The idea was to learn from past mistakes made by our world leaders and prepare ourselves for any economic fallouts of the current events, which are shaping our destinies. As I started listing these out, I realised how bad a shape the world is in. So here go some thoughts which tell me that we are not out of the woods yet...
THE GLOBAL ECONOMY
This looks ominous for the growth of the Chinese economy & its banking system, which UBS believes has an exposure of as much as 50% of its books to the Chinese property market. Remember, just like the subprime disaster in the US, the Chinese economy has wrapped itself around its bloated property market… so if it crashes, the whole system could come tumbling down.
Iran wants nuclear power and possibly the capacity to build a nuclear weapon; which is unacceptable to Israel and the U.S. Following the U.S. invasions and occupations of Iraq and Afghanistan, Iran has emerged as the principal power in the region, capable of further destabilizing either of its war-torn neighbours. The US has imposed sanctions including an oil embargo on import of crude from Iran, while, Tehran has led a move to ditch the U.S. dollar as the standard currency of exchange in the global oil market and cutting off supplies to France and the UK.
US President Mr. Obama, speaking at the American Israel Public Affairs Committee, in early March has declared that he would not tolerate a nuclear-armed Iran and would act — militarily, if necessary — to prevent that from happening.
If the situation spins out of control in any of several possible directions, oil prices could shoot to $200 a barrel. Of course, the downside of open hostilities could throw the entire Middle East into chaos and it is conceivable that even Russia and China could be drawn into the conflict in some way.
Over the years Governments across the world have been mounting expenses by building unwieldy bureaucracy and appeasing public servants with wage hikes, while simultaneously reducing tax burdens and lavishing sops on the electorate. While this kept everyone happy as long as the economy was growing, it has thrown up several challenges with recessions & slowdowns over the past few years.
Since the Second World War or probably the disbanding of the erstwhile USSR, the world has never seen as much political unrest as we are witnessing since 2011. Blame it on the loss of jobs, economic disparity, inflation, corruption, religion or systemic decay of governance – the economic crises that has swept the world since 2007 has resulted in political unrest of a magnitude not witnessed before.