World Bank Group President Jim Yong Kim will be at a Thomson Reuters Newsmaker event in London on June 19 discussing the threat to economic development posed by climate change, the business case for going green, global economic development, sustainable growth in the developing world and mobilising capital in international financial markets.

The Newsmaker will be President Kim’s first major public event in London since he was appointed World Bank Group President last year. He has committed the bank to a new strategy that will aim to “end extreme poverty and promote shared prosperity”.

Coming directly from the G8 Summit, President Kim will be speaking on the same day that the World Bank launches a new report, Turn Down The Heat: Climate Extremes, Regional Impacts and the Case for Resilience.

You can send us your questions for President Kim using the comments box below, or on twitter using the hashtag #askworldbank, and we will endeavour to put a selection of them to him.

You can watch the event live and join the online discussion here from 9 a.m. BST on Wednesday, June 19.

Back  in the last quarter of 2012 when Mark Carney was announced as the Governor-elect of the Bank of England, imaginations ran wild about the new arsenal he could bring to the BoE’s toolkit for getting the UK economy moving again. GDP targeting and unlimited QE were not beyond the realms of possibility. Carney in the past had dismissed suggestions that central bankers were out of options when it came to stimulating over-leveraged developed economies. However, as we get closer to his start date the debate has shifted regarding monetary policy.

The Bank of Japan is throwing the kitchen sink at their economy, at the same time as debate is raging at the Fed that QE3 should come to an end. Added to this, the BoE seems to be having its own internal debate about the effectiveness of the UK’s quantitative easing policy.

Where Carney stands regarding these debates is what we want to know as his start date at the Old Lady comes into view. All eyes and ears will be on his response to questions about the positive and negative effects of QE. He is likely to be asked about the Bank of Japan’s enormous monetary policy programme announced earlier this month. While he is likely to be diplomatic, it will be interesting to see if he believes the BoJ’s economic objective – to use monetary stimulus to reach a 2% inflation target in 2 years – is realistic, and if QE is the best way to do this.

Will Carney adopt the BOJ-style of QE and throw the kitchen sink at the UK economy? Or will he adopt the more cautious approach of the ECB? What does he think about the Fed’s QE programme and the prospect of the end of the largest stimulus programme the world has ever known?

Everyone wants to know if he thinks the Fed’s massive expansion of its balance sheet has been successful, especially as cracks have started to form in the US economy recovery. While Carney is likely to be diplomatic (after all, central bankers do not typically comment on the activities of their peers), any candid comments will be most welcome by the fixed income and FX community who are trying to “price in” the Carney effect at the BoE.

The current governor of the Bank of Canada has taken on the challenge of his career by agreeing to head of the Bank of England. Canada has low inflation and its economy has stayed in positive territory ever since it emerged from recession at the end of 2009.

It’s a very different kettle of fish in the UK. The economy is sluggish, even if we do avoid a triple-dip recession the UK is likely to skirt along the bottom for sometime yet. The threat of stagflation is also very real as Carney gets ready to make his move.

The BOE has, so far, not been able to brighten this lacklustre economic landscape,  can Carney deliver the economic goods when Mervyn King has not?

Carney’s view of the limitations of monetary policy will also be monitored. The ECB has been clear that it feels monetary policy can’t fix everything and President Draghi has made clear that member nations’ governments need to do their bit to boost sustainable growth.

Does Carney feel the same? Where does he think the limitations of monetary policy lie? Is the UK economy beyond help? While we doubt he will admit that central banks’ are impotent, no one will buy what he says if he thinks he can click his fingers and make everything ok.

There has been a lot of speculation about Mark Carney and his style of central banking, but as we get closer to his start date at the Old Lady, we really know very little about his plans for the BoE. The BoE needs a new face and a new leader, his answers to some of these questions will help us to find out if he is the right man for the job.

Dear Mark Carney,

As you arrive in your new office, you will not be short of free advice, least of all from economists. Nonetheless, like a supporter of the away team valiantly trying to make himself heard above the roar of the home crowd, this is my feeble attempt to compete against the chorus of voices calling for ever more, ever larger doses of QE, ever lower interest rates and even more devaluation of the Pound.

Just say no!

What, after all, has QE achieved?

We can never know for sure what might have happened without it – my colleagues are still arguing about the effects of economic policy in the nineteen-thirties, so we can't wait for a definitive answer about 2008 and its aftermath – but the evidence in its favour is far from overwhelming, whereas the damage it is doing is plain for all to see, especially in two areas.

