This is a very interesting article from my good friend David Newman, ISWA’s Vice – President and director of ISWA Italia. He is always thinking the broad landscape and provides thoughtful insights about our future. You can find more about David in a very interesting self-description he has written at:
http://www.iswa.org/fileadmin/galleries/Organisational%20Structure/Profile_David%20RobertNewman.pdf”
Thanks a lot David for this contribution – my good readers please enjoy it.
“When the financial crisis broke in 2008 I predicted several events whcih have since come to be. I also got some predictions startingly wrong. For example, I predicted that the crisis would lead to several countries declaring bankruptcy, to heavy social unrest, to widespread unemployment, to military style repression on the streets of countries considered democracies. Most of this has come to pass, in one or several countries. Among those that I predicted would survive relatively unscathed was Greece. How wrong can you be ?
Here’s some more predictions three years down the road and looking forward into 2012.
Eurozone
It is unlikely governments will act willingly to drastically reduce the debt burdens. Therefore the banks and the speculators will act for them, forcing countries
like Italy into insolvency (don’t forget, in 1992 the UK went through the same turmoil) and imposing thereafter economic policy. It will be painful. Average standards of living will fall by about twenty percent over the next five years.
Germany will not continue to bail out the weaker countries- France cannot afford to. Spain is on the road to financial stability, Portugal is turning around, but
Ireland, Greece and Italy are bankrupt. How the Eurozone will deal with this is the big unknown but I doubt it will lead to countries leaving the Euro, rather a restructuring of their debts under a programme agreed with other Euro nations, the IMF and the major banks. Forget retiring at 60. More like 70.
America
Obama risks losing the next election. One of my predictions in 2008 was that he would probably be a disappointment and that the Copenhagen Climate Change meeting in 2009 was his first real testing ground- for the progressives amongst us he has shown himself to be a charismatic failure.
America will not default, nor will it fall into much of a deeper recession. If I were to invest anywhere in the world right now it would the USA.
BRICs + Turkey + Korea
They are laughing all the way to the bank in Brazil, India, Indonesia, China, Turkey and a few other fast growing nations- not everything is working positively but the crises of Europe and the USA are a long way away. Why ? precisely because many of these nations adopted ten years ago the strict public spending regimes Europe and the USA failed to adopt but preached for everyone else ! These countries will grow quickly based on export demand for their products but above all on internal domestic demand. Goldman Sachs estimates by 2020 over 800 million people around the world will join the middle classes, and they all will be from these countries. The environmental conseqeunces are devastating, both in terms of resources consumed and
waste produced.
Then there are some exceptions- Australia, with its rich mineral resources, seems to be in a (rich) world of its own; South Africa and much of black Africa is growing rapidly although their economies are still too small to influence international markets and events and grinding poverty and corruption is still the norm.
And finally there is the Middle East. Two events this year will make ground- breaking changes to the stalemate of antagonism and hatred there.
The first is the Palestinian declaration of independence which will happen this month at the UN. The world will finally be divided between those who recognise and those who do not recognise the Palestinian state. And the political consequences are enormous although volatile.
Secondly, the gas and oil fields found off the Israeli Mediterreanean coast finally give this country energy independence and that means independence from agreements with its neighbours. This may play out in a more relaxed Israeli approach to regional politics, or an even more aggressive approach.
You might say there is a third event, the Arab Spring. And this is so, but who knows how it will evolve ? I am not willing to make a fool of myself by predicting the growth of peaceful, democratic nations that make peace with Israel and live happily ever after; nor do I think Al Queada will take over. But in between there are so many variables in each nation that a prediction would be foolish.
We will survive this period of turmoil and perhaps, in ten years time , come out of it with greatly strengthened economies. Who will lead the pack will be those nations are to change their spending patterns rapidly to turn investments into new technologies and away from financing public debt. Korea is a model. In 2009 it took the decision to invest $80 billion in infrastructure, clean energy, new technologies, and today is the Asian powerhouse after China. But it could afford to do this because in the 1990s it sorted out its bloated public sector, its over-leveraged and corrupt banks, its public finances. Why didn’t we learn this lesson too ?