World on Brink of a Precipice and a Large Full-Scale War in Asia

As global economic woes continue to haunt world leaders, the world itself seems to be on the brink of a precipice and a large, full-scale war in Asia. What are the factors that determine this prognosis? Let's look at the EU where the sovereign debt crisis has gone out of control with another bailout being mulled for Greece and also for Spain. Analysts believe that France and Italy may also go the way of Greece and Spain. The situation is so bad in Spain that some Spaniards were found rummaging for food in the country’s supermarket trashbins. The world’s largest economic block, the EU is imploding. Let’s look at the US. While polls show that the US could avoid a fiscal cliff, it has record unemployment, its budget deficit is at an all time high, and housing transactions have fallen. Yet the economic growth in the US could be better the next quarter. 

Democrat Barack Obama’s administration is pitching for budget cuts in the military and is urging countries in EU, South America and Asia to up their military budgets as the US having spent considerably in the wars on Iraq and Afghanistan is increasingly wary of providing security umbrella to friendly countries. Not surprisingly in Asia, countries such as South Korea, Indonesia, Taiwan, Vietnam, Thailand, Singapore have increased their defence budgets and are going on a weapon’s acquisition drive much vary of a increasingly assertive, secretive and belligerent China. Besides, this the tussle between China and Japan over a clutch of islands which are rich in gas/minerals could spin out of control. Nationalist feelings are at an all time high in both these countries. World economic growth has been slashed to 3.3 per cent as a whole, with the advanced economies set to grow at 1.3 per cent and developing economies set to grow at 5.3 per cent, the IMF said recently. 

Growth in the world economy could increase marginally if the world fixes its unregulated hedge and derivatives trading, the World Bank said. What is necessary is accommodative monetary policies, steady fiscal consolidation and fixing the financial systems to spur growth, the IMF has advised. But the question is what factors point to a full scale blown out war in Asia or World War III. Some of the points above mentioned need to be factored but also the fact that Israel/Palestinian problems, Iran, Pakistan, China’s problems with Japan and southeast Asian countries, the deteriorating global economic order, the slowing of growth in the drivers of global growth namely China and India. The global economic recession is indeed very deep and entrenched and the world stands at where it stood in 1933, just before the start of the World War II.