Did I stuff it up?
Just over a year ago, I walked the plank. Well, not quite. I offered up my predictions for 2009. The first time I’ve done that – so time to look back and see how many predictions I stuffed up. If I managed to get them all right, then I am going to embark on a new career as a psychic. Dress up with wild red hair in ribbons and gaze dreamily into a crystal ball. That should do it.
To refresh our collective memories, here were my predictions for 2009 with a look at how I tracked against them:
- Reinvent yourself as a Chief Financial Officer (or CFO) – due to the global financial crisis, I said that organisations would need a financial wizard to navigate them through the mess. I may have this one right – the Best of 2009: Careers in CFO.com (possibly a biased publication!) declared 2009 as the Year of the CFO, with the role of strategic CFO being prominent. A quick look at seek.com.au and I found 95 jobs for CFOs or senior corporate accountants. So I’m giving myself a tick for this prediction.
- Formal recognition of global recession: I predicted that the IMF would formally admit the global economy was in recession. Well, that happened in April 2009 with the IMF’s April World Economic Outlook. I thought that despite a new Prez in the White House, Obama’s economic stimulus programme would not put a halt to rising unemployment during 2009 in the US or a deepening recession. Although hiring is starting to pick up now and jobless figures are dropping, a record 20 million-plus people collected unemployment benefits in 2009 in the US and the unemployment rate hit 10%. In March 2009, Treasury Secretary Timothy Geithner, told the grim tale of a deepening US recession and indeed world recession. Falling US auto sales and increasing home foreclosures signalled a recession that wasn’t going to disappear quickly. Further, I muttered that I wouldn’t be surprised if some US states declared bankruptcy. Well, that happened in California. Arnie ran out of money and basically had a US $12bn deficit on his hands. He ended up giving IOUs to creditors and civil servants. Illinois is in the midst of a financial struggle that could mean tax increases for its citizens. And Business Week laid it all out, highlighting the US states in bad financial shape. Thankfully, hyperinflation didn’t happen. So…basically a tick for these predictions.
- Banks will screw us. What better example can I give than the Westpac (Australia) outrage and its “mortgages are banana smoothies” ill-judged metaphor. And Australian banks certainly tightened credit in 2009. Tick.
- I said that Governments would take increasing control of banks. Well, the Austrian Government had to take control of Bank Medici; Ireland became the first European Union country to take de facto control of all of its most important banks; Obama took over control of the bonus pool by capping executive pay at banks that were bailed out; and the Spanish Government took over the troubled savings bank, Caja de Ahorros de Castilla-La Mancha. Tick.
- Employers could get nasty. I predicted that wages could be cut and more demands made on staff to “do more with less”. This certainly happened – Hewlett-Packard imposed wide-ranging pay cuts including Executive council members who took a 15% haircut on their base pay; Japan slashed wages across the board in an effort to stem job losses; and the recession was putting pressure on some workers to do unpaid overtime so they could keep their jobs. And the global recession witnessed worsening employee morale. Tick.
- Trend towards a simpler life. Really, I think this is an ongoing trend and will continue into 2010. But with many people in the US, for example, out of work – people are learning to be thrifty (and enjoying it). Here’s the story of 37-year old woman leading a simpler life after being laid off; USA Today reported that Americans were paring back their lavish lifestyles because of the financial crisis; the DIY industry exploded in 2009 with people doing their own home improvements, learning how to cook at home or making crafts to sell. The global recession even renewed interest in home vegetable gardening. Tick.
