From a new post on the Oil Drum:
It looks to me as though 2012 is likely to be a truly awful financial year, with several crises converging:
- Either very high oil prices or recession,
- The US governmental debt limit crisis,
- The Euro crisis,
- The Chinese debt problem,
- Debt deleveraging in the US and elsewhere,
- Further MENA (Middle East/North Africa) political problems, and
- Conflict between need for greater resources and pollution issues.
If a person follows through the expected effects of high oil prices and debt, the financial system would appear to be the most vulnerable part of the system. The financial system would also appear to be what telegraphs problems from one part of the system to another. Unless a solution is found, failure of the financial system could ultimately bring down the whole system.
Nothing happens overnight with the world economy, so changes are likely to take place over a period of years, rather than all at once. We can’t know exactly what the future will bring, but the handwriting on the wall is worrisome.
Well worth reading the full story.