I predicted the crash of 2008 – here are the global ‘megathreats’ I see now | Nouriel Roubini

Over the coming decades, the world will face mega-threats that would not only jeopardize our global economy and financial assets, but also jeopardize peace and prosperity.

In our partisan political world, where we kick the streets — we favor short-term planning and let others think ahead — these threats are something different. Left to grow, they will make life worse for people around the world. It is essential for the public good that these threats are not ignored by our leaders, but recognized, taken seriously and countered – quickly.

Some of these mega-threats are economic: the specter of inflation and recession at the same time; the debt crises, the mother of all crises, while private and public debt ratios have reached historic peaks; an aging population that will collapse our pension and healthcare systems, to name just three. In the years leading up to the 2008 financial crisis, I properly predicted that our vicious boom and bust cycles would lead to total economic collapse. I fear that we will again be faced with this prospect.

Here’s what the economic crisis would look like this time around. A global recession that will be severe – not short and shallow – as high debt ratios and rising interest rates will lead to a sharp increase in debt service problems. Defaults for zombie households, businesses, financial institutions, governments and countries as central banks are forced to raise interest rates – not cut them as we have seen over the past decades – to fight against inflation. Advanced economies such as the UK are beginning to be rated as emerging markets after disastrous economic and fiscal policies, such as those of the short-lived Truss government. Private equity, real estate, venture capital and cryptocurrency bubbles will burst now that the era of cheap money is over.

But beyond that, our turbulent times present us with larger geopolitical mega-threats to our way of being. The global backlash against liberal democracy and the rise of far-right and left-wing radical and authoritarian parties is partly driven by the sharp rise in income and wealth inequality. Workers feel left out while elites gain wealth and power. This situation will get worse as jobs are lost, not because of trade and migration, but because AI, robotics and automation will lead to permanent technological unemployment. Left unchecked, this will surely see even more dangerous and aggressive populist regimes come to power.

More urgently, the conflict in Ukraine has increased the risk of a new cold war between the West and powers like China, Russia or North Korea. Growing tensions between the United States and China over Taiwan have peaked in recent months and could escalate further. The constant risk of conflict between Iran and Israel, however, could destabilize us all.

And then there is the most pressing and real mega-threat of all: the global climate crisis, which will cause untold and irreversible economic and human disasters if it continues to be ignored. It’s already on our doorstep, of course. Natural disasters this year alone have created millions of climate refugees. Droughts and heat waves have swept through India and Pakistan, sub-Saharan Africa and the western United States. They are only a sign of things to come, but the powerful are doing little to remedy them – most talk, and indeed most investment, is nothing more than green-washing and green-wishing. This is not the urgent and tangible action we need.

These are just a few of today’s ominous signs of far worse and dangerous mega-threats in the coming decade – mega-threats that I see our leaders ignoring every day, it’s clear as it should be that the past 75 years of relative calm are now threatened.

Here is a possible path for our future world: these threats materialize and feed off each other in a destructive loop, leading to economic chaos, instability, collapse and conflict worse than we already know. But there is another, less dystopian future: one where national and international politicians cooperate on sound policies and solutions to ensure the continuation – however bumpy – of half a century of peace and prosperity.

It is important that our leaders are aware of mega-threats like these so that they can be dealt with before it is too late. As long as dysfunctional and polarized politics and warlike geopolitical rivalries prevent much-needed global collaboration, the dystopian path seems a more likely bet.

Nouriel Roubini is professor emeritus at the Stern School of Business and author of Megathreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them.

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