Ringing in 2009
I said in a previous post that I don’t like uneven numbers, so already I’m not liking the sound of 2009. Normally, I don’t offer up my own predictions – basically, I’d be worried that one year later, when my predictions turned out to be oh so ridiculous, I’d have serious egg-on-face. But I’ve been reading heaps on the global economy and other stuff, so I’m going to outline what I think 2009 might bring us based on all my readings and thinking. Leave a comment if you have other thoughts.
1. Re-invent yourself as a Chief Financial Officer. This would be have to be the dream job of the moment. With the GFHF (global financial hissy fit), employees are being shown the door and companies are literally vanishing overnight. Organisations left standing require a magician to navigate them through economic hell – the CFO! Organisations will do some internal reckoning and look at their exposure. Pity I suck so badly at finance.
2. We’ll all be in economic hell along with the CFO. Obama’s stimulus package (or as I believe it’s now called, Economic Recovery Plan) and the Rudd Government’s attempts to kick-start flagging economies seem to assume that this is all that’s needed. The spending that sustained us all over the last few years was based on the housing bubble, which has well and truly burst. Before that, it was the tech bubble. So unless a new bubble comes along, I’m not sure how things will recover once the Recovery Plans run out of steam. What will be the basis of a post-GFHF economy? Manufacturing? Real Estate? Financial industry? How do you build a sustainable economy without bubbles and Government “recovery plans”? All the devastating forces are still ripping into the economy – housing slump, decrease in consumer confidence and the hedge funds and banks I reckon are still to reveal exactly what they’ve been up to (so probably more bailouts will be required, further burdening the taxpayer). And I don’t see how leaders like PM Rudd are going to really help the situation with the Christmas hand-out, telling us to spend up big. It’s the consumerist, American-style capitalist model that got us into the GFHF situation in the first place. A rethink of this model needs to take place pronto.
I reckon 2009 will see formal admission by the IMF that the global economy is in Recession. Despite Obama and the atmosphere of hope around his Administration, I don’t think he’ll be able to overcome rising unemployment in the US and a deepening Recession in that country throughout 2009. I wouldn’t be surprised if some US States declare themselves “bankrupt”. Let’s just hope we don’t see signs of hyperinflation.
Banks will screw you and me. Consumer credit will be restricted and if you’re late with a payment, watch out, they will hit you with penalties at high interest rates. But Governments will probably increasingly take direct control of banks.
I also think that employers could get nasty. Knowing that people are fretting about keeping their jobs, wages could be cut and more demands made on staff to “do more with less” – leading to worker stress and gloomy moods.
3. There will be a trend towards living a simpler life. Yep, I know that many people have been calling for a return to a less materialistic world for some time. But I think 2009 will see a conscious shift towards making your own stuff, doing with less voluntarily. The GFHF has scared the bejesus out of us. Anyone under the age of 80 years has no memory of what it’s like to live through a Depression. But we’ve all heard the stories. As a result, I think we’ll start to re-examine our lives with a view towards having less personal debt and going back to basics – like lay-bys, eating at home more, less reliance on outside entertainment and so on. Heck, even I am looking to invest in a sewing machine to make my own clothes (and I’ve never been known for my sewing abilities). I want more control over what materials I can choose. I want clothes that aren’t “Made in China”, poorly made and destined to fall apart within a season.
We will no longer sit back and accept that CEOs get paid exorbitant salaries and bonuses. We will not suffer fools – greedy bankers and financial advisors. We will return to saving and investing wisely and seeking long-term financial security not just short-term profits. We will need to reflect and adapt because a very different GFHF world awaits us.
4. Because of the ongoing economic uncertainty and people worrying about jobs and losing homes, I think we’ll see an increase in civil unrest. There could be a rekindling of socialist ideals.
5. There will be some industries or professions you’d like to be in because they will see an increase in popularity. During the Great Depression, people went to the cinema to relieve anxiety. Women still bought lipsticks and cosmetics to make them feel better. So I reckon the entertainment and cosmetics industries will thrive.
6. We’ll expect more from our politicians. Instead of party bickering, we will be looking for strong leadership to guide us through 2009. Hopefully, this will start with Obama. We will expect increased cooperation between political parties and on the international stage as Governments and politicians collaboratively address economic issues.
7. Politically, Afghanistan will start to haunt Obama. There will be further strife between India and Pakistan. I think we’ll see a rise in trade protectionism. So for example, already you see Russia raising tariffs on autos to prop up its ailing car production industry (mmmm….wonder if there will be a call for the return of Communism there?). The EU is busy accusing the US of taking a more protectionist stance on trade. I think that increased protectionism will be a huge threat to the global economy in 2009 because it will lead to a collapse in global trading.
8. The global climate is stuffed and continues to be stuffed. 2009 will see more wild weather patterns. I think it will be chaotic and all at a rate faster than predicted. We’ll have to take ourselves off the snooze alarm but it might be way too late to get serious about climate change. I think we’ll start to see the first skirmishes over resources. I was reading recently about a worldwide shortage of seed. For example, soybean seed has been in short supply and alfalfa seed supply is tight. We’ve already seen food riots breaking out in Morocco, Yemen, Mexico, Guinea, Mauritania, Senegal and Uzbekistan. And of course farmers are probably going to face a tough time getting credit to buy seeds. This will all get worse in 2009 leading to food shortages and skirmishes affecting the stability of regimes.
World food security is measured by grain inventories and the really bad news is that only 50 days of grain inventories are available, compared with 115 days in 2000. This is the lowest amount of available grain reserves since 1960.
I’m not sure there’s much to look forward to actually, particularly in the UK. But I also think it is a temporary situation. We will ride it out and come out the other side okay, maybe in 2010 or 2011. But we’ll be in a very different post-GFHF world that will require us to adjust, adapt and learn to focus less on ourselves. We’ll realise that in our global environment, everything is connected and that a crisis here or a skirmish there can have a ripple effect and ultimately impact you and me. I have left out the prediction that there will be disappointment with Obama in 2009 as that’s a separate post.
What are your predictions based on what’s going on in your country or what you see going on around the world?