First, the distortion to interest rates is equivalent to a massive redistribution from savers to borrowers, a forced loan amounting to hundreds of billions of pounds. The subsidy takes many forms, most obviously the negative real interest rate paid to bank depositors and, perhaps even more damagingly, the cripplingly low annuity rates and unsustainable burden on pension funds.

To a great extent, this is an intergenerational transfer. Now we didn't need David Willets to tell us that we baby-boomers have never had it so good and our good fortune is to some extent at the expense of the young, who have to pay for our index-linked state pensions and all the benefits in kind we enjoy. But it is also because my generation was brought up to believe that security came from saving, whereas the young are far more inclined to borrow – hence Britain's disastrously-low saving rate, far below that of almost any of our competitors. Throughout the post-war period Britons have seen their savings expropriated by the authorities by a combination of raids on pension funds, more taxation and high inflation. Unsurprisingly, they have responded by over-investing in housing, the only asset available to ordinary folk that seemed to be sheltered from the vagaries of economics and the greed of politicians –– which brings me to the second area where QE is doing a lot of damage.

Too many people, including those who ought to know better, talk as if re-inflating the housing bubble should now be the Holy Grail of monetary policy. For them, it's a no-brainer: print money and you can be sure that much of it will be used to buy houses.

So why hasn't that happened already?

We've been printing money like crazy since 2008, so why hasn't it generated the mother-and-father of all housing booms? Trillions of pounds have been created, but little of that money is reaching households, nor the SME's who are just as desperate for it. The dirty little secret at the heart of QE is that it is being used to recapitalise the banks.

The record gap between borrowing and lending rates and even the 3%+ difference between long and short gilt yields should be added to the bill for cleaning up the mess left by Fred Goodwin and co. Essentially, QE means the banks can borrow for nothing and lend at rates barely changed from the boom years – my credit card offers me cash at 27%. (By the way, these high rates cannot be explained away by default risk, because bad debts have barely increased in the last few years).

Of course, being able to trumpet the world-beating reserve requirements imposed on Britain's banks has become a point of competitive honour for our regulators, so bankers can to some extent claim force majeure as a defence. But if anyone asks why we need such sky-high reserve ratios, it is because of the appalling track record of our banks, because systemic risk is greater than ever, given that we have chosen to merge banks rather than break them up, and because we still insist on basing our economy on financial services instead of taking the opportunity to wean ourselves off this dangerous dependence.

I know that much of this is beyond your control, given the international context, in particular, the currency war unleashed by the Fed in 2008.  The Bank of England has led us into the battle with enthusiasm and success. The Pound has been by some way the weakest major currency in the last few years, falling by 25% against the dollar, 35% against the yen and even by 6% against the euro – sovereign debt crisis notwithstanding. But what benefit have we derived from these hollow victories? Our export performance has remained feeble, while our inflation rate has long been far higher than any of our major competitors.

Now I am not asking for a policy of unilateral disarmament, but I think you could at least use your reputation and the prestige of your office to press your opposite numbers in the world's central banks for an end to this madness before it is too late. It is time to get back to sound money, and to bury once and for all the myth that monetary policy can generate real growth.

For all the talk of bubbles past and present, the most damaging bubble of all has been in the market for central bankers. The first real superstar was Alan Greenspan, and his bubble burst spectacularly. Yet here we go again, expecting Bernanke and Draghi and Kuroda to save the world economy by wrecking its money.

Now you arrive in London trailing clouds of glory, revered as the world's best central banker. The first thing you should do is make it plain to everyone – politicians, markets and the public at large – that you are not an adherent of the central-banker-as-superman philosophy and that you take what we must now call the minimalist view that characterised the pre-crash orthodoxy, with one critical modification. The job of a central banker, or rather of the MPC, ought to be to keep broadly-defined inflation under control – that is to say, the pre-2008 terms of reference need to be broadened, but not to cover the level or growth rate of real or nominal GDP. Instead, it should be widened to require you to keep an eye on asset prices. The notion that we cannot identify bubbles is simply an excuse for neglect. True, in any given case we cannot say with 100% certainty what is irrational exuberance rather than rational confidence in the future, but, as you well know, most macroeconomic decisions have to be based on unreliable estimates of things like the growth of capacity, the supply of labour and the demand for money.

You arrive in London at the top of the league of central bankers. Bear in mind that there is only one way your reputation can go from here.

