I believe that the Fed has overreached in its monetary policy not just in response to the latest crisis, but pretty consistently over the 15-20 years. In an effort to lessen the effects of (inevitable) economic downturns, the Fed (and other central banks) has caused extreme financial distortions and dislocations.
In our recent annual review of Turkey's economy, regression analysis suggests that, barring a significant change in policies or the economic environment, the level of growth consistent with a stable current account is in the 2¾ to 3½ percent range. In other words, growth above this speed limit would lead to a wider current account deficit.
The global economy looks poised to display better growth performance in 2014. Leading indicators are pointing upward -- or at least to stability -- in major growth poles. However, for this to translate into reality policymakers will need to be nimble enough to calibrate responses to idiosyncratic challenges.
Despite some recent apparent signs of improvement, in the past two years we've had very negative economic news from Europe, particularly from countries such as Spain, Ireland, Greece, Cyprus, Italy, and Portugal. High unemployment, failed banks, fiscal insolvency, and a growing distrust of markets are just a few of the difficulties.