https://pixabay.com/photos/sparkler-sylvester-dark-shining-477598/
"I tell you naught for your comfort,
Yea, naught for your desire;
Save that the sky grows darker yet,
And the sea rises higher."
- GK Chesterton, The Ballad of the White Horse
"Men at sometime were masters of their fates.
The fault dear Brutus, is not in our stars,
But in ourselves, that we are underlings."
- William Shakespeare, Julius Caesar
...........
This is the traditional end of the seasonal (and astrological) cycle when we take stock of what lies ahead. New Year’s resolutions are wheeled out, and everyone has a crystal ball.
.............
This is the traditional end of the seasonal (and astrological) cycle when we take stock of what lies ahead. New Year’s resolutions are wheeled out, and everyone has a crystal ball. Christmas may well have been reduced to a consumer brand for many, but the old ways run deep. Many a glass will be raised to say farewell to the old year, and usher in the new, and it’s a racing certainty that out-of-tune renditions of Auld Lang Syne will ring out.
Other certainties, however, are about to change; the economies of the world will shift into War Economy mode in 2023. With bewildering speed, we are now being forced to jettison the comfortable low interest, low energy cost, low inflation, rules-based global economy that was our comfort and embrace a much more uncomfortable new order instead.
...........
This new order will be the very opposite of co-operative globalisation, which has been a central plank of civilised aspiration ever since 1945. Instead, all around, we now see country after country already pulling up the drawbridge.
.............
This new order will be the very opposite of co-operative globalisation, which has been a central plank of civilised aspiration ever since 1945. Instead, all around, we now see country after country already pulling up the drawbridge. Like those end-of-world rugged types one reads about, who have for years predicted the collapse of government, and work to preserve themselves against an uncertain future by storing up food, fuel and ammunition. Likewise, nations are now improvising similar doctrines of self-reliance – boosting sovereign economic gains, and putting themselves first.
And so. with our families in mind, our pockets, and all our futures, we consult our in-boxes which groan with financial and political forecasts. We are all familiar with the daily round-up of trends to expect and "no see-ums". The hope is to identify one of those ’black swan’ events that nobody expected, and for which provision will need to be made.
We’ve certainly had a few of those, this past year, starting with Russia’s invasion of Ukraine in February 2022. That caught the markets on the hop, and they are only now beginning to catch up. This was certainly a good example of a Black Swan event, as was Covid two years earlier, whose effects are still massively distorting.
Looking ahead then to 2023, and pulling together a few of these strands, here are a few out-of-the-box forecasts and trends to mull over, culled from a variety of sources:
..........
Nationalism has become the ideology of our age.
...........
1) Nationalism has become the ideology of our age. No wonder the world is in crisis, says Gordon Brown, a former prime minister of the United Kingdom. He argues that at the very moment the world needs to work together to address global problems, it is being pulled apart not just by conflicts, but also by rising protectionism. An outdated geopolitics is threatening a decade of ongoing crises. Pillars of the post-cold war world order are tumbling down as we leave the unipolar, hyper-globalised, neoliberal era. "Those who try to build the present in the image of the past are finding themselves wholly ill-equipped to meet the challenges of the future, (and) we need new models for national economic management and global co-operation," he adds. (1)
2) In many ways, the wider world has experienced a "phoney" war since the Russian invasion of Ukraine seven months ago – similar to the run-up to the German invasion of France in 1939. Our experience of the fighting in Ukraine has been at arm’s length, seen mostly on our TV screens, and our lives seemed for a long time to tick along without qualms under the balmy sun of summer in the northern hemisphere, and a reasonably benign winter in the south. But now the phoney war is coming to an end, and the war in Ukraine could spill over into a full-scale conflict between NATO and Russia, the head of NATO, Jens Stoltenberg warned this month. Asked what he fears most about (the winter in Europe) he said: "I fear the war in Ukraine will get out of control and spread into a major war between NATO and Russia." He said while he understood that people struggling with fuel shortages and high prices are losing enthusiasm for supporting Ukraine, a much higher price for freedom would have to be paid if Russia is allowed to win in Ukraine.
3) In the same way that diesel cars were once the (heavily subsidised) darlings of the motor industry, so electric vehicles are now the new kids on the block. Dramatic deadlines (eg 2025) have been established to end the construction of the internal combustion engine altogether. We are talking a few years only. As a result, 2023 will see electricity demand worldwide explode, as electric cars replace liquid fuel cars. The shift will be accompanied by a breathtaking increase in digital storage and transmission. Data centre infrastructure will, together with electric transportation, consume up to 20 per cent of global energy within a couple of years with the great leap forward occurring in 2023.
But the growth potential for energy is constrained at present, as fossil fuel energy is shut down and alternatives like wind and solar are seen as too intermittent. As a result, all eyes in 2023 will be on the extraordinary clean energy breakthrough (just announced by the Lawrence Livermore National Laboratory in the US) of a fusion reaction that has been achieved which produced more energy than it absorbed.
...........
As a result, all eyes in 2023 will be on the extraordinary clean energy breakthrough (just announced by the Lawrence Livermore National Laboratory in the US) of a fusion reaction that has been achieved which produced more energy than it absorbed.
............
