“It’s tough to make predictions, especially about the future–Variously attributed
2022 is upon us, and everyone seems to be rushing to make their predictions. As your financial advisor will counsel you, past performance is not a guide for the future. 2020 and 2021 didn’t quite work out the ways the punditry thought they would. Stuff happens, as they say.
I’m going to offer up some thoughts about where I see 2022 going. It’s more of an unfolding of trends and movements than anything else. No spreadsheets, multivariate cyclical chart analysis. No, this is the intuitive side of my consciousness operating.
In the interests of full disclosure, some folks even track my ‘predictions’ going back 15 or so years. The bottom line is that I’m well within the ballpark about 80% of the time – but the average is 5 years ahead of manifest reality. So, here goes, and remember this might be close and maybe not until 2027ish. No priority or time schedule is involved. I see all these happening in parallel and intertwined like strands of yarn.
Growth is Gone
Worldwide continuous growth is done with. The drivers are changing attitudes about consumerism, the decline in boomer generation demographics, and natural resource limitations.
Implication: Industrial capitalism has passed beyond the practical stage for increasing overall global well-being. Just as feudalism and mercantilism had their time, so it goes for capitalism which depends on ever-expanding markets to provide growing returns on investment over time. Declining market growth and the financial foundations fall away. No more fodder for the ‘greedasuarus.’
The challenge: The critical question is how to transition from a global financial system to whatever comes next. I don’t pretend to have an answer. However, I think whatever it will be based on an operating principle of personal well-being for the entire community over ‘profits’ for a few. The seeds have been planted, and the first sprouts are beginning to appear.
The Decline of US Hegemony
Guess what? Nobody even wants to talk about this. Because it goes right to the heart of the mythical belief of most citizens about the United States of America being omnipotent, all-powerful, and ‘exceptional’ when viewed in a global light.
Implication: The role of global arbitrator of trade relations, the planetary policeman, and the sole source of moral correctness has disappeared. The post-WWII preeminent position has been swept away by ‘globalization’ and the rapid rise of new population centers such as China and India. The US is no longer in charge of world affairs.
The challenge: How does a nation make the transition from being in charge to just being a co-equal member of the team? How does a nation move along the continuum of coordination – cooperation – collaboration? How does a government subjugate its collective ego in service to the greater good of all humanity? It will take extraordinary humility, grace, and, yes, compassion.
Biden and Democracy
A very strange ‘weak signal’ occurred in the US in 2021. A new President elected mainly as a reaction to a rise of authoritarianism convened a worldwide “Summit for Democracy.” Over 100 leaders across a vast group of political, business, and non-governmental organizations called in mid-December with plans for a follow-up meeting already in place. Much to the chagrin of the Chinese.
Implication: Non-Third World countries appear to be organized around a ‘democracy – authoritarian’ axis. This portends a socio-political reorganization beyond a regional market focus. The Cold War has receded, as has the Europe/Americas/Asia orientation to global markets.
Challenge: How to move beyond diplomatic conversations towards a sustainable, resilient governance structure? Some past efforts have been successful such as the Bretton Woods Agreement and the North Atlantic Treaty Organization. But even these are showing signs of irrelevance. Will this be just another well-intended effort that withers on the vine-like President Wilson’s League of Nations? It should be noted that more authoritarian regimes were not invited (e.g., China, Hungary, Turkey, Russia, and Myanmar).
Financial Markets Drives Environmental Action
The United Nations COP26 (Council of the Parties) convened in late 2021. Little was accomplished short of vague promises to reduce CO2 levels long term. However, in the face of political power, economics comes to the fore. MunichRe reports 4,200B USD weather elated losses since 1980. Or, as they note,” Good risk management also requires precise knowledge of extreme weather risks and the factors that influence them, for example, climate change.”
Implication: Areas prone to ‘extreme weather events’ will see a significant rise in insurance premiums. Some areas, such as low-lying coastal cities, may find themselves uninsurable. Investment in infrastructure and housing for these impacted areas will disappear. ESG (Environmental, Social, and Governance) will predominate in financial markets and target opportunities that produce a ‘positive environmental impact.’
Challenge: The primary challenge in this shift is a matter of timing. Can the financial and investment community effect change fast enough to attenuate adverse climate impacts before catastrophic results occur? While there is wide disagreement as to timelines, 2050 seems to be the most reasonable estimate. Given the average useful lifespan of large power plants is 40 years, there is little margin for lack of action.
The Bottom Line
2022 will be the year that these four forces will begin to rise up and become visible. No longer ‘weak signals’ drowned out by the noise of everyday events, they will become the center of attention and debate.
Put them on your Future Scope detection screen and make yourself ready for action.