The 2010 Quiz: What Next?
DK Matai
We trust that this "ATCA 2010 Quiz" finds you in excellent spirits. We
wish you and your family the very best for the year ahead and hope you
will enjoy playing this quiz. To begin with, ATCA presents a forward
analysis of 2010 divided into nine sections:
i. Zeitgeist: Spiritual and Environmental Awakening;
ii. Green Technology, Lifestyle and Sustainability;
iii. Healthcare and Progress Above The Poverty Line;
iv. Digital, Nano and Robo Tech;
v. Shift in the Balance of Power;
vi. Growth Post Financial Shock;
vii. Sovereign Bond Yields and Debt Trap;
viii. China Mismatch; and
ix. Currency Turmoil, Gold and Inflation.
To play the "ATCA 2010 Quiz" just solve:
x. The Black Swan Mystery and Rank Order of Priority of the nine
sections.
Introduction
One of the many lessons of recent years is that if something does not
happen immediately, it does not mean that it will not happen at all.
For example, ATCA had noted gravity-defying unsustainable challenges
to economic fundamentals in 2005, 2006 and the first half of 2007.
These together became The Great Unwind and The Great Reset that
unfolded subsequently. Although they were not a surprise, their
scale, speed, severity and synchronicity were breathtaking. Many signs
and signatures that we have noted over the years, have taken some time
to manifest: this coming year may be no exception. The following
outcomes are anticipated by the mi2g Intelligence Unit (mIU) and the
ATCA Research and Analysis Wing (A-RAW):
i. Zeitgeist: Spiritual and Environmental Awakening
Spiritual and environmental awakening at an individual level and stake-
holder activism at a group level is going to become much more
pronounced in 2010 as people continue to connect with each other
around the world in their billions and have more accurate information
at their finger-tips. The perceived truth is increasingly an amalgam
of alternative perspectives in regard to events and personalities
obtained through mobile devices, social media, micro-blogging and
other personalised expression outlets heralding the step-by-step
decline in influence of newspapers and other traditional media.
The intelligence accessible via powerful online search engines,
roaming mobile telephony and trans-national independent digital
networks is delivering much more by way of protecting human rights,
raising awareness amongst the masses, promoting democracy and the
values of liberty, equality and fraternity, in comparison to the
global confrontations orchestrated to achieve just that.
The more that humanity communicates and connects, the more it bonds to
move beyond physical and intellectual differences towards realising
the collective universal consciousness or the Omega Point. As global
dialogue develops, greater connectivity, introspection and inner
progress is likely to yield further rewards in mutual understanding,
forgiveness, tolerance, compassion and mercy towards all fellow
sentient beings and our united ecology.
ii. Green Technology, Lifestyle and Sustainability
Green technology is poised to take another massive step forward as
individual lifestyles begin to modify significantly as a result of
greater consciousness. Not only is the new technology evolution, in
some specific cases, surpassing traditional fossil fuel alternatives,
but post Copenhagen, many governments, businesses and individuals
appear ready to make green technology and sustainability their
immediate focus of attention.
We predict the rise of CSOs – Chief Sustainability Officers – at most
major businesses over the next few years. Watch out for further
greening of the corporate world, as it tries to reinvent itself in the
face of pressure from its major stakeholders and the large pension
funds' awakened sense of fiduciary responsibility towards the next
generation.
The rise of electric, hybrid, solar, hydrogen, wind, geo-thermal,
hydro and tidal power as well as alternative clean fuels is inevitable
and necessary to balance the over-dependence on unclean fossil fuels
from an energy security perspective and the huge environmental
degradation caused by industrial pollution.
Governments also wish to be seen to be getting greener in the area of
clean energy production, distribution and consumption as well as
coming up with inventive policies on taxation and resource allocation.
Locally generated clean energy solutions may be preferred by
discerning users in favour of centrally produced traditional energy
solutions. These developments are already visible in the proliferation
of local waste-to-energy recycling solutions and sustainable
methodologies on the one hand and eco-friendly infrastructure
investments on the other. Nuclear technology is also likely to be
touted and embraced as a solution -- once again -- but it may not live
up to expectations as the true cost and ten-to-fifteen year output
delay of new nuclear programmes is determined, including the cost of
processing the radioactive waste over its full life cycle.