Yours,

Laurence Copeland

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Monetary policy would be so much easier if people, banks and markets obeyed the monetary authorities’ orders. In such a world, Thursday’s dictum from Mervyn King would be enough to put a stop to the pound’s recent decline. The UK’s central bank governor said that the pound was “probably” properly valued, after respective 6 and 7 percent falls against the euro and dollar so far in 2013.

The verbal intervention worked on Friday morning - the pound rose slightly against the currencies of both of its principal trading partners. Over time, however, the Bank of England’s actions matter more than its leader’s words.

It is easy enough for King to make pronouncements, especially as he is leaving the job at the end of June. After all, if the pound drops further, he can always say the market was paying too much attention to the utterances of his successor at the Bank of England, Canadian Mark Carney. But no words can extricate any central banker from the macro-economic trilemma. That is the observation that while modern central bankers want three things - control of monetary policy, free cross-border movements of capital, and exchange rates of their choice - they can never have more than two of them.

In the UK, the foreign-exchange traders who control the flow of funds in and out of the country think the BoE’s policies of negative real interest rates and generous money printing invite inflation, so they are minded to sell the pound. While the British central bank cannot stop this, it could support sterling with more hawkish policies. Such a turn, though, would amount to letting the forex market set monetary policy. The trilemma is inescapable.

King is well aware of the limits to his power, but he may think that tough talk from a man in the know will calm notoriously emotional currency traders. Or perhaps he hopes that stronger economic growth will soon make his words come true. Traders are more likely to overlook inflation when GDP is strengthening. But as long as the UK’s inflationary stagnation continues, central bank pronouncements can only slow the currency’s decline, or discredit the speaker.

David Cameron, of course, is the prime minister of the UK, and last week he gave a rambling 4,000-word speech on the national economy which is almost impossible to read. For some reason the speech appears online in what you might call teleprompter format, with a single sentence sometimes spanning three separate paragraphs. It's a clear indication that Cameron is more interested in rhetoric than he is in substance.

Meanwhile, Martin Wolf, who for many years has been the most respected and important economic commentator in Europe, has in recent weeks become much more accessible. Check out his column on bankers' bonuses, for instance: it's a smart and rollicking read, arguing persuasively that the UK government is being idiotic in its opposition to European bonus caps.

Wolf's immediate response to Cameron was solid, but his second go-round is just devastating: we're now officially in a world where the wonkiest columnist in the driest newspaper in Britain is stating his case far more simply and clearly than the populist PR man turned prime minister:

Mr Cameron argues that those who think the government can borrow more “think there’s some magic money tree. Well, let me tell you a plain truth: there isn’t.” This is quite wrong. First, there is a money tree, called the Bank of England, which has created £375bn to finance its asset purchases. Second, like other solvent institutions, governments can borrow.

Wolf's main point is simple: in an economy which might already be in a triple-dip recession, deficits are caused by economic sluggishness. That's what forces up government spending while reducing government revenues. Everything comes back to growth: the UK credit rating, the size of the deficit, and, most simply, nominal GDP, which is now 13.6% lower than the government officially forecast it would be back in 2008.

What's more, government spending comprises a much larger share of GDP in the UK than it does in the US, which means that spending cuts can easily directly cause recessions. And deficits always go up, rather than down, in recessions:

The prime minister also stated: “[Labour] think that by borrowing more they would miraculously end up borrowing less ... Yes, it really is as incredible as that.” What truly is incredible is that Mr Cameron cannot understand that, if an entity that spends close to half of gross domestic product retrenches as the private sector is also retrenching, the decline in overall output may be so large that its finances end up worse than when it started. Bradford DeLong of Berkeley and Larry Summers, the former US Treasury secretary, have shown that, in a depressed economy, what Mr Cameron deems incredible is likely to be true.

Cameron's speech is basically the horrible personal-finance metaphor writ large: he's trying to persuade people that solutions which make sense on a household-budgeting level can scale up to the national-accounts level. He's obviously never heard of the paradox of thrift.

In fact, the speech is even more confused than that. At the beginning of the speech, Cameron attacks the policies of politicians who thought "that we had ended boom and bust". Obviously, we haven't. But then he makes no attempt at all to explain what government policy should be during boom years, and how that policy should differ during recessions. And finally he gets into the thicket of monetary policy, explaining that he essentially needs to abolish boom and bust himself, else none of his policies are going to work.

