Today’s Globe & Mail does an excellent job of presenting the three different potential outcomes for the global economy, one optimistic, one pessimistic and a third somewhere in between. Below are the key snippets of their article reflecting each of the three outcomes. However, I highly recommend reading the full article which is linked below.

Now that I have burnished my bullish bona fides with two posts from the optimistic viewpoint, I want to share with you an analysis from John Mauldin that is much closer to the truth regarding where the global economy is headed, what type of bank losses we should expect and what that means about buying stocks. Warning: this is not an upbeat forecast.

John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore

With a name like “Credit Writedowns,” this site is obviously not preternaturally given to the wildly optimistic scenario. In fact, my operating assumption is to hope for the best, but plan for the worst and expect something in between. Indeed, in an economic downturn, one needs to be more fixated on planning for the worst than hoping for the best. Nevertheless, as with the last post on China, I want to present the ‘bullish’ scenario to paint a fuller picture of the potential outcomes for the global economy.

Below is a clip from the World Affairs Council meeting in Oregon with Paul Krugman as keynote speaker. The clip runs 1 hour and 34 minutes. However, Krugman’s piece, which is the centerpiece starts at about 13 minutes. And runs through his ideas first before they open it up to questions. Well worth a look.

Below is a good video clip from the recent World Economic Forum in Davos. The speakers are addressing the issue of how they see the global economic outlook going forward. The moderator who begins the discussion is Martin Wolf of the Financial Times, who I quoted in a recent post.

This clip comes in at one hour in length, but is definitely worth a watch because it gives you a good sense of what some very smart, very well-connected people believe. You should note that Martin Wolf himself does not believe the Obama bailout package is going to get it done.

You may have picked up on my change in terminology recently. I have gone from calling this rough patch in the global economy a rough patch, downturn, recession or some other euphemism to labeling it a Depression. Now, I am doing that for effect in part. Thinking of this as a longer-term downturn focuses one on mitigating downside risk rather than waiting for the eventual rebound. I think this is what we need to do.

However, I do believe it will be a depression in all likelihood — although we are not there yet. What I find interesting is that a number of prominent figures have started to voice the same beliefs in public. David Rosenberg of Merrill Lynch was the first. And even UK Prime Minister Gordon Brown let the D-word slip from his mouth. Bond King Bill Gross recently said it was a depression with a small ‘d.’ Now, we can add Dominique Strauss-Kahn to the mix.

The statistics coming out of Japan have been truly awful of late. In my last post, you saw a small video connecting reduced spending in the U.S. to Japan. However, I need to be more explicit about how things are unraveling in Japan. The industrial production number that was released this past Friday was a wake-up call that Depression has arrived, at least in Japan. Industrial production fell a stunning 9.6%, the most since statistics began in 1953. This is a figure that translates into a GDP of 10% — and this in the world’s second largest economy.

The Chief Economist of Goldman Sachs sat down with the FT’s David Oakley and had a go on a number of topics from the financial crisis, investments in Emerging Markets, the future of the Bric (Brazil, Russia, India and China) economies, to the global economy.

Below are links to the three-part video series on the FT website. I think the videos are well worth watching.

Enjoy.

UPDATE: 25 Mar 2009: In anticipation of the upcoming G-20 meeting and on the heels of some provocative comments made by Chinese officials regarding the US dollar, I would like to re-post this article from January. Paul Davidson has a very good plan on reforming the global monetary system here that needs MUCH more circulation.

Paul Davidson is a leading academic scholar in the field of Economics with a large catalogue of publications of merit. I would like to use this post to introduce you to him and a specific work of his that deserves more attention in the mainstream media. This post may be a bit wonkish, but I hope you will appreciate the message.

Happy New Year. As the new year begins, I find myself in a fairly optimistic frame of mind. Perhaps, we can wipe the slate clean and start anew this year. In that vein, let me share with you what I think needs to be done in order to right a global economy that is suffering its worse recession since the 1930s. If we accomplish these ten steps, the global economy may well recover much sooner from recession than any of us expect. Feel free to add your own assessment in the comments section.