Perilous Times, Globalisation and The New
World Order
The New World Order Is Quickly Moving In
Bernie McSherry 13.03.10, 2:20 PM ET
Forbes Magazine
Recent events offer evidence that the ground beneath our feet is
shifting, both literally and metaphorically, and scientists and traders
alike are noting the effects. In the literal sense, Richard Gross, a
geophysicist at NASA's Jet Propulsion Laboratory, estimates that the
massive earthquake that struck off the coast of Chile last Saturday
moved hundreds of miles of solid rock several yards, altering the
Earth's axis by approximately three inches due to the shifting of such
a substantial mass. A movement of that magnitude is rare; yet investors
can be forgiven for being unimpressed. The axis of world economic power
is also shifting as the aftershocks of economic crisis continue to
alter the world order.
The European economy appears to be on shaky ground as its leaders
struggle to come to terms with what we will one day view as having been
an inevitable sovereign debt crisis, caused by structural shortcomings
in the European Monetary Union and brought to a head by profligate
spending on the part of its weakest members. While it seems likely that
Germany and France with their banks heavily exposed to Greek sovereign
debt will reluctantly guarantee Greece's bonds, the assault on the euro
is underway and massive short bets are being placed worldwide. Traders
won't be surprised to see the market turn on Spain next, further
testing the resolve of the E.U.'s strongest members. The fate of the
euro itself may hang in the balance.
Just as tectonic movements can dramatically alter the landscape (the
Chilean quake had the effect of raising Santa Maria Island, off the
coast of Concepcion, by six full feet, claiming new land from the sea),
so too can shifts in economic mass affect the distribution of global
power. The upheavals that have plagued the financial world in the last
two years have lifted China to a new level of prominence as the world's
largest exporter, one with a nearly insatiable appetite for
commodities. The sleeping giant has moved into the next phase of the
economic cycle far sooner than the rest of the world, and it is taking
key resource suppliers like Australia along for the ride. Both
governments have recently taken steps designed to prevent their
economies from overheating and creating new asset bubbles.
This stands in stark contrast to the actions of governments across
Southern Europe where debt concerns are forcing governments to curtail
stimulus efforts, even in the face of deepening recessions. As Asia
supplies the majority of world economic growth over the next decade or
three, America's gaze will continue to shift westward. The world's
economic axis is shifting and the new century will be dominated by the
countries of the Pacific Rim and the Indian subcontinent.
Western efforts to slow the process are probably doomed to failure,
victims of enormous demographic differences that benefit the nations of
Asia, abetted by a technologically linked world in which capital and
ideas flow across borders at lightning speed. Traders in the West have
long become accustomed to coping with world markets that trade 24/7,
and ordinary citizens are feeling the stress as well. As the pace of
daily life accelerates for citizens across the planet, there is one
more piece of bad news: The Chilean earthquake is believed to have
increased the speed of Earth's rotation, shortening the day by 1.26
millionths of a second due to the “ice-skaters” effect of moving mass
closer to the axis of a rotating body.
That may not sound like a lot of time, but it may provide some relief
to those who find themselves groggily banging on the snooze button
tomorrow, wondering how morning could have come so quickly. If you fall
into that category, you can relax. For once, it's not a figment of your
imagination: Your alarm clock actually did wake you earlier than it did
last week. It's merely fundamental physics.
Bernie McSherry serves as senior vice president of strategic
initiatives at Cuttone & Company where he is a member of the
management committee.