Cameron boasts in the speech that "it is now possible to buy a new home anywhere in the country with only a 5% deposit, and at very low interest rates," and worries that "even just a 1 per cent rise in mortgage interest rates would cost the average family £1,000 in extra debt service payments". He then says (the ellipses are his, not mine):

It is hard to overstate the fundamental importance of low interest rates for an economy as indebted as ours…

…and the unthinkable damage that a sharp rise in interest rates would do.

When you’ve got a mountain of private sector debt, built up during the boom…

…low interest rates mean indebted businesses and families don’t have to spend every spare pound just paying their interest bills.

In this way, low interest rates mean more money to spare to invest for the future.

A sharp rise in interest rates – as has happened in other countries which lost the world’s confidence – would put all this at risk…

…with more businesses going bust and more families losing their homes.

In other words, Cameron is placing all his chips on permanently low interest rates, which are the one thing he can't control. And at the same time, he's pursuing a contractionary fiscal policy, which is the main thing he can control. Here's Wolf, explaining elegantly just how confused the prime minister's thinking is:

As the prime minister himself notes, “we had over-indebted households borrowing from over-indebted banks”. So why does he expect monetary policy to achieve much? He evidently thinks people should borrow less...

Today, even more aggressive monetary policy is quite likely to be ineffective, even counterproductive, to the extent that it slows desirable deleveraging. It is likely that direct monetary financing of even larger fiscal deficits would be more effective and less damaging than using even looser monetary policy to prod the private sector into life.

This is the political mess that Mark Carney is inheriting as he takes over the Bank of England. The prime minister is betting everything on low interest rates and on loose monetary policy, while using fiscal policy to make Carney's job as difficult as possible.

The UK is in a very tough economic spot right now, and it needs coordinated fiscal and monetary policy to get itself growing again. But the leader of the Conservatives seems to relish the idea of doing nothing at all on the fiscal side, while the leader of the Bank of England only took the job after deciding that he wouldn't run for leader of the left-wing Liberal party in Canada. The chances of these two working effectively together seem slim indeed -- and as a result, the future's looking pretty bleak for Britain.

Update: Wolf's colleague Chris Giles pushes back.

The investigations into the LIBOR rate-rigging scandal showed how commonplace bribery among dealers had become. For example, between September 2008 and August 2009 a single trader at the Royal Bank of Scotland had made corrupt payments to interbank brokers on 30 occasions, by means of risk-free transactions known as "wash trades."

While the likes of Barclays and RBS have acknowledged wrongdoings and vowed to change course, it’s no longer enough to mollify critics with soothing words, apologies and empty gestures.

That is why we at Transparency International are challenging banks to immediately initiate sustained industry-wide reforms. These reforms should have the clear commitment and buy-in of the most senior bank executives. A new generation of banking management is needed, one that is prepared to devote as much time and money to developing ethical standards as they once spent on circumventing them.

Top regulators have also woken up to the need for change. The European Union made a strong start[PC3]  when it committed to cap banker bonuses at 100% of their base salary, with shareholders able to double them. This goes a long way toward tackling the wrong incentives that helped drive banking behavior to the brink in 2008, precipitating the crisis.

In a speech last month, Mark Carney, incoming governor of the Bank of England and chairman of the Financial Stability Board, gave a blunt assessment: “Banks need to participate actively in reform, not fight it. … The time for remorse is far from over.”

But apart from an appeal to bank executives to rediscover their core values, Carney was short of ideas. This is what needs to be done.

At a minimum, the industry must commit to best-practice standards of integrity and agree to a hard and fast timetable for implementation. There must be measurable progress and a dialogue with all stakeholders.

Yes, overhauling the culture of an organization is one of the biggest challenges a chief executive can face.  However, from our experience of engaging with companies and sectors beset with endemic corruption, we have learned a thing or two. We would prescribe the following medicine to an ailing financial sector:

• Forge a new management culture:  The behavior of bank employees is not hard-wired. They are responding to short-term incentives and skewed values that are reinforced at every step of the career ladder, from initial recruitment to golden parachutes. Banks must put in place a sustainable management and leadership culture, together with the systems that underpin it (e.g., compliance monitoring, coaching, whistleblowing procedures, remuneration policies).
• Sunshine is the best disinfectant: Banks can vastly improve their transparency, particularly public disclosure of their business models, their policies toward customers, relationships with governments (payments, lobbying, political party contributions) and the measures taken internally to deal with unethical behaviour.
• Accountability, accountability, accountability: What has changed? What corrective action has been taken? At every step of this process of reform, the answers to these questions must be communicated to all those who have a stake in a bank’s proper functioning. This means not only “fireside chats” with supervisors, but with investors, customers, employees and civil society more widely.

