Globalisation and the development of Asia have strengthened the world economy immensely over the last couple of decades. This strong economic activity should continue into the future, but five major risks which are very difficult to assess. - The first risk is the credit crunch. Will the pain be limited to the financial sector, or will it spill out into the rest of the economy. Higher interests rates are inevitable, but their impact on economic activity is much more difficult to assess. The flawed financial system will eventually collapse, but not for a while yet.
- A related risk is the lever pullers who run the financial system. They have considerable ability to get things wrong trying to put things right. The credit crunch is the result of a foolish response to the dotcom crash.
- The third risk is the price of oil. The long term direction of oil prices is very difficult to assess. A serious escalation of prices would do serious economic harm.
- War in the Middle East could cause tremendous damage.
- Most depressions are caused when unexpected events are exacerbated by political leaders. The capabilities of our political leaders have not improved recently. They still have the ability to stuff things up. Unexpected events are inevitable. Mistakes by political leaders are even more inevitable.
The last of these five risks is the most serious. The kingdom of man has been riding high for several decades, but its days are numbered, because the Kingdom of God is coming. God will sooner or later shake the kingdom of man, so that it falls away. The clever political and economic leaders will assist him by making this situation worse. They will totally undermine their credibility.
The world economy looks quite strong, but we should never take prosperity for granted. God may have something different in mind. He usually shakes the kingdom of man when it is not expected.
This full series is at Economic Situation.
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