All that has happened is that the transmission from one to the other has been delayed. There has been no decoupling of developing economies, or more narrowly the BRICs, from the developed world.Note that although at first glance some of these predictions seem unrelated to others, in fact they all flow from the same basic balance of payments and balance sheet frameworks. These are more or less the same predictions – based largely on historical precedent and the logic of the global balance of payments mechanisms – that I have been making for the past five or six years (or the past 11 years on the breakup of the euro), but I thought it would be helpful to list them.

There is nothing really new in these predictions.

Trade protection sentiment in the US will rise inexorably as unemployment stays high for a few more years.

Germany will stubbornly (and foolishly) refuse to bear its share of the burden of the European adjustment, and the subsequent retaliation by the deficit countries will cause German growth to drop to zero or negative for many years.

Spain and several countries, perhaps even Italy (but probably not France) will be forced to leave the euro and restructure their debt with significant debt forgiveness.

European politics will continue to deteriorate rapidly and the major political parties will either become increasingly radicalized or marginalized.Within three years Beijing will be seriously examining large-scale privatization as part of its adjustment policy.Much slower growth in China will not lead to social unrest if China meaningfully rebalances.If the People’s Bank of China (PBoC) resists interest rate cuts as inflation declines, China may even begin slowing in 2012.Any decline in GDP growth will disproportionately affect investment and so the demand for non-food commodities.Chinese growth will begin to slow sharply by 2013-14 and will hit an average of 3% well before the end of the decade.Chinese debt levels will continue to rise quickly over the rest of this year and next.Over the next two years Chinese household consumption will continue declining as a share of GDP.BRICs and other developing countries have not decoupled in any meaningful sense, and once the current liquidity-driven investment boom subsides the developing world will be hit hard by the global crisis.

These will be driven overall by a contraction in global liquidity, a sharply rising risk premium, substantial deleveraging, and a sharp contraction in international trade and capital imbalances. If I am right, this means that there still is a pretty significant set of major adjustments globally that have to take place before we will have reversed the most important of the many global debt and payments imbalances that have been created during the last two decades. My basic sense is that we are at the end of one of the six or so major globalization cycles that have occurred in the past two centuries. We are so caught up in noise and market volatility – as the market swings first in one direction and then, as regulators react, in the other direction – that it is easy to lose sight of the bigger picture. Markets have been crazy this month, but rather than try to wade through all the news, much of which doesn’t seem to have much informational content, I thought I would duck out altogether and instead make a list of things I expect will happen over the next several years.

Seeing the bigger picture meaning