Well, I don't want to go overboard. It's too easy to come up with nightmare scenarios about what may happen next. But here are things I think have a reasonable chance of happening, even assuming some good will on the part of the theocratic right.

1. The end of the Western Alliance. NATO is a dead letter. Even the English are not going to follow us into war again.

2. An Argentina-style currency crisis. This is where some are going to think I'm going over the deep end, but I'm not. Ask an economist.

We have an untenably large fiscal deficit, the administration wants to reduces taxes further (if anything) and has show no inclination to cut spending--rather than the reverse--opening that deficit wider. To date, that deficit has been financed largely by Asian nations (including China), trying to ensure that the dollar does not fall too far against their currencies. This is not sustainable; ultimately, interest rates will have to increase, because higher rates will be the only way the Treasury will be able to find the money it needs to borrow.

Simultaneously, we have a huge current account deficit--meaning we import far more than we export. This, too, is unsustainable--it involves borrowing further money abroad.

When a nation runs large current account and fiscal deficits at the same time, it is at high risk for a currency crisis. A currency crisis occurs when the nation's creditors no longer have confidence in its ability to repay its obligations; at that time, sources of further funding dry up, liquidity dries up, the currency crashes, there are major lay-offs, and there is, for a time, deep recession.

America has avoided this fate so far for several reasons, including a past history of financial responsibility, the fact that we dug ourselves out of the Reagan deficits, and the fact that the dollar is the currency of account for most of the world. But even America cannot continue to run deficits of this scale forever.

A currency crisis is, in fact, virtually inevitable, unless a) the fiscal deficit is drastically reduced, by cutting expenditure, raising taxes, or both; and/or b) there is a large increase in US exports relative to imports. Both of these look quite unlikely over the next four years.

Exactly when the crisis occurs is impossible to predict; quite possibly, not until after W is out of office, which is a bit of a pity. As the architect of the coming depression, he ought by rights to be around to suffer the consequences.

3. A serious attempt to ban abortion. Bush basically owes his re-election to the Christian right, and this is the single issue that most motivates them. This could take the form of a constitutional amendment--which, since they control both houses and the presidency, they can get through--but which also must be adopted by 38 states, which may be more problematic. Alternatively, they can adopt it as a simple law, which would, however, be susceptible to court challenge--but then, it is quite likely that Bush will be able to appoint several new justices to the Supreme Court over the course of the next four years.

The only factor that might restrain the Republicans from doing this is concern about the next election; this is the kind of issue that might well motivate the opposition enough to win (just as, in my opinion, the gay marriage issue is largely responsible for the Republican victory).

4. Military action against Iran, North Korea, or both. Quite likely, this will not involve a full-on invasion and conquest, as in Iraq, if only because the volunteer military doesn't even have enough men to secure Iraq, let along hold down Iraq and fight another war. More likely, it will be an airstrike to try to take out reactors, missile sites, or other nuclear-related facilities. Given that we will have no allies, this assualt will inevitably be condemned by the entire world, other than Israel; we will escape UN sanction only by using our veto. If it involves Iran, Iran will become (like Syria is already) a covert supporter of the Iraqi insurgency, making pacification of Iraq essentially impossible.

5. One or more major terrorist operations against the United States, quite likely involving dirty bombs (I think it less likely they'll get actual nukes) smuggled into the US in shipping containers, virtually none of which are inspected three years after 9/11, even though this is our most obvious vulnerability, because the current administration hasn't bothered to spend any money to do so.

Have a good time, fellas. And it might be time to start socking away some money for a rainy day.

posted by Greg at 4:00 PM