I think the major cause of economic instability in 2008 will be:
- Boom and Bust in global Housing Market
- Capital Shortages as a result of mortgage defaults
- Exchange Rate volatility underpined by continued weakness of US dollar
- Commodity Prices - Shortage of supply and increasing demand could push up prices.
In the UK and US, governments concentrate almost entirely on Monetary policy as their anti inflationary mechanism. However, there are other potential policies as well. Some feel very outdated (- remember Monetarism and trying to control the Money supply?)
Is a Strong Pound Good or Bad? - How firms respond to a strong Pound
If your an exporter the continuing strength of the pound is likely to lead to problems. However, there are different ways that firms can respond.
Chinese Economy in 2008 - Will the dragon be slayed? or will growth continue to outpace all expectations. Also prospects for the Chinese Yuan 2008