In the past, these concerns have been farmed out to compliance or corporate responsibility departments. This should change with a commitment by senior management to do all this in a public and transparent way.

There is no quick fix. Cultural change requires a large investment of time and resources. Those who can show evidence of reform, however, may see some sheen restored to their tarnished reputations. Those content with empty promises will find that a culture of corruption and a string of fines are their only legacy.

PHOTO: Bank of Canada Governor Mark Carney speaks to students at the Richard Ivey School of Business in London, Ontario, February 25, 2013.

Financial conditions in the euro zone have significantly improved since the summer, when euro zone risks peaked because of German policymakers’ open consideration of a Greek exit, and the sovereign spreads of Italy and Spain reached new heights. The day before European Central Bank President Mario Draghi’s famous speech in London in which he announced that the ECB would do “whatever it takes” to save the euro, bond yields in Spain and Italy were at 7.75 percent and 6.75 percent, respectively, and rising. When the ECB announced its outright monetary transactions (OMT) bond-buying program, the euro zone was at risk of a collapse.

Since then, risks have abated significantly, thanks to a number of factors:

• The ECB’s OMT has been incredibly successful in reducing the risks of breakup, redenomination and a liquidity/rollover crisis in the public debt markets of Spain and Italy. Although the ECB has yet to spend a single additional euro to buy the bonds of Spain and Italy, both short-term and longer-term sovereign spreads against German bonds have fallen substantially.
• Following a number of political and legal hurdles, the successful operational start of the European Stability Mechanism (ESM) rescue fund provides the euro zone with another €500 billion of official resources to backstop banks and sovereigns in the euro zone periphery, on top of the leftover funds of its predecessor, the European Financial Stability Facility (EFSF).
• Realizing that a monetary union is not viable without deeper integration, euro zone leaders have proposed a banking union, a fiscal union, an economic union and, eventually, a political union. The last is necessary to resolve any issue of democratic legitimacy that might result from national states transferring power from national governments to EU- or euro zone-wide institutions. This transfer of power also would have to involve the creation of such institutions to ensure solidarity and risk-sharing are developed in the banking, fiscal and economic unions.
• The open talk in the summer by some German authorities about an exit option for Greece has turned into a tentative willingness to prevent and postpone such an exit. There are several reasons for this. First, Greece has done some austerity and reforms in spite of a deepening recession, and the current coalition is holding up. Second, an orderly exit of Greece is impossible until Spain and Italy are successfully isolated. Such an exit would lead to massive contagion, which would hurt not only the euro zone periphery but also the core, given extensive trade and financial links. Third, an economic disaster in Greece would be damaging to the CDU Party’s chances of winning the German elections. Thus, even when Greece inevitably underperforms on its policy commitments, Germany and the troika (the IMF, EU and ECB) will hold their noses and keep the funds flowing as long as the current coalition holds up.

Given these developments, the risk of a Greek exit in 2013 has been significantly reduced, even if the risk of an eventual Greek exit from the euro zone is still high, close to 50 percent by my estimation. Meanwhile, the narrowing of Spanish and Italian sovereign spreads has significantly diminished the risk that either country will fully lose market access and be forced to undergo a full troika bailout like Greece, Portugal and Ireland. Both Spain and Italy may in 2013 opt for a memorandum of understanding (MoU) that opens the taps of ESM and OMT support, but such official financing would inspire confidence as it would not be associated with rising, unsustainable spreads and a loss of market access.

While there is a much lower likelihood of disorderly events in the euro zone, there are still significant obstacles to deeper integration, as well as country-specific economic and political vulnerabilities. The biggest obstacle to the formation of a banking, fiscal, economic and political union is that Germany is pushing back against the time line for action, with the initial skirmish on ECB supervision of euro zone banks. This backpedaling reflects deep German skepticism on whether the resolution of the euro zone crisis requires a move toward greater union. Without a more credible commitment to austerity and reforms from euro zone periphery countries, lurching forward would imply that risk-sharing will turn into a large, long-term transfer union, which is unacceptable to Germany and the core. Thus, Germany will do whatever is necessary to delay the integration process, at least until after elections in fall 2013.

