THE CRISIS OF AGE LOOMS

The exploding cost of funding retirement benefits is threatening many economies. Policymakers worldwide must tackle the problem posed by an ageing population. Acommon thread runs through Brazil's recent financial crisis, Japan's decade-long economic stagnation and President Bill Clinton's cosmetic proposals to strengthen US social security. All could be harbingers of the great "ageing recessions" that threaten to wreck the global economy of the 21st century. Exploding retiree populations in the industrial nations will drive down private savings rates after 2010. The EU and Japan, which have been exporters of private savings, are destined to become importers. Consequently, the role of global creditor increasingly will fall to the developing nations of Asia and Latin America. In some future crunch, the politics of this new dependency could get out of hand.