Bad Odds

The Business Insider has put together a slideshow, "The 15 Costliest Financial And Political Risks Looming In The Next Decade," highlighting the potential economic, social, political, and geopolitical threats detailed in a recent report by the organization that sponsors the annual gathering of movers-and-shakers at Davos, Switzerland, which is coming up at the end of this month.

Here are three that I believe are far more likely to occur than the oddsmakers at the World Economic Forum have calculated, based on what I have written about at Financial Armageddon and When Giants Fall (and in my books with those same names):

Asset Price Collapse: Over $1 Trillion

Likelihood: Above 20%

Cost: Over $1 Trillion

What it would look like: Funded by cheap dollars and quantitative easing programs worldwide, the bubble in everything from bonds to borscht bursts is covering the world in a sea of debt, making the unemployed even more bankrupt, and putting many more on the street.

The Western World Closes Its Doors To International Trade: Over $1 Trillion

Likelihood: 10%

Cost: Over $1 Trillion

What it would look like: Trade wars and protectionism immediately come to mind, but a withdrawal from globalization could also affect the stability of governments and potentially result in widespread political extremism.

Fiscal And Sovereign Debt Crises: $1 Trillion

Likelihood: 20%

Cost: $1 Trillion

What it would look like: Countries continue to pile on debt to pay for government services and corporate bailouts, taking on more and more interest payments, potentially leading to a series of international sovereign debt crises.

Click here to see the complete slideshow.

Comments

[Kevin M. Smith]

Is there any chance that those who rule the G-8 will get it and force countries like to US to start governing responsibly instead of governing just to preserve the power of their respective parties. It's a rhetorical question really. See http://www.rightwingagenda.blogspot.com/

[lee]

Though there will not be a world regulator major powers will have similar regulation to curve bad practice, the future is bright.

[Dave Narby]

I'm personally expecting several currency crises to happen in a 1-2 years, resulting in global trade coming to a standstill for a few months, after which a world currency based on commodities (at least for international transactions) will be established.