THERE IS AN essential difference between China and most of the other major economies. As the World Bank revises its growth forecast downwards, it is important to remember the difference. Simply put, China has a range of palatable options available to it. Europe and the US are exhausted after their first attempt to recover from the global financial crisis and their options are now limited.

WHERE IS THE pulse of the 2012 world economy located? Europe has no pulse and looks to have a high potential to move into a full cardiac arrest. The pulse in the US is erratic, but weakening. Although many have pointed to the 1% loss in the Standard & Poor’s 500 Index in 2011, the real shock is the very meagre 12% rise in the S&P 500 from 2010 to end-2011. This is not a bullish story. It is two years of virtual stagnation despite the current index rally. The pulse in China appears to be losing some strength, although it remains stronger than either Europe or the US. The longer-term prognosis is for some weakness going into 2012.

GROUNDHOG DAY. Call it what you will — the charts suggest there is a high probability that 2012 will be a repeat of 2008. The leadin is not the same. In 2008, the markets were dominated by end-of-trend patterns such as head and shoulders and rounding tops. The year 2011 didn’t have these patterns, but it had massive increases in volatility, confirming instability.