Third, today’s relaxed financial conditions could tighten sharply, as the result of an old-fashioned market panic.We see compressed risk premia, rising leverage and, not least, rapid growth of relatively opaque and unregulated non-bank financial intermediation. Note, too, that private-sector indebtedness is itself not far below where it was in 2007.Fourth, governments in high-income countries are losing control of their public finances. With a few exceptions they are running big structural fiscal deficits, while average ratios of public debt to GDP are at levels last seen after the Second World War.These countries, especially in Europe, also face the challenges of high...