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Articles and information on Clem Sunter

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Breaking Futures 2010

By Clem Sunter

Here is a list of breaking futures for 2010. These are issues and events that we think will make the headlines over the next twelve months.

1. Yoyonomics

We are in a recession resembling a corrugated 'U'. The global economy will yoyo up and down in a narrow band with positive and negative flags confusing the picture of whether a genuine recovery is taking place. Until America sorts out its total debt which now stands at $57 trillion (more than four times its GDP), a sustainable recovery cannot take place. Equally, American consumers will need to halve their household debt to income ratio from 121% to around 60% and this will take time. China's economy at a quarter the size of the American economy, and with consumer expenditure as a much lower component, cannot yet do a solo rescue job for the world as a whole.

2. Brics and Blocs

A popular expression introduced by Goldman Sachs some years ago is 'The BRIC Economies'. The phrase represented Brazil, Russia, India and China, the argument being that these were the growth economies of the future. Of the four, Russia is not doing well at the moment, but anyway we believe blocs are going to overtake brics - in particular the Asian trading bloc made up of China, India, Japan, the Asian tigers, Australia and New Zealand. This bloc will rival the European Union and North America one day. We are moving towards a three-legged world economy in which Africa will have to find its place.

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3. The Universal

With the demise of the dollar, calls are growing for a universal currency. Keynes thought of the idea first and gold to a certain extent performs the role. But with the Chinese taking a huge hit on their holding of US Treasury Bills, the notion is gaining ground among prominent economists. Meanwhile gold could breach $2 000.

4. Main Street versus Wall Street

Never has there been so much ill feeling towards the financial sector in America. Ordinary Americans feel that not only was the crisis precipitated by the banks, but they are now the first to become greedy again. This social division could even lead to unrest, not just in America but worldwide as unemployment continues to grow.

5. Goldilocks loses again

Afghanistan is beginning to look like Vietnam, a series of compromises between sending in a sufficient number of troops to do the job and getting out altogether. The not-too-hot, not-too-cold approach which is how Goldilocks liked her porridge could lead to a stalemate.

6. Boom!

Religious rivalry will continue to produce sensational terrorist incidents which will make the headlines around the world. Borders are porous, terrorist groups are better organised and better equipped and could soon have access to weapons of mass destruction. We have not had another 9/11 incident since 9/11, but there must be one in the works somewhere. Only superb intelligence will stop it.

7. The Copenhagen Opening

In December 2009, new rules will be established to curb carbon emissions and slow down global warming. These rules will start to change the way we live and use energy. Expect a row between developed and developing countries around the sharing of the cost burden and access to new technologies.

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8. Oil and Water

Irrespective of Copenhagen, oil is becoming a scarce commodity with only 90 years of cheap reserves left and peak production expected in the next five years. With any kind of recovery, oil will go straight through $200 a barrel. Since oil revenues are more than all other commodities combined, this could have a major inflationary impact. Water is also moving into the same category. Australia is having to surround itself with desalination plants to cope with rising needs. Desalinated water costs six times more than water from natural sources. South Africa could run into a problem similar to Eskom with water if it doesn't carefully plan its future sources now.

9. iSol-ution

The next big thing after iPhones will be iSols: intelligent solar cell power sources that will free residential homes from Eskom (which will become a standby generator). Eskom will still power industry. The Americans have proved solar technology with units supplying the power needs of the largest hospitals in Baghdad. Just like cell phones free people from telegraph wires, solar units will free them from power lines.

10. Yellow and Blue

Brazil will win the 2010 Soccer World Cup and Kaka will be the hero (just as he was in the second half of the final against America in the Confederations Cup). Chelsea will win the Premier League in England because Manchester United no longer have Ronaldo.

11. The Hangover

South Africa must start planning now what to do with all the stadiums after the 2010 World Cup to avoid a gigantic hangover. Life could be tough as the country comes down to earth again.

12. Colony Collapse Disorder

The bees are still disappearing in America and China. They play a critical role in our ecological chain. Funny how something so small could signal the end of the world as we know it.

By Clem Sunter

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