Free market 101

When markets are free, people become easy fodder for en slavers and exploiters.
The concept of free market means the government is allowing the vulnerable to be exploited. Market freedom is a freedom to exploit.
Every market process involves more than just financial costs and benefits of doing business. Looking at just the financial benefits; versus costs, means important considerations in the process of production are missed. Pollution, long run consequences, and costs to others are not factored in by market price forces-resources become under-priced.
Free markets become 'free,' as they don't factor in all the true costs of production. To the  producer, these markets create seeming 'free profit' paid for by everybody else.

Spreadsheet Art

Abstract models mirror modern art. Both cannot express the essence of reality. Growth in a Time of Debt, by Professor Ken Rogoff and Carmen Reinhart, models world economies and was accepted as truth by neoliberal policy makers. The bulky read has pretty charts which helped convince policy makers impose stiff austerity cuts.

Europe is reeling under austerity cuts. Rogoff and Reinhart, have for yours been crusaders against big government. In 2010, the world was convinced by their persuasive arguments and beefy charts.

Growth in a Time of Debt is flawed. Thomas Herndon, phd student, and his supportive professors have identified methodological failings in the elaborate spreadsheet modelling. Spreadsheets carry risk and graphs become modern art.

Practically, austerity cuts growth. Inverse relationships exist between growth and debt, on one hand; austerity and growth , on the other. The common denominator in all economic play is growth. With environmental considerations, sustainable growth to be precise.
Europe has seen austerity driven jobs loses or negative growth.  Sustainable growth can create employment for those suffering recession. Without growth, austerity worsens the debt balance as interest accumulates. Debt  can finance growth,  all this complicates the relationship between debt and growth. Charts all start to mirror modern art.

Critical Mass

World equity markets have performed well in the first quarter; however, the real economy is not picking up. Austerity has driven down output performance in the EU, USA and periphery regions. The above graph shows a process of financial 'crowding out', as Global debt exponentially increases without increases in real output. China continues in its 'Africa dream', but right now it does not have the capacity to carry the load of the world's employment problems. Medium term, China needs to restructure its trade dependent economy which is highly unsustainable.
In the next few months austerity will continue to drive down real output and the BRICs, plus other emerging economies, will marginally sustain the world economy. Downward real macro-economic performance will ultimately pull down equity markets, in the US and Euro zone.