Update Sunday 10/30 2pm: Apparently the new agreement is pretty much like the previous ones-- full of holes. Here's the Telegraph's Liam Halligan with some of the devils in the details: The question of who will lend to the EFSF, on whose collateral, and who will ultimately repay the loans, was barely addressed last week. Such tricky questions will apparently be answered at the next European summit in December. Meanwhile, the fundamental disagreement between France and Germany regarding who should take the biggest losses – eurozone governments or private creditors – remains unresolved. Since Thursday's announcement, though, Germany's powerful constitutional court has issued an injunction requiring the country's full Parliament to approve any EFSF bond-buying.\.
Onto the topic du jour-- megatrends. We as humans, alone amongst the creatures that crawl upon the earth, are fascinated about the future. It's in our DNA; we're hot wired this way. In the late 1990s and early 2000s, I myself traded commodities, also known as futures. To be successful, you need to anticipate market moves, whether they be up or down. This is called "futures trading". For centuries, the kings and courts of the middle ages had their court astrologers who looked to the skies for answers and signs from the Gods. Nostradamus was the most famous of these, making startling predictions. Other less known seers from that time have made even more startling accurate predictions; chief among these is the legendary witch Mother Shipton.
Here in the digital age, our curiosity with the future has taken on a more sophisticated approach. Two attempts in our own age spring to the forefront. The first one was known as the "web bot project", which used website searches as a way of measuring human consiousness-- what we collectively are thinking. After the 2008 crash, the terms "economic collapse" rushed to the top of the list. In my opinion, this is more of a backward looking method. The project did score some hits, but many more were not so accurate.
The second was by a gentleman named Bruce Bueno De Mesquita, a Stanford mathematician. He developed a sophisticated algorithmic computer program used to predict certain events when inputed with certain variables about a certain situation. The CIA hired his firm and gave him a series of scenarios, which the CIA then ran by their own analysts simultanously. The CIA determined that Mesquita's programs were far superior, and as I understand it they continue to consult him. His accuracy is pretty good, though not perfect. His program also suggests policies that might positively affect outcomes. His work determined that the top priority of the North Korean regime was self preservation and that they were terrified of being taken out by the US. He therefore suggested a policy that would allow the North to keep their ability to produce nukes, but would require they dismantle any they have already produced in return for economic aid, primarily oil. Most of his predictions are not well known; you have to pay a pretty penny to get this information.
A lot of what Mesquita predicates his predictions on is mega trends and the affect these will have on nations and their peoples. While we don't have Mesquita's computer algo's, we can take a look at a few of the biggest issues facing the planet and it's people and perhaps come to our own conclusions thereof. I've hereby present six megatrends that, for good or bad, look like they will take large parts in shaping our future.
1. Climate Change: While at this point there is some dispute about the causes of it, there is no doubt that the planet is getting hotter and that the ice sheets at the North and South poles are rapidly melting. The effects of this are not entirely understood, but what there is is rather disturbing. Weather will become more extreme, especially heat. This will affect crop production as crops wither in the heat and lack of rain. In other regions, it will produce more numerous and more violent hurricanes and tornadoes. Another, more disturbing, trend is that with the sheer amount of water shifting from the polar ice caps to the oceans, ocean levels are slowly rising. Given enough time, cities like New Orleans and Amsterdam are likely to be lost to the sea. Another disturbing problem this brings is that this extra water puts extra pressure on tectonic plates, which will likely produce more (and more violent) earthquakes.
2. Overpopulation: While some nations have come a long ways in this area, a lot have not. The population of Nigeria in 1980 was 74 million. Today it's 154 million. By 2031 (twenty years from now) it will reach roughly 250 million. Africa is especially problemetic here, and this is compounded by another megatrend I'll discuss below, the declining amount of agriculturally viable land. The most overpopulated nations are also the most destitute. This will result in ever increasing waves of hungry immigrants washing ashore elsewhere, especially in Europe and America, though increasingly Latin America as time goes on. Islamic nations are amongst the worst offenders due to cultural reasons. This will, as we have seen, help to create instability. The problem for the new leaders of Egypt, Tunisia and the others is that their ever growing populations are encountering flat lined world grain production. Here's an article on Nigeria's problems and what life is like for the people in Lagos: http://ca.news.yahoo.com/lagos-centre-africas-population-boom-155558115.html
3. Soil Erosion: Approximately 40% of the world's agricultural land is seriously degraded. According to the UN, an area of fertile soil the size of the Ukraine is lost each year due to deforestation, drought, city expansion, desertification, salination and overuse. In Africa, if trends continue, the continent might be able to feed only 25% of it's ever growing population by the year 2025.. a scant 13 years from now. This should alarm everyone. But in my view, correcting the misuse of land would help quite a bit. I live in Minnesota, and my house sits on what was once a very large corn farm. My uncle sold the family farm near Red Wing to the local Indian casino, who paved it over to expand parking. My house sits on 1/3 of an acre of very fertile soil-- if I wanted, I could plant a few nut or fruit trees and use the front yard to grow corn instead of pretty grass and ugly weeds. But this trend, if left unattended, will cause mass hunger, instability and misery on a global scale. What we saw in this year's "Arab Spring" began as food riots to protest the record prices of grains in Tunisia. Another answer might be to cut down on meat production-- it takes about 15 pounds of grain to produce a pound of chicken. Beef and pork are worse. Putting a halt to America's addition to corn based ethanol would also help, and perhaps quite a bit.
