system two

system two
start-up thinking in the enterprise

Wednesday, 9 December 2009

3 scenarios - all bad...

The 3 most likely scenarios for our economy over the next 3-5 years.

1. As the fiscal stimulus is rolled back, we realise we've created a massive asset bubble in commodities and stocks. Gold goes to $5,000 and ounce, the stock market tanks, economic growth falls back - standards of living start to decline.

2. As the fiscal stimulus is rolled back, we fail to realise we've created a massive asset bubble in commodities and stocks. Consumers keep spending (a bit). Due to the value of the pound we start importing inflation even in a low growth environment. Gold goes to $10,000 an ounce, the stock market tanks, economic growth falls back, standards of living start to decline.

3. As the fiscal stimulus is rolled back, we fail to realise we've created a massive asset bubble in commodities and stocks. Consumers keep spending - quite a bit – economic growth picks up to reasonable levels - inflation goes nuts. The government of the day, keen to be perceived to be acting early, lift interest rates. Everyone realises no real recovery had taken place. Gold goes to $10,000 an ounce, the stock market tanks, economic growth falls back, standards of living start to decline.

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