4 Financial Doomsday Scenarios

By Harry Kimball,  Newser Staff
Posted Dec 17, 2008 11:20 AM CST
A specialist works on the floor of the New York Stock Exchange.   (AP Photo)
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(Newser) – James Rickards is far more pessimistic about the economic crisis and its global implications than most of his analyst colleagues, Politico reports. But he’s also well respected by US intelligence and defense services. Here are four of his nightmare scenarios.

  • Terrorism: Al-Qaeda has long sought to disrupt the US economy; the current crisis would give any attack a "force multiplier effect"

  • China: The country finances more than $500 billion in US debt, but depends on a halfway decent dollar to fuel its export economy. As the US continues to devalue its currency with bailouts, China's influence grows.
  • A real crash: Rampant deflation, 15% unemployment, and a 35% loss of GDP don't seem to be in the cards, but Rickards is paid to think about the "existential threat," and loss of international influence, they would cause
  • A new global currency: The world depends on the dollar now because there's nothing else; if the world comes up with an alternative and abandons the dollar as its lingua franca, a recession becomes a depression