Water shortages caused by droughts and floods will continue to show a
steady rise. The need for the delivery of locally refined water
through non-energy-intensive solutions is likely to increase. This
presents a great opportunity for innovation. Expect a better quality
of government response to climate induced crises, than in the past.
iii. Healthcare and Progress Above The Poverty Line
Macro development has to be matched by micro development in order to
ensure stability and balance in national growth.
The US government is poised to pass a huge healthcare bill: one that
could result in millions of newly insured citizens and billions of new
dollars heading to healthcare companies. Specifically, pharmaceutical
companies will see a large influx of new customers. Hospitals, most of
which treat everyone regardless of ability to pay, will start making
money from what used to be charity cases. The biotech firms that
unveil effective drugs, and get them through the FDA process, will
likely top the single-day gainers list.
In emerging countries, sub-standard living conditions for the mass of
humanity gravitating towards urban metropolitan areas continues to
skew growth. Governments are likely to experience growing citizen
support to tackle extreme poverty and reduce mass unemployment to
avoid social unrest with destabilising consequences.
The growth of micro-finance and micro-business solutions assisted by
mobile telephone networks is proliferating. This is the only viable
mechanism for offering small tranches of capital for self-employment
and small scale entrepreneurship banking. Expect multi-nationals to
announce a number of inverted pyramid solutions taking lessons from
players in fast moving consumer goods (FMCGs) with a view to growing
the market for their products ever faster in the emerging nations,
given the weakened demand for their products in the developed world.
iv. Digital, Nano and Robo Tech
Previous troubled economic periods have given birth to technology
bellwethers and the current downturn is already creating a new breed
of tech entrepreneurs. Third party software developers writing
applications for Personal Digital Assistants (PDAs) and social
networking sites are booming in the midst of a global downturn. 21st
century new technologies continue to proliferate and to cause
disruptive innovation, with their associated challenges.
The Digerati are taking advantage of two recent and connected changes
in the world of digital technology, especially the fast-moving sector
of mobile telephony. First there is the move to "open", rather than
proprietary, software platforms, which has led to the second major
change – the explosion in the use of web and mobile phone
applications. The current generation of social media sites such as
Twitter, Facebook and LinkedIn are all open to third-party
developers. They all have "Application Programming
Interfaces" (APIs), which means that almost anyone with some
programming skills can create applications that harness the power of
such sites with millions of users.
Nanotechnology based devices and materials are becoming ever more
ubiquitous: from personal entertainment devices to "special
properties" clothes that perform better than cotton, silk, wool or any
of the traditional natural fibres in surpassing their key benefits.
Human-like robots have also begun making their foray into domestic
environments, especially in the care of the elderly, and also at some
airport lounges and for monitoring traffic.
v. Shift in the Balance of Power
The most significant theme shaping the world economy is the shift in
the balance of power from the West to the East, most recently
witnessed in Copenhagen. From US unipolarity to multipolarity, with a
few significant actors, appears to be the latest outcome. The
principal eight actors are: US, China, European Union, India, Japan,
Russia, Brazil and South Africa. This is leading to a new power
matrix, with the winners being countries with young human capital,
inward investment attraction power, natural resources and the ability
to compete by adapting and changing faster than their competition.
Such agile countries may continue to enjoy stronger growth at the
expense of the established incumbents.
vi. Growth Post Financial Shock
Let us recall that since August 2007 and over the last two years:
1. The Great Unwind -- deleveraging and paying off debt; and
2. The Great Reset -- collapse in global demand for durable
products;
continues to unfold, and has brought about an unprecedented fall and
slow down in world trade. World trade is a much better measure of the
real global economic health as opposed to the frothiness of the global
financial markets, which can be pumped up for a while via excessive
liquidity creation or leverage.
The Great Unwind and The Great Reset justified aggressive stimulus and
policy actions by key G20 member countries and other governments
acting in concert. The combination of massive liquidity provisions,
extremely low interest rates, tax incentives and increased government
borrowing and spending have thus far provided the free lunch escape
route the world economy needed to continue its addiction to the cheap
credit pyramid. This cannot continue for too long because the loss of
Lady Prudence over the very short term may be possible but in the
medium to long term, this can lead to a total loss of confidence by
lenders, ie, buyers of debt! Our message is simple, "There is no free
lunch"!
