Economic Crisis - After the Storm, the Earthquake

While we are expecting for the financial turmoil to pass, we might be missing a bigger one coming our way.

Before the burst of the late 2008, we had high oil prices, economic development, controlled inflation and low interest rates.

The high oil price made inflation grow, and that was one of the elements that made life harder for families triggering the debt crisis.

So the “before” situation was: economic development with high oil prices. It was a “inflation” scenario.

The crisis situation was: economic recession with low oil prices. It brought us to a deflation situation.

But nothing tells us that economic development and oil prices go hand-to-hand. So, we have two other situations to consider:

The optimum Scenario with economic development and low oil prices - Of course this is only achievable with alternative energies.

And the worst possible Scenario with high oil prices and low economic development – This would be a stagflation scenario.

So the question is: what happens faster? The economy recuperation or the rise of oil price?
If the rise of oil prise goes extremely high again, most of world economies can not sustain the burst of inflation that will arise. And in reaction to the rise of inflation the European Central Bank will be forced to raise interest rates.

Such a situation will be unsustainable for the citizens and families who have to pay interests for their loans. The situation that we first tried to avoid could be coming our way.

The key point is oil price. If it goes above 80 dol. It’s a sign to be worried. The contingent reaction is investment in alternative energies. Investment in alternative energies is not something we should do only to protect the environment. It should be done to protect our economies.