted in a reflation of the global credit bubble.

The longer-term risks are also related to this reflation, in addition to a definite scaling down in public spending for various programs in advanced and certain emerging nations.

Despite this superficial economic progress, the recovery remains uneven with advanced nations lagging far behind the progress made in emerging nations. Most notably, advanced nations continue to experience persistently high rates of unemployment. Germany remains as the only notable exception in terms of advanced economies that are doing well. However, even Germany will soon be pulled down due to weakness in the EU.

Most emerging nations within Asia and Latin America are progressing nicely, although inflationary risks have heightened over the past several months. Specifically, Brazilians have tallied up a very large amount of consumer credit. And when financial institutions withdrawal foreign capital, the nation could get hit very hard. While China faces the threat of an implosion of its real estate bubble, the Chinese economy has numerous devices that can be introduced to cushion widespread effects. No matter how you look at it, there is not a single large economy that remains completely shielded from global economic risks.

Going forward, it will be important to consider differing economic dynamics throughout the globe, relative interconnectedness and each nations abilities to respond to deteriorating conditions through policy intervention.

When we examine critical macroeconomic metrics, a highly variable picture emerges throughout the globe. In terms of GDP, the U.S., EU, China, and Japan stand out.

However, when we examine GDP growth, emerging nations lead the pack, with China, India, Brazil, and nations in Africa in the lead.

When we examine the size of economies by trade, Europe stands out aided largely by the progress made in Germany.

Despite recent problems, Japans trade economy is also quite prominent. Finally, Australia and Canada also stand out despite having much smaller populations. In particular, Australia has benefited greatly from Chinas thirst for commodities.

When we examine nations based on the size of financial assets and liabilities, the U.S. and EU stand out. In contrast, most emerging economies pale in comparison.

Recently, the IMF revised global growth downward again, to about 4.5% for both 2011 and 2012.

As I have discussed in the past, the key point is that virtually every nation had previously been expected to report declining growth in 2011 and 2012 relative to 2010. This reduction in growth is now being acknowledged. Even though the new estimates for growth are still impressive, we cannot forget that it remains unbalanced, with emerging nations far outpacing growth in advanced nations.

Thus, the key to sustaining economic growth throughout this challenging period will be to ensure emerging economies are able to continue at their current pace without overheating.

Finally, perhaps the most efficient means by which to minimize further reduction in global growth would be to minimize further episodes of financial stress in the EU.

As predicted weeks earlier, during its June 22nd meeting, the Fed lowered estimates for economic growth at 2.7% to 2.9% this year, down from its 3.1% to 3.3% forecast made in April. During the meeting, the Fed also released 2012 growth forecasts between 3.3% to 3.7%, which was lower than its previous forecast. I expect the Fed to reduce its 2012 forecast in coming months.

Think about that for a minute. Over a two-month period the Fed revised growth downward by that much? What does that tell you? Youre going to get this same approach from Wall Street economists and others.

Remember, a forecast looks forward by a reasonable time span. And real forecasts general hold their weight over time. Otherwise, such forecasts are really broadcasts, serving only to fuel knee-jerk responses.

Now I want to direct your attention to the accompanying table. Although the basic data was retrieved from the U.S. Budget Office, the IMF has tweaked it in order to state its case for radical austerity measures.

Basically, the data shows that older Americans and Americans born today will receive more government payments than taxes paid into the system. While I do not dispute this data, the analysis leaves out the influence of healthcare system. A good deal of the inequity between generations is due to the public healthcare system.

While the demographic shift is certainly a factor, the main culprit of intergenerational inequity is due to unchecked inflation from within the healthcare industry. If the U.S. healthcare system was restructured so that it spent the same per capita and on a per GDP basis as the healthcare systems in Canada, UK, Japan and Western Europe, much of the projected intergenerational disparity would disappear.

This remains a topic not discussed in the media because everyone in the media has been paid off by the healthcare industry in a variety of ways. The situation is similar to the financial media. This is specifically why you will never obtain any useful or accurate guidance from anyone in the media, especially from the media whores. As the facts reveal, all of the so-called financial experts have miserable track records and hidden agendas.