Meanwhile, there is a deep recession in the euro zone periphery that is spreading even to parts of the core: France will experience a recession in 2013, and even Germany is sharply decelerating as two of its main export markets, the euro zone periphery and China, contract and slow, respectively. The balkanization of economic activity between the euro zone core and the periphery persists. The balkanization of banking is ongoing as cross-border flows, interbank flows and smart money have left the periphery banks and found shelter in the core; in the case of public debt markets, balkanization and domestication continue as cross-border investors have left the periphery public debt markets, in spite of reduced yields, on top of abandoning periphery banks and corporates.

The euro zone periphery recession will continue in 2013: Fiscal austerity is ongoing; the euro is still too strong; periphery banks have capital shortages and liquidity concerns, and thus are achieving required capital ratios by contracting credit and selling assets; and consumer and business confidence is still depressed given falling output and employment. Moreover, private and/or public debts are still very high and possibly unsustainable over the medium term in a number of periphery countries, while the lack of growth adds to the debt sustainability risks. Potential growth is still very low in most of the periphery as demographic aging is ongoing, while structural reforms are occurring too slowly and only affect productivity growth after long lags.

Underlying all this is the issue of the loss of external competitiveness associated with external current account deficits that private foreign investors are unwilling to finance. Some internal devaluation is ongoing, leading to a reduction in unit labor costs, but that process is recessionary and occurring too slowly. Thus, though financial conditions have improved and tail risks have lessened, the fundamental problems of the euro zone remain.

PHOTO: A journalist compares the new 5 euro note with an old one (top) during a ceremony with Mario Draghi, President of the European Central Bank (ECB), in Frankfurt, January 10, 2013.  REUTERS/Kai Pfaffenbach

This is a tough time for experts. Empowered by the Internet and embittered by the sour economy, many people doubt the wisdom of expert elites. Journalism sometimes casts further doubt by seeking polarized positions that can draw an attention-grabbing debate, or by taking refuge in he-said-she-said accounts to avoid the harder job of figuring out who's right.

Now one tribe of specialists - economists - is striking back. Concerned that the great unwashed have come to see all economic proposals as being equally valid, the University of Chicago Booth School of Business has led an effort to figure out what economists agree on, where they diverge and how certain they are about their views.

To do that, the Booth school called on reputable economists to join its panel of experts. Each week, the panelists are asked whether they agree or disagree with a particular economic idea.

"Among practicing economists, it is understood that the media and the political process paints economists as more divided than they are," explained Anil K. Kashyap, a professor of economics and finance at the University of Chicago and a leader of the project. "It is more sensational and maybe makes for better reading to have point-counterpoint. It seemed reasonable to provide some context. There's a lot more settled issues than most people have a sense of."

As an example, Kashyap cited the gold standard, the monetary system in which the standard economic unit of account is a fixed weight of gold.

"The gold standard is an insane idea," he said. "I don't know of any reputable economist who thinks it is a wise idea, but it got a lot of real political traction."

Of the Booth panelists, 93 percent disagreed that the gold standard could improve price stability or employment.

But that is an extreme example. A paper presented this week at the annual gathering of the American Economic Association investigated the survey results in greater detail.

"Based on our analysis, we conclude that there is close to full consensus among these panel members when the past economic literature on the question is large," wrote the authors of the paper, Roger Gordon and Gordon B. Dahl of the University of California, San Diego. "When past evidence is less extensive, differences in opinions do show up."

But the authors did not find an ideological bias in those disagreements: "There are certainly some idiosyncratic views expressed, but we found no evidence of different camps."

Economists, these results suggest, seek to objectively establish the truth and have a widely agreed-on body of knowledge about how the economy works. In an age when it can be hard to write the word "facts" without reflexively reaching for quotation marks, that is of some comfort. But this picture of consensus among experts comes with a few caveats.

One was articulated by Paul Krugman, a Nobel Prize laureate and New York Times columnist who was at the American Economic Association meeting. Krugman accepted the idea that economists share a wide body of agreed, objective and nonideological knowledge. But he argued that when it comes to one subset of issues - business-cycle macroeconomics, or how policy should respond to booms and busts - economists are both divided and biased. That matters, Krugman rightly pointed out, because outside the academy these are among the economic issues ordinary mortals care about, and fight about, the most.

The second caveat is that consensus may be more fleeting, and therefore less valuable, than the economic high priesthood might like to think. To his credit, Kashyap revealed two issues on which the economic conventional wisdom, and his own views, have changed since the financial crisis of 2008.

