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If you’re just watching the Dow, it may not seem like there is much to worry about in the global economy.But the reality is, there are forces stirring on the four corners of the globe that could derail the current feel-good environment.
They come in all shapes and sizes: the collapse of a monetary union, inflation gone wild in the emerging world, and the world’s emerging power losing its feet.
Food price inflation in those two key BRICs has been high, and while both countries are throwing every tightening measure imaginable at the problem, little has been accomplished.
While the Indian democracy is more politically robust, the Chinese government is in danger of not living up to one of its key promises to its people: economic stability and growth. If inflation was to rise even higher, which now seems unlikely, China's rural population may move against a government forcing dramatic actions.
The Threat: The Spanish economy is the domino frightening the bulk of Europe. It represents the fourth largest economy in the eurozone. Its economic position is desperate. On the labour side, unemployment is over 20%. On the banking side, its local banks, or cajas, are in need of a bailout. And on its growth side, well, it's weak.
There may soon be a means in place for Spain to take EFSF aid to support its banks, still troubled by the country's flailing real estate sector. But if its problems arise sooner, the euro could be in trouble as Germany waffles on an expensive political bailout.
The Threat: Tightening in China has lead to massive spikes in SHIBOR, the Shanghai Interbank Offered Rate. That means for banks, companies, and even government sponsored companies could be in trouble.
If, suddenly, a company or bank was to enter a default scenario, it is unknown how Chinese markets would react.
The Threat: The Korean Peninsula has been tense for the past few months, after a North Korean shelling attack on a South Korean island shook the region's stability. The fishing boat incident between China and Japan also ratcheted up tensions in the region.
And while things seem to be calming down in Korea, the potential for an escalation of conflict remains in the region, with China posturing through new weapons releases and the U.S. bogged down in Iraq and Afghanistan.
The Threat: As every economy in the world attempts to build an export led recovery, countries are using their printing presses to devalue their currencies as a means to compete.
Some are clearly losing, like Brazil. Others are winning, like China with its floating dollar peg.
But if the world is to show signs of contraction, states may become more aggressive and move from currency war to protectionist trade policy.
The Threat: Oil prices may have more to do with the health of the global economy than realised. Some say it was the trigger that caused the recession we just escaped.
With oil prices rising right now, there's the potential that, if we surge past $100 like we did prior to the last recession, we could see the same result.
The Threat: The U.S. government's high level of debt has thus far not been a problem, with markets more focused on issues in the eurozone. That could all change, however, if the run-up to the increase in the U.S. debt ceiling leads to a conflict over government spending in the U.S..
Markets may pounce on the uncertainty, sending U.S. treasury yields higher, further endangering the health of the U.S. government balance sheet.
The Threat: The housing double-dip is clearly on in the U.S., with Bernanke's attempts to stave off deflation failing. But with housing already so low, will a further decline actually have much of an impact?
Nouriel Roubini sees a further $1 trillion in losses in housing.
Such a decline would inhibit some of the economy's most reliable spenders endangering the consumer outlook and, in turn, the U.S. recovery.
The Threat: Ireland's parliament has approved its deal with the IMF and EU. But a new government, which will be elected in late February, may not approve of the deal.
And even if that government does, it could be overruled by an more nationalist Irish government in the long-run, that will reject the bailout and seek broader economic independence, maybe even monetary, for Ireland.
The result would be haircuts for Ireland's banks and a hit to its sovereign debt holders, including key European banks.
The Threat: China could be in store for a hard landing, if it engages in too heavy handed policy tightening to combat inflation in the country. Societe Generale give this scenario a 30% chance of happening.
The result would be a slow down in what has become the world economy's second engine. There's no telling what the contagion would look like, and whether it would create a recession scenario for the U.S.