where are we going?

I am interested in the most likely scenario to the path of economic "recovery"

Feel free to suggest other scenario's/variations 

1. The euro crisis gets resolved through haircuts on bonds and the USA unemployment rate continues to drop Asia, SA and Africa keep growing and the world economy booms

2. The euro zone fails and  govts. defaults but USA powers through. Third world growth slows but still moves in the right direction. boom

3. the usa slumps. euro zone fails. bankruptcy and austerity rules here and across the pond great we see Great Depression 2.0

4. the credit crisis spreads but every one prints it out. Benton woods is a failure. The gold bugs end up very happy

i'm leaning towards something along line 4.

1. The euro crisis gets resolved through haircuts on bonds and the USA unemployment rate continues to drop Asia, SA and Africa keep growing and the world economy booms

There may well be haircuts on bonds, but won't that leave the world's banks bankrupt? Which means they will need to be bailed out [in the opinion of themselves and their pals in govt], which means printing money, which means no recovery. After all, the cause of this depression is money printing and this scenario will lead to more of the same.

Why should the USA unemployment rate continue to drop [significantly]? What has changed? Short answer: nothing. 

2. The euro zone fails and  govts. defaults but USA powers through. Third world growth slows but still moves in the right direction. boom

Euro zone failing and govts defaulting would certainly help a recovery.

Euro zone fails means the causes that created the Euro would rise again, mainly Germany inflating a little less than everyone else, thus embarrassing them and their currencies, putting some kind of [minimal] rein on the mad money printing. Also, there would be less central planning, always a good thing for any economy.

Govts defaulting is good for the economy, because it will mean less eagerness [hopefully] to lend the govts money, thus freeing up more for the private sector to use to increase production.

But how will the USA power through? The US has the same problem the Eurozone has [parasitic jobs on a grand scale], only ever so much more so.

3. the usa slumps. euro zone fails. bankruptcy and austerity rules here and across the pond great we see Great Depression 2.0

Sounds possible indeed. And this scenario does not rule out the next one, but rather complements it.

4. the credit crisis spreads but every one prints it out. Benton woods is a failure. The gold bugs end up very happy

i'm leaning towards something along line 4.

Sounds very likely, and as I wrote, this will go hand in hand with line 3.

You left out there are some issues with countries such as China and Japan which, for all their faults, are prime drivers in the world economy. Both countries hold immense amounts of US bonds and an increasing quantity of eurobonds, effectively propping up the failed American/European monetary system on currency markets. Japan also has the dubious distinction of being the second debtor nation in the world behind the US: so long they averted bond crisis thank to a large captive domestic market. China, for all her strengths, is basically a colossus with clay feet: her own leadership is determined to buy social peace through endless economic growth, even when if it's as phony as the "ghost cities" we covered here in the past. Problem is the endless economic growth is showing some pretty disturbing signs: in the pre-Christmas season (when consumer goods are sent abroad in largest quantities) the Shanghai harbor moved one million tons less in containers. It never happened before. The housing bubble will have to be liquidated eventually. And there are fears of runaway inflation which could undermine the fragile "social peace" built on economic prosperity and Tienanmen-style repression.

While nobody can predict how this crisis will end up, one thing is certain: malinvestment needs to be liquidated and assets/prices allowed to fall to levels at which the market will be willing to liquidate them. Until capital is syphoned off to prop up bubbles and to artificially inflate asset prices we are getting nowhere. Whoever back in 2007 predicted this would have been an inflationary depression, step up and collect your prize (I know there are a few people on these boards who were right on the money).

 

You forgot that in EU price of labor(=wages) is very rigid, which means that unemployment can't adjust that well in recessions. Which means that black market will grow.

