Worst Case Scenario: U.S/World Economy never rebounds

Now we are all talking about when would U.S and world economy turns around, some predictions are end of 2009, some 2010 and so on. What would happen economy never rebounds? In other words what will happen if we are heading to prolong global wide recession for next 10 years. Here are some thoughts

1. Protectionism

Obviously protectionism supporter’s voice grows stronger than ever. World Trade Organization may not have control over world’s trade. All nations lean towards protectionism and they choose their own way of doing business with greater consideration of local job creations and localized political gains.

2. Poverty

Poverty rate grows at exponential rate in Africa and some parts of Asia, which leads civil wars and change of world map. The charity work will virtually stop.

3. Cultural Changes

This prolong recession will help some cultural changes in some countries. To run family with normal means, all of the family members have to work. Man always wins bread concept will eliminate from most of the culture.

4. Revolution

We haven’t seen a rule changing and fundamental constitution change revolutions around the world for last 60-50 years. Now we could see some revolution from some countries.

5. Stock indices

Around the world stock indices trade with low index values, but some time it spikes and then come down to low index. Stock investment may not be a good option for investors, they continue to invest in gold, silver and other metals.

6. Aged Population

Developed nations will face it is growing unemployed aging population. Senior citizen care will be a great deal of concern. The ratio between senior citizen and others will decrease. Due to protectionism, immigration will not offset the ratio either.

These are all worst case scenarios, this will not even happen because U.S and world economy are resilient and come back sooner than later.


Comments

Nandu said…
Interesting post. Couple of other possibilities that could happen:

- Shake up of political equations in western hemispheres. Govt's will be replaced.

- Corporate world will also see lot of realignment. Some of the top corporates today may not exist and a new class of corporates will take over. This will also lead to more innovation.

- Weakening of the developed countries. Power equation of the world will change and we will evolve into multi-polar society.

Anyways i think this is hypothetical situation. While i don't expect recovery soon(next 1-2yrs) I think we will ride thru this in the next few yrs (3-5yrs) and evolve stronger.
1:01 PM
Subba Muthurangan said…
Thanks Nandu for your comment. Yes..these all are also real possibilities.
2:20 PM
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