With the culmination of various major geopolitical events
and a very notable transgenerational event like a pandemic it is likely lot of
day to day life assumptions we had in the past decade are not going to be
valid. This write up is a summation of various events that I see based on my
amateur knowledge on history, geography and economics. At best this is a marker
for my thought process and for the reader this is just a random opinion and you
are welcome to endorse or disagree and the humble aim is to provide a big
picture based on what I infer!
1.
Pandemic
'History
doesn't repeat itself, but it rhymes'.
'If we fail to
learn from history we are doomed to repeat it'
There are these two famous quotes not sure about the owner of them but IMO
they are perfectly valid assertions. If we go by the past reference of a major
pandemic it is the 1918 Spanish flu. A simple reading of that graph shows the
virus came in 3 waves and the second wave was the deadliest one. Given the
recent not so contagious but deadly viruses like SARS, MERS etc., do not have
vaccine, I doubt there is going to be a vaccine in the near future may be in
another 12 months to have a trusted candidate for mass consumption but anything
before that I have my doubts. It may not be politically right to say this for
the leaders but this is a likely outcome to anticipate. At the time of writing
this, we could see WHO warning Europe has reported
surge in cases just before the beginning of winter.
What to expect?
It is likely the trend is going to increase from now on through the winter.
So let us make sure elders in our house are not letting their guard down and us
too. Probably we all will invariably get it but get out of it with some cough
and fever of various degree.
What is the impact?
The covid induced recession if not a depression is now a reality. Slowly
firing season has begun and it is likely that the trend will pick up pace once
the elections in US gets over and the artificial support system of coronavirus
relief package, rental moratorium, loan forbearances etc., will stop and more dominos will start
to fall. Unfortunately the pandemic is widespread in many countries in top 10
or 20 economies of the world. So likely the percussions post the winter is also
going to be wide spread. How big or how bad the situation is going to pan out?!
Only time will tell, let's hope for the best. At this point, it is very easy to
see the travel, hospitality and entertainment industry is under stress with no
relief in the near future.
2.
Remote work -
Digitalization
One of the lasting impact of the coronavirus that it has triggered is the
mainstreaming of WFH for tech industry and many others wherever possible. A
simple extrapolation of this trend paints a disturbing picture in few ways. If
tech companies, schools, colleges and few more sectors hold on to this trend,
then many building rental contracts are surely under question. As companies
continue to evaluate the productivity of employees Vs cost savings due to WFH,
many real estate in the cities and the surrounding eco-system of employment
will not be sustainable anymore.
What to expect?
I'm sure more companies are going to go full throttle on the new connected
workplace model at least in the tech world. Shopping malls, theatres, dining
out, schools, colleges all have to rethink their business model. I could see
mainstreaming of more online learning like khan academy, coursera, udemy etc.,
over traditional brick and mortar places along with more innovations and new
winners just like Amazon for retail.
What is the impact?
This trend is going to have a long term impact may be through the entire
decade. If working remote is mainstream, staying close to office is also not
needed. If there is no need to stay close to office, what is the need to pay
premium for real estate to buy a home in an expensive city with education going
online as well? What is the domino effect of this? People are already moving
out of cities, what happens to your home loans for which you have paid a
premium? Densely populated countries like India may see less impact whereas
what happens to country like US where there is plenty of real estate outside
the cities!
3.
Cycle of
Economic machine
In your free time, if you have not watched this video
by Ray Dalio. I strongly recommend everyone to watch this. It is an eye opener
and worth the 30 minutes of your time to put the past, present and future in
perspective. The Boom-Bust cycle is built into the Fiat money
system and average gap between two bust cycle is typically 8 to 12 years. And
if the short debt cycle plays out, then we are due for a recession any way with
or without coronavirus. On top of it, the bigger worry is the end of long term
debt cycle. This end of the long term debt cycle is also referred as fourth
turning by some other authors.
What to expect?
With the virus and digitalization going on in tandem, it is likely the long
term debt cycle is also playing in our life time. Call ourselves cursed or
blessed but in our lifetime we are going to see something dramatic that will
set the tone for next 80 to 120 years. Am I predicting a doomsday event that a
certain country is going to vanish or get destroyed? Certainly not, but this is
going to be a slow process which will make sense in the hindsight probably by
2040 or 2050.
What is the impact?