Whilst the measures taken in 2009 appeared to be costless for many
large economies, is 2010 the year in which they will pay for them?
Economic fundamentals matter, and if something appears unsustainable
or out of line with reality, then it probably is! At some stage it
will need to be corrected, and the longer it takes, the more severe
the correction is likely to be. Collectively, the associated global
risks are not Unknown Unknowns or Black Swans in the classic sense.
They are more like Grey Swans or Known Unknowns. However, they may
end up being perceived as Black Swans, as and when they come to pass
in the year ahead, because they run contrary to popular expectation,
speculation and crowd behaviour in the financial markets, which is
continuing to stoke several asset bubbles yet again.
The financial sector is unlikely to be as strong a contributor to
future GDP growth as it has been historically and this will have
consequences for other parts of the established economies. The crisis
in the banking sector is similar to an oil shock because virtually
every consumer and company uses banking services just as everyone
depends on energy. A persistent problem in the banking sector can
translate into problems across all economic sectors, graded by the
dependency of each industry on banking.
Post government bailouts, hardnosed short term pure-profits-driven
capitalism with huge bonuses for gambling is now more out of fashion
than ever before. The renaissance themes for 2010 and beyond are
going to be frugality, sustainability, longevity, going green,
philanthropy, social entrepreneurship and building a better world
together for generations to come, with many minor and some major
hiccups along the way.
vii. Sovereign Bond Yields and Debt Trap
Real bond yields could be the single biggest threat to economic
healing, since this would slow the process of repairing balance sheets
and re-ignite concerns about the possibility of sovereign default.
Quality sovereign debt may be the ultimate safe-haven if something
goes wrong, perhaps in the PIIGS: Portugal, Italy, Ireland, Greece or
Spain; or further afield in the Middle East or Far East countries.
Yields on sovereign bonds – the good ones – is likely to plummet as
deflation raises its ugly head again later in 2010. For example, the
10-year German Bund yield may fall below 2.5% and the same may happen
to US Treasuries, despite the significantly unbalanced fiscal
policies. Sovereign debt yields of not-so-good and bad countries, on
the other hand, are likely to spike upwards significantly. The worst-
case scenario for any government to avoid is a debt trap. This may
occur when government debt begins to exceed annual GDP, and when the
“real” rate of interest paid on this debt, that is, the rate of
interest minus inflation, exceeds a country’s rate of economic growth.
It is the government version of maxing out on a credit card and then
finding it a challenge to pay the monthly interest bill. The only
solution is to keep increasing national debt as a percentage of GDP,
which is what Japan is doing and this eventually becomes
unsustainable.
viii. China Mismatch
Chinese growth has been built on an investment bubble creating massive
spare capacity, which may need to be cut substantially to match with
the much lower world demand. The efforts of the Chinese authorities
to stem the credit growth and avoid bad loans, combined with the
creation of several growth bubbles could ultimately reveal the Chinese
investment-driven growth as being deficient. The massive Chinese spare
capacity and the economic backdrop could be a deciding factor in
devaluing the Chinese currency. We are Sino-data sceptics and we note
that China's alleged industrial and GDP growth figures do not tally
with their weaker electricity consumption in the last twelve months,
for example. Therefore, we believe that contrary to universal
expectation of a sharp appreciation, the Chinese Renminbi may be
devalued versus the US dollar in the near future, as capital takes
flight and further real growth in China fails to materialise.
ix. Currency Turmoil, Gold and Inflation
The demand for riskier and higher-yielding currencies and assets will
break down further in 2010, with the dollar gaining on its safe haven
status and relatively better US fundamentals and economic data in
comparison to other established countries. This is consistent with
the negative correlation of the dollar with riskier assets, which has
prevailed in 2009. A resurgent US dollar is likely to power through
2010 with its up-trend intact, as a steadily improving US economy
leads investors to believe interest rates will increase sooner than
had been expected. The US dollar could also snap back sharply next
year because the US dollar carry trade has been too easy and too
obvious for too long.
