The United States will continue its economic expansion until mid-decade. We see the U.S. expansion running into serious trouble sometime after 2005 and before 2010 as the baby boomer generation matures and starts liquidating financial and real estate holdings. In Europe in the next decade a major issues will be the return of Russian power to the Polish frontier and the willingness of the rest of Europe and the United States to share the burden of defense with Germany. Asia Asia will experience a major downward trend. But the two most important economies, China s and Japan s, have not confronted their basic weaknesses and cannot recover until they do.
China faces major internal challenges.
We do not expect the center to hold. In Japan, as a generation matures whose youthful economic expectations have been unmet, expect to see a major political transformation. Russia Economic liberalism in Russia has failed catastrophically. The burning issue in Russia today is how to reclaim the stolen billions that are in the hands of the oligarchs and to halt further theft. Whether the current system will deal with this problem will determine if political liberalism survives economic liberalism s demise.