US: Bullish or Bearish?

Morgan Stanley: "On balance, I remain constructive on the structural prognosis while I have turned more pessimistic on the cyclical outlook.
Four months ago, I dared to pen my first constructive piece on the global macro outlook in years (see my 1 May dispatch, “World on the Mend”). Yet recently, I have warned of the mounting downside risks to world economic growth in 2007 (see my 14 August dispatch, “Not Much Fizz Left in the Global Economy”). How do I reconcile these seemingly contradictory points of view?
My optimistic assessment was primarily a call on the global policy architecture -- the structural framework that governs the cross-border interplay between national economies and world financial markets. I was encouraged because the so-called stewards of globalization finally seemed to be taking the threat of mounting global imbalances seriously. The 22 April meetings of the G-7 and the IMF were watershed events -- singling out global imbalances as an increasingly worrisome threat to sustainable growth in the world economy. The IMF introduced a new paradigm of surveillance and consultation that moved from a single-country to a multilateral framework. I drew added encouragement from pro-consumption rumblings in China that pointed to a rebalancing of that economy away from excess dependence on exports and fixed investment. For years, I worried that the authorities were asleep at the switch as an increasingly unbalanced world veered toward a highly disruptive strain of global rebalancing. With global policy makers finally waking up to the threat, I argued that it made sense to reduce the odds of a crisis endgame"