There are many reasons to fear that 2012 will be a highly challenging year for the US economy. This is not only because the economic recovery will face considerable headwinds and could be hit by a European financial shock, but also because the US appears to have run out of fiscal and monetary policy space to counter any renewed economic downturn with an additional stimulus.

Unlike in the United States, any losses from property market lending are likely to be absorbed by the state. And they will be done so in a manner that will not impair the Chinese banking system's ability to extend credit as was the case in the United States.

There has been much gnashing of teeth and rolling of eyes over eurozone leaders' repeated inability to solve their financial crisis once and for all. The rest of the world can best help, the reasoning goes, by shouting exhortations at Europe to just try harder. But what, exactly, are Europeans being urged to do?

Ten years from now, what will be the next great global currency?

The world saw such extraordinary uncertainty in 2011 that a simple failure to repeat that debilitating climate of uncertainty in 2012 may engender a moderate recovery, especially in the US economy.

China's ultimate objective must be to float the currency to allow it to find its own level in a world of capital convertibility.

The strained economic relationship between the United States and China poses a very real risk to the long-run economic outlook for the United States and the world, as China continues a dangerous and inexorable drift towards protectionist trade policies.

It would be wrong to plan a second stimulus package at this time.