Under Construction

Here are some financial crisis scenarios you'll hear every so often. I haven't done enough investigation to assign probabilities to any of them. They are usually overblown. People were worried for generations about another depression, but the government has learned to use fiscal and monetary policy to minimize that risk.
There are always short term worries. E.g. the failure of several sub-prime mortgage companies at the end of Feb., 2007 and a sharp drop in the market along with declining home prices lead to dire short term predictions. The market went down 6% in two weeks, but rebounded 11% in the next 2 1/2 months.

Baby Boomer Retirements with 401(k) cash ins.

The fact the baby-boom generation (a large population group) will be be reaching 65 from 2009 - 2030 and starting to withdraw their retirement savings has led to speculation of a multidecade bear market. A 2007 study "New Estimates of the futurre Paath of 4001(k) assets", (a National Bureau of Economic Research (NBER) working paper by James M. Poterba, MIT, Steven F. Venti, Dartmouth; and David A. Wise, Harvard.
They forcast that the total size of 401(k) plans will nevertheless grow markedly. 401(k)'s now represent only a modest fraction of a typical retiree's total wealth. But the professors point out that 401(k) plans have existed only since the early 1980s; by the time that today's younger workers retire, they will have had many more years to contribute to their 401(k)'s than current retirees have had. See NY Times Article "Baby Boomers Are Cashing In. So What?"

World move from a dollar standard to euro or gold

Almost every major country has been slowing moving out of dollar dominated assets and diversifying into either the euro, in most cases, or into gold, which Russia is doing very strongly.
President Nixon broke from the gold standard in the turmoil of the Vietnam War, when the French and other European nations begin trading in their paper dollars for gold, in their doubt that the militarized U.S. economy would ever be a robustics porter of real goods and services again. And then Nixon in order to rescue the dollar, having cut it loose from the gold standard, seems to have gone to Saudi Arabia and made a deal; whereby the United States would arm the Saudi royal family against all opponents, internal and external. And in exchange, everyone in the world would need to trade real goods and services for dollars to get petroleum; whereas the United States simply prints those dollars up for nothing. The U.S. is losing that hold on the world financial system, but there's another reason to hold dollars, and that is to keep the American economy going, so that the United States can consume what the rest of the world, particularly China, exports.
Source: Michael Ruppert's economic forecast , 2006

Opec converting from the dollar to the Euro
Syria, under fire from the U.S. for the alleged support of terrorism, said it planed to end its currency peg to the dollar by year-end 2006 to reflect closer trade ties with Europe. (I don't know if they actually did that)

The Organization of Petroleum Exporting Countries (OPEC) is shifting away from total reliance on the dollar as an international currency - and adopting the euro as an alternative.

Iran is "waging economic war" against the US by ending all oil sales in US dollars. The shift to the euro and other currencies could encourage large holders of dollars - such as China, which buys more than 10 percent of its crude oil from Iran - to diversify their foreign exchange reserve portfolios. Because these holdings "are vital to financing the continuing US federal budget deficits," the move to non-dollar currencies seriously threatens US economic stability.

See: Will the Dollar Plunge? Would that Be So Bad? at EconBrowser.com, 2006

Gold standard
President Nixon broke from the gold standard in the turmoil of the Vietnam War, when the French and other European nations begin trading in their paper dollars for gold, in their doubt that the militarized U.S. economy would ever be a robustics porter of real goods and services again. And then Nixon in order to rescue the dollar, having cut it loose from the gold standard, seems to have gone to Saudi Arabia and made a deal; whereby the United States would arm the Saudi royal family against all opponents, internal and external. And in exchange, everyone in the world would need to trade real goods and services for dollars to get petroleum; whereas the United States simply prints those dollars up for nothing. As these bourses open using euros and rubles, the U.S. is losing that hold on the world financial system, but there's another reason to hold dollars, and that is to keep the American economy going, so that the United States can consume what the rest of the world, particularly China, exports.

Foreign Financing of US debt

Japan and China were literally loaning us the money to buy their goods.

Under a resource-based gold convertible dollar system, as we had for most of our nation's history, the kinds of trade deficits we now are faced with could not occur. When trade imbalances occurred, delivering gold to make up the difference would balance the books. As gold was drained from a deficit country, the currency would be devalued, making imports too expensive, and thus stopping the trade deficit. But in a fiat-dollar-based system, these limits are removed.

This is patently "unsustainable" because at some point foreigners may decide they have enough of our dollars, forcing the whole system to fall apart. The dollar would devalue, and then we wouldn't be able to buy as many things as we want from foreigners, like energy to drive our cars.

Some argue that catastrophe can't happen. These optimists point out that the foreigners who have loaned us the dollars to maintain our life style, are freely doing so and are now locked in a deadly embrace where they would hurt themselves if they don't continue extending us credit.

China, Japan, India, and Korea have all decreased the percentage of their holdings denominated in dollars.

Caribean Banking Centers and the UK have picked up the slack. Caribbean Banking Centers are actually the largest buyers of U.S. debt. They are acting on behalf of investors from other nations who are passing money through the banks of the Caribbean to make their purchases. Who these Caribbean investors really are is a mystery.

See: Japan and China Stop Buying US Debt, Bud Conrad, 2005

Treasury International Capital (TIC)

Depletion of strategic natural resources - Oil & water

Most experts think we either have or will reach peak supplies of world oil reserves between now and 2010. Although OPEC is still increasing output, they are doing it with more wells and other extraction techniques. Oil will not run out in the near term but it will be more expensive to get it. There are many, however, who think we are finding or will be finding new fields to compensate for the depletion of existing ones.

This along with concerns about climate change from greenhouse gas emissions is becoming a real concern for most.

Clean water reserves running out
The United Nations estimates that by 2050 half of the world population will experience water scarcity. The worst hit populations will be those of the 49 Least Developed Countries (some 2 billion people), who will not have the needed 50 litres per person per day for their basic needs. Since the 1970s multinationals, interested in the water market, have capitalized on the looming “water crisis” and lobbied steadily to get the privatisation of water and sanitation accepted as the only solution for the management of this increasingly scarce resource.

See: Peak Oil
Thirst, Privatization or Water for All? at the Presbytrerian Church USA.
Africa - Europe Faith and Justice Network (AEFJN)

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last updated 30 May 2007