For the longest time, we are focusing on the performances of big economies. This might be the right time to focus on the tensions in Middle East.

Oil is what we say is the black gold and for the most part, its prices affect all economies. We’ve been trying in the past to find an alternative/substitute for oil but we cant say that we have successfully found one. Everyone should participate in efforts to ease up the tensions in the middle east, since if not prevented, it poses huge risks for all.

Oil remains one of the top risks facing companies which directly hits bottomline figures and product prices. Every company needs to ensure that they have a plan just in case the risks related to oil suddenly became a reality.

The increasing intensity of sectarianism affecting the political landscape and influencing the economy, myopic business decisions driven by asymmetric real time information availability, differential acceptance on sustainable economic development across political barriers, and above all, the potential of two or more related events happening simultaneously affecting already fragile economy and political alignments.

Transparency on the part of the bankers or lenders have dumped the risk on the financial system. Failure to disclose to borrowers the potential costs that comes from a miss on monthly payment lead many borrowers on spiraling debt problems where the possible ramifications shift to the financial system (bankruptcy). Bankers hardly reveal to borrowers how much they get charged should they fail to meet their loans requirements. Should transparency prevail, many borrowers would have been careful when stepping out to solicit for loans.

One of the greatest risks to the global economy is currency wars. And this war is not the occasional public spat between the US and China, but one between these two economies on one hand, and the rest of emerging economies on the other. The US dollar has of late depreciated against free flowing major currencies, and with it depreciated the yuan, because the latter is pegged to the former.

The real losers in this have been Brazil and other emerging economies which export a lot to ‘Chimerica.’ The exports of these economies suffer because the prices of their exports are more price elastic.

A price war could jeopardize the nascent, already-in-anger, global economic management architecture of where the G20 takes the center stage.

Relevant to see that that there is no mention of risks about Tunisia, Egypt, and Libya! What a difficult task to forecast...

I believe that there are three major sources of risk that will be faced in 2011.

First, the inability of the US political system to concentrate on key long-term measures to strengthen future growth while tackling systemic long-term spending rather than across the board cuts with their unintended consequences will leave the US economy sputtering, unable to be an anchor for global economic growth.

Second, the cracks in China’s economy that have been whitewashed and ignored by analysts and investors (both domestic and international) for too many years will result in a significant collapse in growth. These factors have to do with continued support for favored industries and companies that will be unable to pay debt, a collapse of real estate prices, high levels of unemployment, and underlying corruption. The real estate crisis and unemployment will be devastating to the middle/upper middle classes and form the basis for civil unrest. Risk taking by China’s wealthy entrepreneurs does not seem to incorporate any possibility for a downward adjustment in prices. They and their banks will be picking up the pieces at great loss.

Third, the growing divide between the general population and the super wealthy (and the perception that government around the globe are using more resources to support the latter will result in increasing unease and unrest). In the US we have moved to a system that uses market discipline for the small businesses and workers, while corporate socialism increasingly protects the the largest corporations and banks from the market via tax breaks, subsidies, government contracts, etcetera.

In the year 2011, we are most likely to witness political instability due to lack of effective governance. This risk may pose some problems not only to China, Iran, and other countries as mentioned in the roundup but also to India. Certainly rising prices would pose a serious challenge to those at the helm of affairs but also to central banks. In my opinion, political instability, soaring inflation, rising unemployment, and discontent among the poor and middle classes will pose risks for the economic development of some of the Asian and Eurozone economies.

I think the greatest potential risk this year is radical greening, because corporations in the mining & energy sector will be impacted by radical greening and it will be the most obstacle for sustainable growth in the future.

The financial crisis started in 2007 has finally arrived at the grass-root level and we will witness more nations buckled and crippled by widespread unrest by the populations. This domino scenario fueled by high inflation and stagnant economy will spread from the poor and underdeveloped nations to the developing nations and will eventually hit the developed economies by end 2011, beginning of 2012.

1. Sovereign debt crisis in US
2. Geopolitical situation and political tensions between North and South Korea, Iran, between India and Pakistan, etc.
3. Cooling down measures in China

1.Oil price high = inflation, high food price, cutting corporate earnings.
2.US/Chinese currency matter.
3. Europe debts.
4.Chinese housing market.
5. US Munis. Bonds matter.
6.Gold heading south.

My 2011 Risk List reads as follows:

(a) Quantitative easings turn out to be an addictive palliative rather than a cure, leading to further currency debasement and asset value explosion;

(b) Global resource contraints worsened by climate change fuel rising costs of energy and materials, adding to global inflation pressures, especially on food prices, affecting billions of people;

(c) In the face of continual joblessness, rising protectionism contracts global trade and restrains full recovery;

(d) A deepening shift of economic and geopolitical weight from the West to the East begets fear, anxiety, and zero-sum game thinking if not paranoia, leading to more conflicts on both economic and political fronts.

It would appear that in Indonesia risks are diminishing. The country enjoys a priviledged position in the world with its traditionally strong local consumer demand, relatively underdeveloped export manufacturing base, and rich deposits of carbon fuels and other minerals, all high on the must-have lists of the exploding neighbor economies.

Another market crash starting in the USA is more likely than less. Congress passed a watered down financial regulation bill that is being further eroded during the detail setting in the rule/reg process. The casino-like Wall Street bankers are continuing to issue near fraudulent papers and financial annual reports. This makes the market likely to have another bubble and collapse.

It may well be precipitated by a massive debt walk away of student loans, as well as continued real estate (homes and commercial) problems. State and local governments must either raise taxes dramatically and/or cut back by 30% or more. Either will stop economic recovery.

Escalating tensions may be expected between the Asian superpowers China and India locked in a deathly grip for supremacy in the contest over spheres of influence. Localized proxy wars backed by the aspiring superpowers may occur in littoral states of the Indian Ocean; any of the Southern Asian nations; areas bordering Bangladesh India and Myanmar and in the Bay of Bengal. Conflict between the dominant superpower (USA) and the aspiring superpower (China) in South China Sea and along the oil routes of Asia Pacific and the Middle east cannot be totally ruled out. A new reality may arise out of China and India’s quest for power and dominance in their respective regions - Southeast Asia and South Asia are very likely scenarios. It is when they cross these spheres is when the situation may become conflagrant.