George W. Bush wants to start privatising Social Security, reform the tax code and undertake new foreign policy initiatives in his second term. But he faces two severe international economic threats that could derail the US and world economies and take his own agenda along with them. Each will require a substantial mid-course policy correction by the administration and substantial co-operation from key countries.

The most acute risks are posed by the large and rapidly growing US current account deficits. They exceed 6 per cent of gross domestic product and are on a trajectory to reach 10 per cent - more than $1,000bn annually - within the next few years. The US already must borrow $5bn from the rest of the world every working day (to finance America's own foreign investments as well as the trade imbalance).