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.