Countries across the world, struggling with the aftershocks of the credit crunch, are wrestling with different solutions to their financial plight.
Options for global economic recovery
Two years after the global banking system survived the credit crunch by the skin of its teeth, the world economy is still in mortal peril.
Ballooning sovereign debt, a global government bond bubble, riots in Greece and France, rampant money printing in the US, rising inflation and the prospect of a global trade and currency war appear to be pushing us back to the brink.
So are we heading for another financial meltdown, or are recent tremors merely lesser aftershocks? Here are some of the major threats still facing the global economy, and their danger levels.
Trade and currency wars
The major nations no longer fight each other with guns and bombs, but they are willing to use other instruments. Right now, currencies are the weapon of choice.
The US has complained that China has conducted low-level warfare against its economy for years. The undervalued yuan has ravaged US industry by making Chinese imports cheap and US exports expensive. Now the US is fighting back.
This month, the US Federal Reserve launched another blitz of quantitative easing (QE2), announcing an additional US$600 billion (Dh2.2 trillion) of bonds buybacks. One of QE2's key aims is to aggressively sink the dollar, to teach China a lesson. If that doesn't work, the US could take more direct action, including protectionist measures against Chinese imports.
This is a high-risk strategy, says Ted Scott, the head of strategy at global fund manager F&C, because it could spark a "violent and disorderly" decline in the dollar.
Another danger is that central bankers across the world will gleefully start shooting down their own currencies in a bid to keep their exports affordable.
China desperately needs a weak yuan to support its export-led economy and keep the lid on social unrest. Deflationary Japan is desperate to stop the yen from rising further. The Bank of England is pinning its hopes of recovery on a weak pound. Portugal, Ireland, Italy, Greece and Spain are crying out for a cheaper euro (but Germany won't let them have it).
If it does end in war, and a return to protectionism, there will be few winners. International co-operation spared us another Great Depression, Mr Scott says, but a breakdown in fiscal and monetary relations now would take us straight back to the 1930s.
Total currency warfare could suck in countries as far apart as Brazil, Thailand, South Korea and the Gulf states. "The two main protagonists, China and the US, both have strong cases, but they need to compromise to prevent a tariff war and economic isolationism," Mr Scott says.
This is no fun for expatriates in the UAE, who have seen the value of their dollar-pegged dirham income fall, says Christina Weisz, the director of foreign exchange specialist Currency Solutions. "The internationally mobile individual is at the mercy of this global currency war, with Japanese, Brazilian and Swiss currencies becoming more expensive, and the US dollar, UAE dirham and sterling suffering," she says. "Expats can protect themselves from the uncertainty of these movements by fixing exchange rates with a currency specialist."
The world desperately needs monetary and fiscal harmony, not a currency war. But will it get it?
Risk rating: 5 out of 10. A trade war guarantees mutually assured destruction. That should help to avert conflict, but it will be a close-run contest.
QE2 has a further aim, beyond sinking the dollar, growing the US economy and cutting unemployment. It is actively designed to boost core inflation.
Again, this is a risky policy. Once the inflation genie is let out of the lamp, it is hard to get it back in again. The fund manager Barings called QE2 "one of the greatest policy mistakes in the Fed's history", and plenty of analysts agree. What if it goes haywire?
The first thing QE2 did was to fire up stock markets. All that fresh liquidity has to go somewhere, and much of it ended up in emerging markets such as Brazil, India and China. They were furious, because they want less inflation, not more of it.
QE2 also drove up the price of commodities, which are traditionally seen as a hedge against inflation. Ironically, that could backfire against the US, which will have to pay more for imported petrol, food and industrial metals.
Emerging markets face hot money flows and asset price inflation, but at least the Middle East is protected, says David Sanders, the chief investment officer at Invest AD's asset management business in the UAE. "Domestic money supply is still low and government subsidies will soften the effect of raising global commodity prices.
"QE2 could lead to higher oil prices, and this would benefit Gulf countries, particularly Saudi Arabia, which is a leading oil producer with a competitive petrochemicals sector."
Gulf countries might even welcome significant inflows of foreign investment to help fund their massive infrastructure spending plans. "Inflation is also likely to be muted because weakness in residential and commercial real estate in the UAE, Qatar, Kuwait and Bahrain is softening rents and prices," Mr Sanders says.
The UAE might be a safe inflation haven, but other countries won't be so lucky. The Fed's controversial policy could even backfire on the US if inflation spirals out of control, or the degraded dollar loses its reserve currency status.
Risk rating: 7 out of 10. The Fed is rubbing furiously away at the genie's lamp and could unleash forces it can't control.
Government bond bubble
Bond mutual funds have recently been hotter than dotcom stocks in the technology boom of the late 1990s, and we know how that ended.
Huge demand for the safe haven of government bonds has created a potential bubble and inflation could suddenly make it go pop.
Bonds typically pay a fixed rate of interest and offer investors security in uncertain times, but they are vulnerable to inflation because nobody wants a fixed rate of interest when prices are spiralling.
Bond investors are now buying into an overpriced market, says Ashley Clarke, a director at the financial and tax specialist advisory firm Dubai-ifa.com. "Sooner or later, interest rates will rise to take the heat out of the economy. When that happens, the capital value of bonds will plummet. This could lead to a sudden stampede out of bonds. The time to get out is now."
Risk rating: 5 out of 10. How many bubbles can you worry about at one time?
Back in January, the world saw that something was rotten in the state of Greece. It was deep in debt, the government was cooking the books and the people preferred rioting to paying tax.
A sovereign default seemed inevitable, a euro zone exit possible and the contagion looked set to spread to Italy, Spain, Ireland and Portugal. The world braced itself for Credit Crunch II. Then in May, euro zone members and the IMF launched a €750bn (Dh3.7tn) "shock and awe" bailout package and the panic subsided. Markets recovered. The Greeks still rioted, but less frequently than before.
Problem solved? No. With a world- record budget deficit at 15 per cent of GDP and total public debt of more than 125 per cent of GDP, Greece has zero chance of repaying its debts. Ireland is in a similar plight.
They might be EU minnows, but French, German and Swiss banks could suffer if they default, and the subsequent contagion could spread to Italy and Spain.
The EU isn't the only area facing a sovereign debt crisis. The US is drowning in debt. The UK's total debt will top £10tn (Dh59.1tn) by 2015, according to PricewaterhouseCoopers. If the economy underperforms, the debt burden could eventually hit 5.8 times GDP, slowing growth for decades.
Markets have stopped worrying about sovereign default, for now. That could quickly change.
Risk rating: 7 out of 10. We can hide under the covers, but the debt bogeyman is still waiting for us.
The perfect storm
Each of these threats is closely interlinked, says Mark Dampier, head of research at the UK-based independent financial advisory Hargreaves Lansdown. "If one of them explodes into life, it could set off a deadly chain reaction. We might have to deal with some or all of these events at exactly the same time."
Mr Dampier names QE2 as the most likely source of any meltdown. "Hot money flowing into emerging markets will force up inflation, which will rebound on the West by pushing up the cost of imports. If inflation rises, so will interest rates. At that point, the bond bubble will burst," he says. "If people stop buying bonds, we could see widespread sovereign debt default because the major economies have to roll over a huge amount of debt and they can't do that without any buyers. The domino effect could be blistering. That is the single biggest danger facing the global economy right now."
Risk rating: 8 out of 10.
Despite all the dangers, perhaps the most likely result is that the global economy will muddle through. But it will be a bumpy ride, and there is a long way to go before we are completely safe.