Frogs: Everyone affected by the global economic trade
imbalance, primarily China, US, EU and Japan
Boiling water: Economic crisis precipitated by a break-down in
the global trade imbalance
Ice cubes: Liquidity and fiscal stimulus
The metaphorical story of the frog boiling to its death in gradually
warming water should serve as a warning to economies.
As the water gradually heats up, the frog will float quite placidly,
unmindful of the warming water’s ultimate fatal impact, as its
survival instincts are geared towards detecting sudden changes.
But attention needs to be paid not just to obvious threats, but also
to slowly developing trends.
The world’s major economies flourished for too long while global
trade imbalances reached an unsustainably high level, triggering
the ongoing economic crisis. The subsequent infusion of liquidity
and fiscal stimuli (ice-cubes) has managed to temporarily cool the
boiling waters. This brief respite has given frogs another lease of
life to leap to safety.