Fusion reactions enable vast amounts of energy to be produced from very little hydrogen fuel. They are the holy grail in energy production. The expectation in 2023 is that on the back of this achievement, technology companies and investor capitalists will team up and raise trillions of dollars to fund a new Manhattan Project (which originally developed the atom bomb) to realise the potential of fusion in practical terms. This will also involve harnessing the potential of AI (artificial intelligence) which could benefit other areas of human achievement at the same time. Paradoxically none of this would have happened without the energy crisis caused by the Ukraine-Russian war.
4) French President Emmanuel Macron is tipped to resign in 2023, with far-reaching implications for European Union cooperation. Macron was elected to a second term in May 2022, but shortly thereafter his allies lost their outright majority in the French parliament to the right wing in June 2022. As a result, Macron has been unable to pass legislation and he had to use emergency powers to ram through the 2023 budget. Commentators believe he recognises his reform programme is now fatally hamstrung and so will step down, opening the way for right-winger Marine Le Pen to become the new president of France.
5) In 2023 the price of gold is set to double in value to 3000 dollars, with hugely positive implications for the South African social war chest. The reason for the rise in the price of gold is due to 2023 being the year global markets finally realise inflation is here to stay for the foreseeable future. In 2023 the American reserve bank is forced to control market volatility with de facto quantitative easing policies, pumping new money into the system; this coincides with China’s unexpected decision to abandon zero Covid policies, and allow its manufacturing industry to open up regardless. This in turn leads to sudden enhanced commodity demand, increasing global inflation. The pressures are further augmented by the US dollar losing value, and inflation throughout 2023 remains in double figures in the G7 countries as a result.
Needless to say, commodity-rich countries, including South Africa, could see big improvements in their income – and currencies. The improved South African economic outlook would inevitably favour electoral prospects for the ruling party, the ANC.
6) Following Russia’s invasion of Ukraine, and the 2022 midterm elections in the US which saw a surge in populist Republican representation in Congress, and Trump declaring his candidacy for president in 2024, the European Union feels more than ever that it cannot rely forever on the Americans to protect them. In 2023, therefore, the EU decides to formally establish the EU Armed Forces within five years, to be funded with trillions of Euros. EU bonds are issued to kickstart the process and the Euro stages a massive recovery. 2023 will see a strong Euro, a weak dollar and gold at 3000 dollars.
7) To meet net-zero climate targets, at least one European country decides in 2023 to progressively phase out meat consumption and production. They are reacting to projections that annual meat consumption must be reduced to 24 kg per person – down from the current OECD average of 70 kg per person. Consequently, a policy move is made to heavily tax meat on a rising scale. In addition, it plans to ban all domestically produced live animal-sourced meat entirely by 2030, figuring that improved plant-derived artificial meats and even more humane, less-emissions intensive lab-grown meat technologies will have to satisfy appetites to help save the environment and climate.
8) Matters in the UK come to a head in 2023 when public demonstrations demand a change of government. Conservative prime minister Rishi Sunak fails to quell public disquiet about the negative direction the economy is taking. A feeling takes hold that Brexit is to blame for the malaise, with polls showing overwhelming support for the UK to rejoin the EU. The original vote to leave was carried by a chunk of the labour force now retired, and young voters want to reverse their decision. PM Sunak cannot hold the Tory ring, and so resigns in June. He is replaced by Labours Keir Starmer, who follows the public ratings lead and triggers a second referendum to rejoin the EU on the lines of the David Cameron deal struck before the original 2016 Brexit referendum. Britain votes to rejoin the EU on I November 2023.
9) Over a third of international trade is invoiced in US dollars and two-thirds of foreign exchange reserves are held in US dollars. The ban on transactions with Russian sovereign entities has led allies of Russia to worry that if they inadvertently break sanctions themselves, they will find their assets frozen overnight. Accordingly, the BRICS countries decide in 2023 to establish a new non-national reserve asset upon which to trade. In a conference convened in July 2023, leaders from OPEC+ countries, mainland China, Hong Kong, India, Brazil, Pakistan, Central Asian countries, and a dozen African Union countries including South Africa, gather to establish an international currency and reserve asset called by a name yet to be decided. All the member countries of the newly created monetary union withdraw from the IMF. Saudi Arabia and Hong Kong end their currency pegs to the USD, which takes a big fall in response to this initiative.
10) In 2023 the OECD agrees to move to a more aggressive stance on tax havens, launching a full ban on the largest tax havens in the world such as the Cayman Islands, Bermuda, Bahamas, Panama, Mauritius and the Isle of Man.
This dramatic change in tax policy reflects the growing recognition, as the war economy mentality deepens further in the new year, that entire industries including countries under US war sanctions like Iran and Russia, are leveraging tax havens to raise capital from foreign investors, who are in turn avoiding taxes – taxes which are needed by the OECD members. Tax dodges in tax havens are estimated to cost OECD members approximately 600 billion dollars annually. One immediate result of the ban is a 50 per cent valuation fall overnight in many publicly-listed private equity firms.
11) The United States finally sends troops to Haiti in 2023 to restore order to that stricken country where anarchy reigns supreme.
...........
How many of these forecasts will come about? Your guess is as good as mine, but the fact they are in circulation in one guise or another may mean where there’s smoke there’s fire.
............
How many of these forecasts will come about? Your guess is as good as mine, but the fact they are in circulation in one guise or another may mean where there’s smoke there’s fire. Some of them may even happen – but I wouldn’t sell any shares just yet. Take professional advice. In any event, whatever 2023 holds, let’s embrace the new year with good cheer and optimism. It may not all be bad!
- As quoted in The Guardian, 10 December 2022.