We have just witnessed a period of intense market volatility. This time around, its effect is compounded by equity markets finding it hard to break off the link to plunging oil prices. In 2008, overleveraged banks and overleveraged households, combined with feckless supervision and regulation led to the market crash and the great recession which followed. Today, banks are healthier, households have greatly deleveraged and there are no real signs of a systemic bubble or malcontent on the scale of the 2008 mortgagebacked securities (MBS) crisis. If there is one thing which is of concern to me, it’s the lack of liquidity, as regulations have forced banks to move out of various businesses and placed restrictions on the use of their balance sheets. The developed world has a growth problem, a productivity problem, a disinflation (if not deflation) problem and a middle class income problem. As I wrote in my December newsletter, the fiscal response from governments to address these is missing and monetary policy is near exhaustion. This will lead to market volatility but, to be clear, this is not 2008 all over again.