The timing and the ordering of events is impossible to predict, but we know that the debts massively exceed the ability of debtors to repay. There will be defaults. That is certain. The only question is whether they will be outright defaults or defaults through inflation. History says that governments very rarely opt for outright defaults (maybe never?) when they have the option of printing. In all likelihood, it will be some combination of outright and inflationary defaults. Some of the nations which cannot print the currency in which their debts are denominated will default outright, at least in part. The major nations will all print. In all nations, the private debt of the politically-connected (especially the banks) will continue to become public debt. In other words, "bail-outs" will continue, along with massive subsidies overtly and covertly: i.e. via printing, via actual subsidies, via regulatory advantages, etc, etc. The interventionist State will grow. Also, international authorities will continually carrot-and-stick the nations into giving up their sovereignty in exchange for economic "aid."

We will continue moving toward global government, and eventually when the current global monetary system based on the dollar breaks down, it will be replaced by a new global monetary system based on another fiat currency, but which is issued (or in some devious manner controlled) by an international authority, like the IMF. There may or may not be another world war to compel the next level of international integration.

The "green" movement (i.e. environmentalism, not the astroturf opposition group in Iran being run by American "pro-democracy" organizations and the CIA) will continue to advocate ever-increasing State intervention in the name of "saving the planet" from the mythical global warming...O, excuse me, "climate change" (they prefer that because it covers all bases). If we don't have another world war, then the next leap in the direction of international integration will be justified by the the need to combat climate change.

In the U.S., the GOP will change dramatically. Either it will be taken over by Paul supporters, and become a genuine minority opposition group, or the old-guard will react and successfully create some new basis for their legitimacy. A new war and/or a mass-casualty terrorist attack would do the trick I imagine. But something's gotta give...

Even though civilization has been all but obliterated already, the steady march of cultural Marxism will continue until there is outright pornography on prime-time Television, and no one knows how to spell "dog" or add "2+2" without looking at the proper "app" on their cell-phone, which, in the meantime, is giving them brain cancer. The mysterious trend of Western men losing fertility will continue, native populations in the West in general will keep declining, immigration from the third world will increase, as will ethnic tensions, all to the benefit of the State, which likes to keep its own power concentrated and our powers distracted and dispersed. Those ethnic tensions will help fuel the anti-terrorism hysteria and the GOP reaction that I mentioned previously, if it goes that route.

...that's enough optimistic speculation for now.

For now I'll just commen upon the original scenarios

"1. The euro crisis gets resolved through haircuts on bonds and the USA unemployment rate continues to drop Asia, SA and Africa keep growing and the world economy booms"

This seems to have a clear cut correlation between the U.S and EU surviving with prosperity continuing, I think that the two survive but none of the fundamental problems in the system are ever resolved is much more likely. Unemployment is pretty much certain to drop EVENTUALLY, but real growth is unlikely to pick up, and the political process has shown itself to be such a cluster **** so many times that I doubt without a fundamental shift in politics the problem could actually be stopped (I.E debts, monetary policy, government spending, and regulations)

"2. The euro zone fails and  govts. defaults but USA powers through. Third world growth slows but still moves in the right direction. boom"

The world is bound to have some sort of general slump if the euro fails. A worldwide depression is, in my mind, pretty much unavoidable.

 

"3. the usa slumps. euro zone fails. bankruptcy and austerity rules here and across the pond great we see Great Depression 2.0"

"4. the credit crisis spreads but every one prints it out. Benton woods is a failure. The gold bugs end up very happy"

Biggest problem with these scenarios is that they conjoin things that can happen separately. I also don't think that you appreciate the debt problem, to be honest. I don't know what makes anyone think that the unfunded liabilities of the United States could ever be paid off, hyperinflation would even have a hard time covering that.

 

The economy won't recover. Not when the FED has total control of the money supply. The state is bound to collapse for good. America is going the way of Rome and will crash soon enough.

If I were you I'd be more focused on preparedness for when SHTF. This means buying gold and silver and learning how to survive when things start crashing and your otherwise fucked.

You keep saying that, but the only way that would happen is if you were able to convince enough people to join you in the woods that we wouldnt have enough people to run a complex economy anymore. I'm not worried.