One is currency controls: "Having watched all this hot money flow into these markets, I am much more sympathetic to the desire to slow things down," he said.

The second is whether central bankers should try to pop asset bubbles, an idea toward which Kashyap has softened. "I don't think the conventional wisdom was very good on this and I was firmly in the consensus," he said.

These shifts suggest that it is worth looking more closely at one clear subgroup among the economists in the University of California study. Gordon and Dahl searched for, and failed to detect, ideological bias or even the subtler influence of the very distinct intellectual traditions of top U.S. universities.

But they did pick up a clear difference between men and women. "Women," they wrote, "tend to be more cautious in taking a stance." For women making their way in the 21st-century world of work, that reticence is mostly a handicap - a willingness to admit to uncertainty is one reason women are paid less and can find it difficult to break through the glass ceiling.

For the benefit of the community as a whole, though, more female economists may be needed. The quest for objective economic knowledge is surely a good thing, as is the Booth effort to map where economists agree and where they diverge. But, given how profoundly and unexpectedly the world economy collapsed in 2008, maybe a little more womanly humility about that conventional wisdom would be a good thing, too.

10.) South Africa: Africa overall looks like it will continue its recent growth. But South Africa, one of the continent’s most complex and important economies, is floundering. Its dominant political party, the African National Congress, is resorting to populism to maintain its base among the urban and rural poor. That means more state intervention, more labor unrest and more assertive unions. We’re not predicting a fundamental political crisis, but the country is moving along a path that offers little reason for optimism.

9.) India: We’ve all read the predictions that India is poised to become the world’s next infinite-growth country. Not so fast. Despite initial optimism, the 2009 election hasn’t freed Prime Minister Manmohan Singh to reform the country as anticipated, with the tough choices continually being kicked to the next parliamentary session. (Americans should find this familiar.) Corruption continues to reign, and as we’ve seen in the rape protests of the past few weeks, there are fundamental cultural issues that India has yet to resolve. As general elections draw closer, the government’s ability to execute robust economic policies will decline even further.

8.) Iran: When is the United States or Israel going to bomb Iran? That’s the question that followed us through all of 2012. But a war-wary President Barack Obama and a more-diplomatic-than-you-think Prime Minister Benjamin Netanyahu mean that the risk of military strikes this year is less than most observers believe. Nevertheless, there is still a significant risk: We’re likely to see a sharp escalation in the shadow war between Iran and Israel and the United States, a cycle of mutual killings, cyber-attacks and proxy battles that has been ongoing for several years. As new sanctions are put in place against Iran, as we predict they will, efforts to sabotage the Iranian nuclear program will escalate. That’ll force Iran to escalate its side of the shadow war.

7.) East Asian geopolitics: For the past decade, the main risks in this region have been North Korea’s nuclear provocations and tensions around the status of Taiwan. Now new risks have taken their place. China has veered away from its “charm offensive” approach to Southeast Asia, and the United States is stepping into the void. Tensions between the two powers could put decades of economic growth at risk, as I’ve written about in past columns.

6.) Europe: The euro zone is headed for neither breakup nor resolution, and in 2013 the risk shifts from the threat of financial crisis to a loss of momentum in creating a redesigned euro zone. The weak economic outlook and the politics of crisis fighting will be the uncertainties this year. Big compromises will be needed to make further progress toward an integrated policy framework. It’s still unclear whether the politicians in power—or those who will come to power through elections—are willing to make those compromises.

5.) JIBs—Japan, Israel, Britain: The losers of 2012’s most important trends are all staunch American allies. Japan, Israel and Britain find themselves in similar positions: Their relationships with the United States aren’t as useful as they once were, they’re outside the major geopolitical changes under way and they’re constrained domestically from responding to the challenges of our new G-Zero era. As a result, Japan is scrapping with China, Britain is stuck in a no-win situation with the European Union and Israel is left watching an Arab Spring that hasn’t bloomed.

4.) Washington politics: It might not look like it, but the United States is on the brink of big developments—a domestic energy revolution, the potential for major trade agreements, a rebounding housing sector and businesses emerging from the financial sector in good condition. Of course, the ongoing drama in Washington threatens to derail all of it.

