Politicians are avoiding needed reforms

I believe only structural reform can protect the global economy against the next great recession.

However, has the world been reforming with sufficient verve or is it a case of financial institutions being unable to break the mould?

It may be an exaggeration to say countries have become slaves to financial markets. However, to some degree politicians are controlled by what happens in those markets. Whenever interest rates threaten to rise too much and paralyse economies, leaders shake off their inertia and take decisive action. And when markets start to nod off again - reflected in falling interest rates - politicians heave a sigh of relief and put their feet up. Unless markets breathe down their necks, few politicians seem prepared to reform.

Economists are hoping the US, Europe, Japan and China will opt for intensive reforms over the coming quarters.

As yet, little suggests that this is imminent. In the US, unless politicians come to an agreement, another shutdown looms and new spending cuts will start to bite. To make matters worse, the introduction of Obamacare has been messy and created political insecurity. America is not yet on solid ground. It may be able to get away with this for a while but Europe risks mounting tensions in the immediate future. Time is running out for reforms. Elections in the European Parliament are due in May. Campaigns have started and will gain momentum. As they eye the polls, few politicians will have the stomach for contentious measures.

In China, the third plenum did not herald major changes. Regardless of his reform rhetoric, President Xi Jinping obviously believes in the supremacy of the Communist Party. And even if he were to take a surprising stance, fundamental reforms would take years and go against the vested interests of local authorities.