CANADIAN SUNSET
Every so often the world is dealt a hugely negative blow right out of the blue. On some occasions, several negative blows are struck, and on rare occasions as many as three or four hit coincidentally.
It's very possible that we will see three tragic systems colliding in a very negative way over the next few years which could bring about a thirties style depression or a 'perfect storm scenario' that we should prepare for, even if we doubt that it will happen. What are the risk areas?
I have five major concerns......
Problem One: Wheat Rust and Major Wheat Shortages for an Extended Period as Long as the Great Depression ... Many Years
The first blow could hit the wheat bread-flour food supply chain and result in unexpected starvation around the globe. The risks are that an Irish potato style famine could travel the globe because of over specialization and vulnerability of wheat to a new wheat rust that recently originated in Uganda and could hit Asian wheat producing areas this summer. China is frantically researching new rust resistant strains, but seems to be fighting a losing battle as the rust may mutate to overtake new strains, which in any event could take five or more years to develop.
Problem Two: World Financial Insolvency and Deflationary Pressures Arising from Major Weakness of the US economy and the US Dollar
Few economists these days think that the world financial crisis will be short lived. We are in for a major shock that could see policy makers struggling to avoid inflationary and deflationary nightmares.
Problem Three: A Flu Pandemic Arising as Starving People seek to Survive Inflation and Wheat Shortages.
A flu pandemic will happen, but we don't know when, perhaps sooner rather than later. The wheat shortage and a major slump in world economy could make the risk situation much worse and increase the likelihood of a pandemic. The problem is one of farmers feeding chickens when their communities don't have wheat and grain because of a major world wheat shortage after the rust has reduced harvests. People could be forced to eat sick birds, or hide the fact they are eating chicken that has the virus, which could cause a pandemic. The rust could increase the likelihood of specific longer term disease threats.
The world does not have the will to change its patterns of consumption of oil and the major oil producers will have a glut unless they can keep the price of oil artificially high. A high price of oil gets us to adopt new methods of producing energy. There is so much speculation in oil that the true energy situation is distorted out of recognition. We do not know whether the price incentives to alternative energy sources will work, but the effects of climate change will worsen as the world economy is hit by greater ferocity and changeability of weather patterns.
Problem Five: Increased Risk that the International Wars on Terrorism Have to Be Shelved On Account of Insolvency
The world economy may not be able to afford a continuing war on terror even though it will continue. Expect more successful terrorist attacks, and one on the United States that could be destabilizing with a new American president unprepared for the worst decade of terror yet to come. If you are starving, you may be tempted to join the terrorist camp, if someone tells you that the problem is the United States. Even worse, the US may be tempted to take action on Iran, which would have disastrous consequences.