3.) Arab Summer: When the Arab Spring didn’t provide any fruit last year, it sloughed into an Arab winter. Now, in 2013, expect a long, hot Arab Summer. Radicalized movements are going to play a much more important role. An increasingly violent confrontation between Sunni and Shia both within and between countries is bringing the region a sectarianism that, before the Arab Spring, had gone largely dormant. But now Syria’s descent into chaos is spreading insecurity into Iraq, Jordan and Turkey. Meanwhile, new regimes are having a difficult time balancing governance with populism.

2.) China vs. information: The risk that the Chinese government can’t necessarily manage is the commodity that’s most unruly: information. A larger, better-educated middle class is demanding more unfiltered access to the Internet just as media reports are revealing secrets about Chinese leaders’ personal wealth. That’s forcing the Chinese to become more risk-averse, and become more nationalistic. That could easily isolate China even more than it already is.

1.) Emerging markets: Emerging markets are responsible for about two-thirds of the world’s economic growth, and their share will get even larger in the next 10 years. That raises the stakes for their future growth, and thus also the risks in case of an economic shock. Brazil, Mexico, Colombia, Turkey, Malaysia and the Philippines hold immense promise, and immense risk. At the same time, some emerging markets that are submerging: Egypt, Iraq, India, Indonesia and Peru, among others, are all struggling to scale their growth. The global economy can only hope they straighten themselves out.

You can read all of Eurasia Group's 2013 political risk report here.

1)     China rising

2)     The Middle East in turmoil

3)     Europe muddling along

They’re the good, the bad, and the ugly of 2012.

The Good: For the sake of our listless global economy, thank goodness for China’s rise. The country’s Commerce Minister is promising that China will hit its GDP growth target of 7.5 percent for the year. (In the first three quarters of 2012, it grew 7.7 percent.) China’s ability to power through the financial crisis provided global markets with much-needed energy, and its momentum, despite the crisis in the Eurozone, a key trade partner, has helped limit the damage. If it wasn’t for the resilience of the world’s second-largest economy, we’d all be a lot worse off.

The Bad: In 2012, almost every key story in the Middle East has gotten more complicated and more dangerous. Syria, Israel, Gaza, Iran, Jordan, Iraq, Yemen, Egypt. Israel has become increasingly isolated within the region, facing Palestinian rockets, a nuclear-driven Iran, and the prime minister of a former ally dubbing it ‘a terrorist state’. Egypt’s president pulled off a power play, and the Syrian nightmare deepened. Iraqis struggled to build a new society in the wake of U.S. withdrawal, and (supposedly allied) Afghans killed a record number of U.S. troops before they could reach the exits. When the Arab Spring first began to take shape, many observers hoped it would be just that – a rebirth. But you can’t spin it now. It’s bad and getting worse.

The Ugly: Europe was a mess in 2012. Reform of the euro area is moving in the right direction, but the halting progress that European leaders made in crafting a new eurozone could not avert record unemployment rates and a return to recession. The term ‘Grexit’ was coined in response to the persistent threat of Greece leaving the euro. Widespread protests against tough austerity measures, the rise of nationalist political parties, and huge governance and implementation challenges have compounded the problems of a continent still groping for credible, lasting solutions. In 2012, we’ve seen moderate progress — and a whole lot of ugly.

What do these three trends mean for the next five years?

In the Middle East, the various emerging conflicts are too expensive, too intractable, and too risky for outsiders to try to manage. Regional powers will have to manage these problems on their own. The bad will remain bad.

But for China and Europe, the ugly will slowly become good, and the good is about to get ugly.

The Europeans are on track to build a new eurozone, one that addresses many of its original design flaws. That means new banking and credit rules, new roles for old institutions, and a new understanding among governments – if not citizens – that Europe needs more unity. In five years, European integration will become something ‘good’ – for international politics and the global economy.

China, meanwhile, will turn ugly, at least for its neighbors – and for the West. China’s new leadership is more of the same. Political and economic reform remain elusive goals. China’s economic growth is slated to continue, but with that growth will come foreign policy disputes as America shifts resources to build new political and commercial ties with those most anxious about China’s expansion.

China’s rise, the Middle East’s turmoil, and Europe’s stumbles are all largely independent events. Despite a globalized world, governments are focused overwhelmingly on domestic challenges these days. That doesn’t mean regional problems can’t cause global headaches. Expect that to be the case for the next five years, as well.

This essay is based on a transcribed interview with Bremmer.

PHOTO: REUTERS/Jason Lee | REUTERS/Khaled Abdullah | REUTERS/Sebastien Pirlet