The strength of the Japanese yen is not reflecting economic reality at
all. Japan's economy is sick and becoming sicker. They are
struggling with a huge and growing debt burden combined with an ageing
population. The Japanese yen is an overvalued currency and as the yen
carry trade comes back into vogue and the dollar rebound gains
traction, the yen is likely to weaken significantly. Also 10-year
Japanese bonds could lose value, given that current rates of 1.25% may
not be sustainable at a time when the public debt is exploding to
cross 200% of GDP.
Gold could spiral down way below $1,000 an ounce in 2010, from its all-
time high of above $1,200 in 2009. The inflation beast has been slow
to wake up – mostly because the dollars thus far created don’t even
begin to erase the hole of dollars destroyed during the financial
crisis. We may see some selective signs of inflation in 2010 – but in
view of the huge collapse in world demand manifest in the world trade
figures, the fundamentals do not point towards a massive inflation
threat at present.
There is a lot of speculative hot money in gold assets right now that
needs to be shaken out. Whilst some quasi-restoration of a gold
standard by some emerging countries, may again lend wind to the sails
of gold bullion, it is still going to undergo a correction like all
other commodities suffering from rampant leveraged speculation. The
strengthening of the dollar will break the back of the recent
speculative element in gold and other commodities. However, the long-
term fundamentals do remain in place, and gold prices may rise once
again in the longer term.
x. The Black Swan Mystery and Rank Order of Priority
In order to play the "ATCA 2010 Quiz", we request your response in
regard to three specifics:
1. What are the Black Swans -- unknown unknowns -- that your
specialisation, experience and imagination conceive, that could have a
big impact on the world in 2010?
2. How would you re-arrange the order in which we placed the top nine
sections in the 2010 list? and
3. Do you have any other thoughts, observations and views in regard
to 2010, which you would like to share?
Let us know and we will publish select responses to queries 1. and 3.
and the highest frequency tallies for query 2.
[ENDS]
We welcome your thoughts, observations and views. To reflect further
on this, please respond within Twitter, Linked and Facebook's ATCA
Open and related Socratic dialogue platform of HQR.
All the best
DK Matai
Chairman and Founder: mi2g.net, ATCA, The Philanthropia, HQR, @G140
To connect directly with:
. DK Matai: http://twitter.com/DKMatai
. Open HQR: http://twitter.com/OpenHQR
. ATCA Open: http://twitter.com/ATCAOpen
. @G140: http://twitter.com/G140
. mi2g: http://twitter.com/intunit
- ATCA, The Philanthropia, mi2g, HQR, @G140 --
This is an "ATCA Open, Philanthropia and HQR Socratic Dialogue."
The "ATCA Open" network on LinkedIn and Facebook is for professionals
interested in ATCA's original global aims, working with ATCA step-by-
step across the world, or developing tools supporting ATCA's
objectives to build a better world.
The original ATCA -- Asymmetric Threats Contingency Alliance -- is a
philanthropic expert initiative founded in 2001 to resolve complex
global challenges through collective Socratic dialogue and joint
executive action to build a wisdom based global economy. Adhering to
the doctrine of non-violence, ATCA addresses asymmetric threats and
social opportunities arising from climate chaos and the environment;
radical poverty and microfinance; geo-politics and energy; organised
crime & extremism; advanced technologies -- bio, info, nano, robo &
AI; demographic skews and resource shortages; pandemics; financial
systems and systemic risk; as well as transhumanism and ethics.
Present membership of the original ATCA network is by invitation only
and has over 5,000 distinguished members from over 120 countries:
including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of
corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres
of Excellence; 500 Inventors and Original thinkers; as well as 250
Editors-in-Chief of major media.
The Philanthropia, founded in 2005, brings together over 1,000 leading
individual and private philanthropists, family offices, foundations,
private banks, non-governmental organisations and specialist advisors
to address complex global challenges such as countering climate chaos,
reducing radical poverty and developing global leadership for the
younger generation through the appliance of science and technology,
leveraging acumen and finance, as well as encouraging collaboration
with a strong commitment to ethics. Philanthropia emphasises multi-
faith spiritual values: introspection, healthy living and ecology.
Philanthropia Targets: Countering climate chaos and carbon neutrality;
Eliminating radical poverty -- through micro-credit schemes,
empowerment of women and more responsible capitalism; Leadership for
the Younger Generation; and Corporate and social responsibility.