Following the nuclear exchange, Indian forces moved into what was left of Pakistan and absorbed the country into a greater India. It would take years (if not decades) to decontaminate and rebuild the areas that were hit, but India began work immediately and was determined to rebuild and restore what was lost.
Though the war between India and Pakistan was brief, it shook the world to its core with the sheer devastation that had been wrought on that region. The global economies began to feel the immediate effect of the nuclear exchange as well as the massive changes in governments in Indonesia and Saudi Arabia. Within a couple of days, the price of a barrel of oil had gone up to just over $400 as speculators swooped in to try and take advantage of the situation; overall investor confidence was severely shaken.
Throughout the 2020s, the United States and the European Union became bogged down with a severe sovereign debt crisis and were struggling just to provide basic services. The US had to begin a series of tough austerity programs to try and balance the budget; the US had already borrowed over $45 trillion, and there just wasn’t any more money left to borrow. The European Union was in the same shape, with numerous countries having defaulted on their debts in the late 2020s.
The new leader of Saudi Arabia, Mohammed Abbas, and the Mullahs of Iran saw this as an opportunity to squeeze the West further by cutting the production of oil. This caused the price of oil to stay over $400 a barrel for an extended period of time. The United States and the European Union began a massive shift in consumption from oil to natural gas, which the United States had an immense reserve of. Converting power plants, semi-trucks, and trains to run on natural gas as an alternative to diesel was going to take a long sustained effort, but the people and their leadership were all in agreement to make that goal a reality.
The economies of the West suffered even further in the wake of the nuclear devastation of India. With the explosions, went not only political stability in the region, loss of infrastructure and slaughter of life, but also the destruction of numerous call centers, manufacturing cities, software development companies, and numerous research and development departments for many major global corporations. India had been an economic and intellectual powerhouse prior to the attacks; the conflict had brought them backwards more than a few decades as they began the process of rebuilding and caring for the tens of millions of injured.
When the affected corporations announced their losses, the economic tragedy of the situation truly began to unfold. The stock markets were already shaky due to the political climate, and instability began a steep decline. The US even closed trading on several days when run-offs were initiated because of immense single-day losses. With the steep oil prices staying steady, consumers dropped off all unnecessary spending; as shipment costs began to increase exponentially, so did the cost of goods and services. Unemployment rose, GDP fell, and the income tax revenue of all major nations fell dramatically.
President de Blasio instructed the Treasury Secretary to do whatever was necessary to restore confidence in the market and to stabilize the American economy. The US began a series of continuous Quantitative Easing (QE) to improve liquidity in the market; the problem was that no governments or private financial institutions were buying the US bonds, forcing the Federal Reserve to buy bonds that the Treasury was issuing.
At first, sovereign debts began to default across the third world nations; those defaults soon spread to Eastern Europe and the European Union. By the winter of 2026, when things didn’t look like they could get any worse, people across Europe and the United States began to lose confidence in the banks and the governments’ ability to keep things under control. Fearing the worst, the public began to pull out their money from the banks.
At first, the bank withdrawals were kept to a minimum, but somewhere a panic set in and within a week there was a full-blown run at banks all across the United States, the likes of which had not been seen since 1929. Within a week, Bank of America, Wells Fargo, Bank of the West and CitiBank had to close their doors and stop people from withdrawing their money; they simply did not have the reserves to cover everyone’s accounts, and given the current economic climate, there was little faith in FDIC to return cash to the average bank account holder.
As the banks across the US and Europe began to fail, the global economy began a tailspin that no one could have envisioned. By the spring of 2027, the world had fallen into a global depression; the price of food had skyrocketed and other commodities and precious metals had also become completely unaffordable; gold had risen to over $12,000 an ounce. The costs of transportation, manufacturing and even farming had risen with the cost of fuel and with the devaluation of the US dollar; people simply could not afford the basic necessities of life.
Glaciation, as a result of the massive use of nuclear weapons in Asia, was also starting to take its toll as once fertile farmland was now susceptible to late winter thaws and early freezing, reducing the growing seasons and diminishing the amount of food that could be grown. The loss of crops caused by the environmental issues was just the beginning of the world famine. While once bananas had been shipped from Central America to the United States, the cost of fuel made them too expensive to export. Grain that had been grown in the U.S. was no longer being sent to Asia and China. People across the world had to begin coping with eating only the food that could be sourced locally.
As transportation systems began to break down, nations had to turn inward to provide for themselves. As a last dig at Saudi Arabia and Iran, the U.S. ensured that any food or commercial exports that could have been sold to them were quickly diverted to other markets, causing Saudi Arabia and Iran to suffer immense food shortages. They may have made enormous profits from keeping oil above $400 a barrel, but they were paying the price now as the US and the EU refused to sell them any food products.
As the crisis continued to go unchecked, hundreds of millions of people began to starve to death. The global population began to shrink; entire nations were simply famished, lacking the basic necessities to provide for their people. This caused immense amounts of civil unrest all across the world, but was particularly felt in the “previously developing world,” as they had fewer resources from which to draw. Rather than migrating to areas in the country that could support them, most people continued to stay in areas that could not sustain the population without outside help.
As the only group to really profit from all of this chaos, radical Islam began to spread across the rest of the Middle East, and then the philosophy became much more popular in Europe and Africa as well. Young people were disenfranchised by their governments and started to feel a sense of hopelessness. Mohammed Abbas of Saudi Arabia was using this restlessness to his full advantage. On many of the remaining functional television stations, Mohammed appeared on a continual loop preaching his message. “Let us overthrow these non-believing governments! These nations must turn to Islam, the one true religion, and ask for Allah’s divine help and guidance through these tough times. Only through turning to Islam will the world begin to right itself and prosper once again.”