A private group of economic analysts recently came together to construct a probable scenario of the state of the world economy and the U.S. economy five years from now. They evaluated current as well as historical economic data to arrive at what they believe is a painfully realistic scenario of the economic situation in 2017. Their forecast appears to be nothing short of alarming.
Massive Debt Loads
The forecast says that the global economic crisis that precipitated in 2007 will show no signs of ending by 2017. If anything, the economic conditions are only likely to get worse, unless dramatic socio-economic policy changes take place at a global level – which appears to be a far-fetched thought at present. The US debt situation will snowball into a gigantic problem, with the debt crossing $25 trillion mark, and causing major downgrading of the country’s credit rating.
Wasteful Social Programs
The U.S. dollar would have lost its fast-eroding status as the global reserve currency, with gold as well as a group of other currencies replacing the dollar. At a political level, the United States would continue to suffer from a paralysis of indecisiveness and nervousness. An acute gap between the rich and the poor, and rising joblessness in the face of wasteful and ineffective social programs, would lead to an increasingly polarized American society.
Gold & Silver – Saviors
The European debt crisis that began in Greece would have spread like a contagion throughout Europe, resulting in a quick succession of bankruptcies and failures of banking institutions. With the unemployment levels at an all-time high throughout the west, and persistent weak consumer spending would create a scarcity or an insufficient amount of tax revenues for their governments. Food and oil prices would have gone through the roof. Prices of precious metals such as gold and silver would have scaled newer heights, with global investors continuously shifting their portfolios in favor of gold and silver.
A Ripple Effect
In the worst case scenario, Asian markets by 2017 will face their own set of economic problems, triggered from the bursting of a huge real estate bubble. Extensive protests and riots will be witnessed across the world, causing serious social challenges and preventing tough financial measures to put the global economic situation back in order. With investor confidence at an all-time low and a growing aversion to risk, economic recovery will be nowhere in sight.
Being Practical, not Theoretical
With this kind of frightening economic forecast about the near future, the question arises: Can we avert a global crisis, and put the world economy on a road to recovery? The answers are not easy, and nobody has the answers. We are living in extremely unpredictable times, and it is difficult to say with certainty how the economic future will shape up. A lot will depend on the political will of global leaders to take bold decisions that are visionary and not retrograde. But first the people have to put the right people in office, people who care about financial jurisprudence and not about politics or what sounds good in a classroom.
In any case, it is clear that there are no quick-fix solutions available. The deep-rooted economic weaknesses that have developed over decades will not vanish into thin air with some magic pill. The recovery, if and when it happens, will be long, painful, and slow. But it really does not have to be, it can be much quicker. Individual investors, meanwhile, need to assess the long-term scenario realistically and choose investment choices that are likely to provide a more secure and growth-oriented future.