“PIMCO, probably the most influential private-sector based investor, said Britain faced a cut in its credit rating unless they develop a credible debt reduction plan”.

My thought was, can the United States be far behind?

“Markets are beset by a series of contradictions. They are dependent on extraordinary amounts of government stimulus. But that stimulus is in turn ultimately dependent on the willingness of markets to finance governments at low rates. At some time - maybe in 2010, those contradictions will have to be resolved. And that will trigger another nasty bout of volatility”.

In other words, hold on, we may be back on the stock market roller coaster ride this year, so be prepared.

“All the issues facing the global economy can be summed up in one big dilemma. If the economy does not enjoy a typically vigorous rebound, then the stock market must come under threat. And if the economy does manage that upturn, them surely government bond prices will fall sharply.”

“This points to a potentially turbulent year. In the past, huge market setbacks have been followed, not by periods of calm, but by long stretches of volatility. The Great Depression included some of the best years ever for Wall Street, with shares rising by over 50% in 1933 and nearly 40% in 1935. But even though shares reached their bottom in 1932, investors still had to live through a flat year in 1934 and a 38% decline in share prices in 1937.”

“In Britain, the bumper year of 1975, when equities more than doubled, was followed by a fall in 1976. When a stone falls into a pond, the ripples persist for a while. The credit crunch was a whopping great boulder.”

Source: The World in 2010 - The Economist