ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies - bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads.
I consider myself fortunate to be an invited member of this group, and here are our collective thjoughts about how it's going to be, as we cast our eyes to the very near future:
Here is a consolidated digest of the key "Opportunities and Threats"
. Humanity is moving with hiccups towards greater humility, acting in concert and collective thinking. Nation states are recognising their inter-dependence within the global community of sovereign nations.
. Small is beautiful. The way out of economic difficulty is through the creativity and the ingenuity of small to medium size businesses as they have the ability to create employment and reinvent processes in all kinds of economic conditions.
. The global economy will no longer be driven by two or three trading blocs, as other smaller trans-national and regional engines are gaining significance.
. Watch out for solid deposit based financial institutions with excellent capital adequacy ratios and corporations with extremely low gearing, exemplary geographical diversification and healthy profits. These entities are potentially big winners from the crisis.
. For those entities and individuals who bear the difficulties and remain sanguine, asset acquisition suddenly looks affordable and tending towards value-for-money over time.
. Inflation has been a cause of concern, however it will come down in the near future.
. Savings: Even as the global financial mayhem will lead to a slowdown in investment flows, domestic savings will have to rise in lock step to take care of strategic investments. The mi2gIntelligence Unit forecast is that looking at the demographics over the next decade, all countries will have to move towards higher saving rates to remain competitive and to stop the continuous erosion of lifestyle quality.
. The use of advanced technologies - bio, info, nano, robo & AI - is going to increase in industry and business to reduce costs and light weight yet strong man-made materials will replace natural raw materials significantly causing commodity prices to decline further and energy efficiency to increase considerably. The innovators and purveyors of these technologies will benefit from the present global crisis in the years ahead.
. Clean energy, sustainable technologies, microfinance, water and eco-friendly infrastructure will settle as key sectors for the coming "Golden Age" and remain growth areas - post the inevitable correction - as the world addresses climate chaos, radical poverty and energy efficiency challenges.
. The world will tend towards multi-polarisation as the key shapers of the 21st century economic architecture are thrown into sharp relief. East Asia is the real place of dynamism and growth action now. Both China and India will continue to remain major engines albeit with lower than double digit growth. Japan's power and influence may also increase.
. Japan, China and India have a unique opportunity to consolidate themselves in leadership positions in the global political and economic "Power Architecture". The American, European and Russian crises may be Japan, China and India's chance to improve their global significance even further given their relative strength and competitive advantage.
. Japan, China and India should be able to weather the storm through domestic capital formation, resilience and rising strategic overseas investment plays. The combination of high saving rates and highly functional capital markets should propel the countries forward albeit with much lower growth.
. Boardrooms from Tokyo to London and Beijing to New York are enthused about India Inc, especially in regard to infrastructure projects. India's economy is based on strong fundamentals like a globally competitive services and manufacturing sector backed by domestic demand driven growth generated by 800 million people with spending power.
. The road ahead for countries including the Middle East is to go further down the path of globalisation. These events should not be used to justify not engaging with the world. It is in the interest of each sovereign nation and the world's collective interest that all continue with their global engagement and coming together.
. The ongoing financial crisis is a clear indicator that the global parking lot for both long-term and short-term capital is going to modify, the US and US dollar are going to remain key but they are not going to be the only preferred destination and currency. There is a great opportunity for Japan and the Japanese Yen. China and India may also remain preferred destinations for capital at the expense of other emerging nations.
. We are moving towards a free and fair world trading system albeit with hiccups. A multilateral rule-based system established by the World Trade Organisation is, therefore, as much in the interest of emerging countries as in the interest of established countries. It is important to get rid of non-tariff barriers which make it difficult for a country's market to be penetrated even when tariffs are zero.
. Ignorance, hubris and arrogance in the corporate, individual and government spheres. Leadership based on "I" and not "We" - me-first and me-last as opposed to our mutual interest and joint well being!
. Inflation has increased input costs, which has trickled down to higher prices in stores. However, in the medium to long term the threat of deflation across all asset classes is much larger because of massive and unprecedented demand destruction.
. Businesses and consumers are being hit by a double whammy: a decreasing cash flow and a dip in the value of assets on the balance sheet. This may continue to sap confidence.
. One cannot have the world's major economies slowing down and their impact not being felt worldwide. However, it is not a zero-sum game.
. Recovery from the global financial crisis is going to be a highly turbulent long and slow process. Exchange rates are more volatile. Commercial and residential real estate values may continue to fall for some time.
. In order to emerge from the current crisis - the worst to have hit the banking and insurance industry in the past 70 years - the balance sheets of financial institutions have to be repaired step by step. Financial institutions are leveraged between 25 to 35 times. A long slow, painful process of de-leveraging needs to take place. The troubles of the financial services sector have dried up the available money supply. Government assistance and partial nationalisation may or may not do the trick.
. The possibility of surprise asymmetric threats - black swans - emerging in the key ATCA areas is rising. Those areas are climate chaos and the environment; radical poverty; geo-politics and energy; organised crime & extremism; advanced technologies - bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics.
. Watch out for a potential destabilisation in China from within as a result of significant economic slow down and regional differences as well as grass roots disenchantment. The lack of access to quality new and information from across the globe in an open way is likely to increase misunderstandings.
. Watch out for the vulnerability of the Euro currency as the fragile financial union of European nation states demonstrates disjointed and haphazard actions to resolve the financial crisis on a case-by-case and knee jerk basis. There are likely to be multiple clashes between Euro-zone nation states and the European Central Bank as the going gets tough. This may make the Euro currency vulnerable.
. Watch out for the potential destabilisation of nuclear-armed Pakistan because of the desperation of the Taliban and the ongoing NATO war in Afghanistan. The Iran nuclear stand off and the Middle East situation in regard to Israel also have the combined potential to create their own global flash points without much notice.
. Russia may use the present global financial crisis to meet long term geo-political objectives such as the swift action seen in regard to Iceland.
Final thought for today from me: The last seven decades have been about how much money one can make. The next decade may be about how much money one cannot lose!
Tomorrow:It's business as usual - I am off my soap-box, so be sure to join me
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