- Increase in civil unrest and rekindling of socialist ideals. I’m sure you all remember the angry protests against financial institutions in the UK; Greek farmers blocked roads and protested over falling agricultural prices; a million workers in France joined demonstrations to demand greater protection for jobs and wages; Icelandic demonstrators clashed with police in Reykjavik. There was unrest all over Europe; a wave of protests swept across Russia; folks in Connecticut weren’t going to take it anymore and descended on the luxurious homes of bank CEOs and US students at the University of California clashed with police whilst protesting against a hike in tuition fees the university says is needed to raise US$505 million. A Rasmussen poll during April 2009 pointed to a possible shift towards socialism in the US – 53% of American adults believe capitalism is better than socialism and 20% say they prefer socialism (I’m going to bet on the high probability that many young people, who don’t know what socialism is, were in that 20% and the 27% who weren’t sure which is better). So…tick.
- I thought that the cosmetics and entertainment industries would thrive in 2009 – because women won’t give up lipstick (lipstick sales during the Great Depression of the 1930s rose by 25%) and people will want to forget economic doom and gloom for a few hours whilst watching a film. Both are mood enhancers. 2009 saw an increase in Avon representatives (probably as people laid off thought of new career opportunities) and I think there was a trading down to cheaper brands. The so-called “lipstick index” (created by Leonard Lauder, chairman of Estee Lauder) says that when there’s a recession, women buy more lipstick and Forbes reported what women were still buying in 2009, with lipstick high on the list. What I didn’t predict but should have is the rise of natural and organic cosmetics, which increased by 13% to €1.7 billion in Europe in 2009. Although cosmetic companies have taken a bit of a battering, make-up and lipstick is still selling well. Similarly, moviegoers defied the global recession with attendance at US cinemas up 5% during 2009 and box-office revenue up 8.6% in the U.S. and Canada and certain to top $10 billion, an all-time record. Tick.
- Better leadership from our politicians and more cooperation between political parties. The US and China pledged to work more closely together on political, economic and environmental issues; representatives of political parties from Latin America and Asia-Pacific met to strengthen cooperation amid the global financial crisis; and UK Prime Minister, Gordon Brown, urged global cooperation at the World Economic Forum in Davos. So I guess a tick.
- Politically, Afghanistan will start to haunt Obama. You just have to read the newspapers to know that Obama’s troubles are pretty desperate in Afghanistan and that quite possibly the country will be Obama’s Vietnam. And he’s going to have to spend 2010 explaining to Congress why he needs roughly $100 billion a year and at least 40,000 more troops (surge anyone?) in fighting a war that is increasingly unpopular. Tick.
- Rise in trade protectionism. Tick, this has happened despite the need for a coordinated economic approach to the financial crisis. Global use of trade remedies rose by 18.8% in the first quarter of 2009 – download a report here.
- Wild weather due to climate change and skirmishes over water and food. This is not science to say this but when I was a kid, I don’t remember so many days of 35 or 40 degrees. We seem to be getting warmer weather during winter (eg in August) and very very hot days in summer followed by a day that is 15 degrees cooler. Read about Australia’s weird weather here. We’ve had severe storms and floods, Perth and Adelaide are on fire, and of course Sydney was hit with a red dust storm during September. Wild weather has wreaked havoc in Indonesia and climate scientists are predicting that the year ahead will see El Niño exacerbating the effects of climate change, bringing with it floods, droughts and the hottest years on record. We’ve also seen snowstorms and sub-zero temperatures in the UK, Europe and the US – which the skeptics use as evidence against global warming – but climate scientists are putting this down to La Niña (cooler than normal water temperatures in the Equatorial Pacific Ocean) and does not detract from the fact that we are seeing thinning ice and retreating glaciers. Climate experts are predicting that the real heat will set in after 2009 with a surge in temperatures. So I’ll give this a tick. Crop failures saw 1500 farmers commit suicide in the Indian state of Chattisgarh; there were some reports of a catastrophic fall during 2009 in global food production; and I’ve already told you about skirmishes over water. Tick.
Clearly, I should reconsider my career path and become a psychic. I’ll dust off my crystal ball. But frankly, if you follow world events keenly and note the patterns, you don’t need to be Einstein to figure out what will happen. Next post – my predictions for 2010. Given my track record, I know you’ll be excited but try to get some sleep 🙂