Spiegel Online suggests there are “Uncanny Parallels to Great Depression” and highlights three potential outcomes, as described by Germany’s foreign intelligence agency, the Bundesnachrichtendienst (BND).

In mid-April, BND President Ernst Uhrlau presented German President Horst Köhler with his analysis of the repercussions of the current situation. During the meeting at Berlin’s Bellevue Palace, the president’s official residence, the two men discussed a “metamorphosis in geopolitics” and the future political make-up of a world that will never be the same again.

The core message for the German government is that Europe and the United States will come under growing political pressure, and will face growing competition from China. Beijing will be one of the likely beneficiaries of future shifts on the political map.

Uhrlau believes that there are three possible scenarios. The first scenario, the most optimistic of the three, assumes that the current economic stimulus programs will work, leading to a rapid shift in trends in the stock and credit markets, and that confidence will return and the economy will pick up speed soon.

Under this scenario, the United States will remain the dominant superpower, but it will emerge from the crisis economically weakened and with less available capital to fund its military activities. The People’s Republic of China would benefit from this development as the strongest exporting nation.

The Chinese will benefit even more if scenario two, which the BND calls the “China scenario,” becomes reality. It describes what will happen if the billions from the West’s economic stimulus programs end up primarily in Asian countries.

The foreign capital would reinvigorate Asian domestic markets, allowing Beijing to invest even more heavily in advanced technology and take over the prime assets of Western industry, thereby accelerating its modernization process.

This, in turn, would speed up China’s process of catching up with the West. For Beijing, the crisis would serve as the catalyst for a development that has already been underway for several years. “China would develop even more strongly into a superpower in Asia and a reference point for countries like the Arab Gulf states and other raw materials producers,” says Uhrlau. “The United States, on the other hand, could forfeit some of its dominant status.”

India would also grow in the slipstream of the Chinese, though not as dynamically. The BND believes that under this scenario, competitors to central institutions like the IMF would take shape, such as an Asian Monetary Fund.

The third scenario is the most dismal. It describes the consequences if the economic stimulus programs are ineffective, which will become all the more likely the longer it takes for the recovery to emerge. It is a catastrophic scenario for large parts of Africa, as well as for countries like Argentina, Venezuela, Iran, Kazakhstan and parts of the European Union, which would come under massive pressure.

Countries like Yemen could turn into “failing” states, with central governments losing much of their authority, while the loss of aid payments from other countries would push countries like Jordan to the brink of insolvency. The flow of refugees to Europe would surge, benefiting Islamists worldwide.

In this scenario, the BND predicts mass unemployment for China, internal unrest and a loss of its monopoly on power for the Communist Party. This would constitute virtually a revolutionary development with grave risks to global stability, because it would prompt the government in Beijing to become more aggressive abroad to compensate for internal tensions.

The BND expects to see a blend of the first two scenarios emerge — not exactly a soft landing, but not an all-out catastrophe, either. What all three scenarios have in common is the theory that, after this crisis, the world will likely not be as dependent on the United States and Asia will play a greater role than in the past. “There will be a development in the direction of regionalization,” says Uhrlau, “and we will have to get used to a more self-confident China in the future.”

I have not read a single prediction that the US will retain its position of dominance as a world power, but I also suspect Germany is quick to condemn the marketing of American culture because it seems to alien to them.

The GM model, characterized by massive marketing, little substance and an excessive policy of debt financing, has also become the country’s model.

I would not say GM had little substance. I think the problem was they pumped out a very significant amount of material that was easily predicted to be worthless within three years. That says to me they lacked strategic thought and innovation, rather than they came up short on substance. Perhaps something was lost in translation.

Spiegel also sees Eastern European markets as a significant factor in how things will turn out, given their loans and imports.

The fact that the crisis in the West is now pulling down the East is largely attributable to a single mistake. For years, Eastern Europeans took out loans denominated in euros, Swiss francs and Scandinavian kroner. The loans stimulated domestic consumption and allowed the economies to grow. Many new member states imported more goods than they exported. Now the mountains of debt are high, and the current account deficits of countries like Lithuania and Bulgaria are a massive 15 percent of GDP.

Capital flight and declining demand from the West have pushed down exchange rates. The currencies that are not pegged to the euro have experienced particularly drastic slumps in value. In the last six months, the Romanian leu lost more than 16 percent of its value and the Hungarian forint close to 20 percent. Private citizens and even governments can no longer service their foreign-currency loans.

Poland clearly has emerged as the strongest economy of the group, but unemployment jumps in one year to over 10 percent and social unrest in neighboring countries is still a factor, especially if it turns into nationalism and isolationism.

Now trouble is beginning to brew in these young democracies. In Bulgaria, Latvia and Lithuania, angry citizens have taken to pelting government buildings with eggs, rocks and — weather permitting — snowballs.

A snowball revolution? I guess the question becomes which of the three possible BND predicted outcomes has the least snowballs.

Speaking of balls, the Krakow Post noted some tension in the UK after the Polish Prime Minister asked them to supervise the banks more carefully.

…Polish Prime Minister’s comments gave fresh ammunition to Mr Brown’s Conservative opposition, with shadow Chancellor, George Osborne saying, “Today we have the prime minister getting a lecture in prudence while he is in Warsaw. We are used to Polish builders telling us to fix the roof when the sun is shining but not the Polish prime minister as well.” Time will tell whether Mr Osborne’s comments will come back to haunt him with hundreds of thousands of Poles still living in the UK, who may not take to kindly to his analogy.

Although Poland’s politician’s have often been ridiculed in the past, it seems that on this occasion Mr Tusk has a point. Poland’s economy expanded by 4.8% last year and is celebrating 12 consecutive years of economic growth. While the UK is predicted a 3.5% drop in GDP this year, and the budget deficit of 12% of GDP.

I always thought fixing the roof when the sun in shining is the best plan. If you are fixing it after the rain has already come through, or during, something has gone wrong. Kudos to PM Tusk for making the statement.

Snowballs, fixing roofs…I’m surprised no one brought up the tinder box analogy.