Things are upside down. This morning’s data shows that Europe has shaken off Greek woe and is booming, while a growing chorus of voices are saying the US is technically bust. Meanwhile, the yield on US, UK and German government bonds crashes. Yet the spread between ten-year and 30-year US bonds is at an all-time high, suggesting markets expect deflation in the medium term and inflation in the longer term. But not enough is made of demographics. Surely the real cause of Japan’s economic malaise was the ageing of its population, which led to surging savings. And if you think the demographic challenge facing the US and the UK is bad, this is nothing compared to the challenge facing Europe.

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