Armageddon

Amsterdam 2020 - In the past 20 years the US public deficit has grown with staggering numbers. The US balance of payments has risen with it to an all time high. The crash of the dollar five years ago has aggravated this effect. Asian governments and investment hedge funds started selling dollars at large amounts, since they lost confidence in the strength of the US economy. Western Europe has followed the Asians, in an attempt to minimize their losses.

The world is sending 5 billion dollar to the US every day in order to finance the deficits. The Fed had to raise the interest rates (now 7%) every quarter for the past years to keep inflation within proportion. This led to a drop in house prices. In the meanwhile, the average debt of US households has increased. The effect of these trends is that the numbers of bankrupt US citizens has risen.

At the moment several smaller banks have problems with their financial obligations and file for bankruptcy. The central banks of the USA, Europe, China and Japan try to minimize the damage by supporting the smaller banks, but with hardly any result. Stock markets decline as an effect of the decreasing stock prices of these Financials. Following the Financials other companies with big stakes in the US are also getting into trouble. Especially after the announcement of the OPEC a year ago that the decreasing dollar rate has caused them to sell oil barrels from now on in Euros. The insecurity of the financial markets has let to more barter agreements than ever, the increasing access to Internet-2 hosted non-financial markets has provided the ability to do this.

Four years ago, ExxonMobil, Shell, BP and Texaco opened their books on the search for new oil wells. None of them has been able to meet their targets in the search and exploration of new wells, while the existing wells are depleting. Oil consumption has increased in the past decades, while oil production has stayed at the same level for the past years. A few years ago an American Nobel Price winner predicted that sustainable alternative energy sources will not be cost effective in 2040 at the earliest. These announcements resulted in a steep increase of the oil price. Nowadays, a barrel of crude oil costs €100. This high oil price has affected the supply of food in the world tremendously. The production and transportation has never been so expensive, people are hungry and are starving because they cannot pay for food anymore, even in Western Europe and the US.

The decline in use of oil in the past two years, and the technology of using and producing energy cleaner, does have a positive effect on the quality of the air and environment. The Amazon rain forest is starting to grow again to the surface area level of 2000 via the UN Oil for Forest program. For every barrel of oil that is produced, 10 trees are planted. Global warming has almost come to a halt.

The oil companies now put their cards on the exploration of liquefied natural gas. This type of energy has two advantages: it is abundantly available in Russia and the Middle East. Next to that, it causes less CO2 and NO2 emissions. The combination of the declining dollar and the increasing oil price is tipping the world economy. Large US debt holders turn away from the US when it becomes evident that the US will not be able to pay back their debt. The Chinese and Japanese economies suffer a severe blow, since they are owing a large percentage of the US public debt. Furthermore, their export market is disappearing with the decline of US spending. Still, their economies are growing, but slowly. They suffer from high unemployment rates, because of the high numbers of population in their working ages.

Western Europe shows a slightly shrinking economy. This is fostered by the ageing population. The decline in the major stock markets and the inability of the governments to change retirement programs led to serious liability problems of pension. In more and more cities retired people are looking for jobs to earn a living. Consumer spending is declining, and most of it goes to basic needs, like food, shelter and healthcare.

The economic downturn in Europe and the USA is an extra burden for the public sector and the social security system. The huge amount of elderly have a great impact on social security spending. Government cannot raise enough taxes to cover public spending. This causes several social problems in Europe and the US: nationalistic and fascistic sentiments rise.

These sentiments have a negative effect on the growing flow of skilled workers from Eastern Europe, Asia and the Middle East that run away from unemployment in their own regions. Problems grow bigger because of this, because the young and skilled workers can pay taxes and can help to stabilize social security. The desperately needed workforce is neglecting the USA and Western Europe and are looking for their fortune in Australia and South America.

The focus of most EU administrations turn inwards and some anti-EU sentiments gain power. The negotiations with Russian states on their potential EU membership are aborted. France, the Netherlands and Germany abort their membership of the EU, while maintaining the Euro as the their currency. The power block of Europe is gone now, and bargaining power to receive the new energy sources is declining. Asia will be the next power block in the world. As a consequence of the economic dismay in the world, production and consumption decreases. Less commercial trading and less tourism takes place between Asia, Europe and the USA. The trust between these 3 power blocks after the collective victory over the waves of terrorism in the 2010’s has instantly vanished. Governments are blaming each other for the economic trouble and are focusing on their own needs.

The world economy has basically come to a stand-still the past years. Globalisation as a trend has come to a grinding halt. The world has to find a way to let the economy start growing again.