If you are trying to make assessment an amateur assessment just like me on
what is going to happen, I recommend to look back at least 80 to 100 years in
to the past if not last 500 years. Do not make any assessment in reference to
2008 recession times. Given the whole world is in a fiat monetary system there
is no limit to printing paper money be it the $2.1 trillion stimulus in US or
$2 trillion deal in EU or Rs. 20L crore package in India or $1.1 trillion
stimulus in Japan. It is all being done with the hope of stimulating demand
triggering inflation. But with virus showing no signs of slowing down and
mainstreaming of remote work it is hard to imagine how growth will happen in
pre2020 way. This is the reason why tech stocks are soaring along with the
all-time highs of Gold. Without money printing ideally we should fall in to an
economic depression. But we might get the double whammy in the near future for
stagflation throughout the world! We all have to contemplate and grapple with
this reality.
4.
Geo-political
tussle
It is interesting when you read the history just like how a single male
lion rules its territory in the jungle, there is always an single super power
post the creation of westphalian world order. The sphere of influence of the
European powers beginning with their quest to explore the world has only grown
and the control of some of these elite powers are there now throughout the
world. If the world continued to operate in the pre2020 way, it was forecasted
for China to overtake US by as early as 2030. Just like in the jungle, if you
have a new challenger, you have no option but to fight the challenger. Defeat
or get defeated to get killed is the jungle rule. The same applies to geo-politics
as well.
What to expect?
The ongoing US-China conflicts or China's adventure in its neighboring
countries or China's initiative like OBOR, string of pearls etc., need to be
viewed in this context. On the geo-political scale, the world has always been
under the influence of India and China for the good part of last 2000 years if
not more. So either the rise of China or rise of India (I wish this happens
too) is a major challenge to the western universalism that we are accustomed
to. Though this civilization framework has gone through its own evolution from
dark ages to slavery to imperialism to colonialism to democracy, the
perspective that China or India or the phenomenon of revival of erstwhile
Ottoman empire by Turkey is completely different.
What is the impact?
In the geopolitical jungle, the tussle has started already. The current
Trump administration initiating sanctions after sanctions on China was the
beginning and coronavirus was the last straw to create legitimacy to this
fight, kind of like immediate causes to WW1 and WW2. China to its credit to
challenge has or owns the manufacturing capacity of the world with its own
version of colonies in Africa, to middle east to Pakistan. Post the conclusion
of US elections, it will be interesting to see how this tussle plays out.
Republicans led by Trump is openly against China. Democrats I doubt are like
that, they have gone to the extreme left talking about socialism similar to
China. Institutions in America are typically bi-partisan and foreign policy
remains unaffected. But all that changed after Trump, will he continue to keep
changing the status quo?! May be, but I don’t know!
5.
Disruption of
digital currency
Ok, That's enough of history, current affairs and what exactly is the fight
for etc.,. Now how will the new world order look like or who will control it?
Imagine for next few years there is going to be sustained inflation or
sustained depression sans growth. It is likely there is going to be lot of pain
and given the fiat money rules the world, no place in the world is immune to
this. The clock to reset the world economy IMO has been pressed when
the coronavirus came into picture. The mechanics of creating the new world
order is actively being worked out and will roll out within this decade.
What to expect?
People behavior change slowly over the period of time. The arrival of
computer, internet, smartphone, cloud technologies have changed the way of live
for good. The disruption ready to happen after netbanking and debit/credit
cards is the replacement of fiat currency itself with something digital. Global
trade imbalances to a good extent are created by countries like china by
artificially keeping exchange rates lower in one country lower vs another. What
if we have a new global reserve currency which is traded throughout the world
which is less manipulative by 'sovereign' nations? What if this currency
replaces Dollar as reserve currency after a sustained period of depression or
stagflation where dollar as reserve currency loses is credibility?! ;)
What is the impact?
The world, economy, the way life as we know is going to fundamentally
change. Of course even the arrival of computer, internet, smart phones have
changed many things. But with more and more digitalization many traditional
brick and mortar stores are in question. But what if the post digital currency,
the concept of sovereign nation and westphalian model of nation-state and
archaic role of govt. is in question? What is you have a few global
corporations promising efficient data based governance model?! Sounds terrifying
isn't it? Arrival of East Indian company rule once again?!
What prediction to the future ends without any reference
jyotisha. Just like many, I do not have any knowledge in this, but it is good
to hear some of them to roughly makeup your mind to face the future. Here is one I
liked from Indic perspective. Give it a watch if you like. Lastly, I see lot of
turbulence in the upcoming decade as we navigate slowly to the new world order
and folks - Tighten your seat belts!!!