http://en.wikipedia.org/wiki/Erosion
4. Technology: In 2008, a Beaverton, Oregon boy of 12 named William Yuan developed a "\Highly Effecient 3D Nanotube Solar Cell for Visible and UV Light". This device, is it were capable of being produced, would be 500 times as efficient as current solar cells. It would, in a single stroke, revolutionize power production the world over and would negate the need for coal, nuclear and other types of power plants. Al Gore's nightmare of global warming would overnight be solved as cars could run on a solar cell on the roof the size of a keyboard. Another energy technology is based on Thorium, which envisions a reactor using Thorium instead of Uranium. It would be much safer than nuclear technology and thorium is incredibly abundant-- here in America, the coal miners extract the stuff and let it lie in useless heaps as they dig out the coal, stepping on it as they go to the coal mines. By 1961, India was on the brink of famine. In 1960 India, with the help of the Ford and Rockefeller Foundations, established the IRRI (International Rice Research Institute), which came up with the IR8 brand of rice. Although IR8 would need pesticides and fertilizers, this new type of rice could produce two crops per year instead of one; rice production in India went from two tons per hectacre to six by the 1980's.. and in optimum conditions upwards of ten tons. It's these types of breakthroughs which can revolutionize life on the planet-- for the better. Just today this came out-- http://www.wired.co.uk/news/archive/2011-10/29/rossi-success
5. Peak Oil: Everything we produce-- including the food I ate for breakfast, uses oil in it's production. Look around you at the number of plastic devices. The problem is, the world's oil production is in decline. Apocalyptic writers such as Michael Ruppert suggest that this decline will be very steep very soon, affecting the world's food production amongst other things. But my view here is that this is a problem that is avoidable due to a number of reasons. First is the aforementioned technology. Due to advances in drilling technology, oil companies are able to extract ever increasing amounts of oil from "oil sands", which are really just glorified tar pits. In the last couple of years, the state of North Dakota and it's Baaken Oil Sands are becoming the next Saudi Arabia. Unemployment there hovers around 2.5% as drilling companies hire any able bodied person willing to locate there. I also believe that technology will develop a new and better biofuel.. with the Pongamia tree taking the lead {video below}. I also believe that if push comes to shove, the people of the world will learn to use less plastics in unimportant things such as toys and plastic milk cartons and go back to the early 1900s when glass and wood {both renewable resources} were used.
6. Debt: In 2002, the world's total debt hovered around $60 trillion. At the end of 2010, this figure reached $188 trillion. Most of this debt was incurred by advanced countries like the US which lived far beyond it's means and much of the creditors were newly industrialized nations like China, which was looking for a place to store their hard earned cash and get a decent return on their investment. The problems have been discussed ad nauseum on my blog and others. At worst, this explosion of debt threatens to collapse the world's monetary system, the means by which we all exchange goods and services. If such an event did take place, the world's living standards would collapse and the instability it produces would be frightening, even in places like the US. As of this writing, there appears to be no political will nor the foresight needed to deal with the problem. What's needed is for the world to come up with a better monetary and banking system, one based on a botton-up credit based system instead of the debt based, top-down system we currently employ. Implementing such a system would be enormously challenging, and would mean that advanced nations like the US and Europe would suffer a decline in living standards at the expense of {mostly Asian} nations that produce more and cheaper. I doubt that America and other advanced nations will willingly enter into such an arrangement, no matter how obvious the need. As I've always said, unless something dramatic and on a global scale changes, the world's economic system will collapse-- and it will be very sudden and total. I myself see this as the most dangerous of all the trends. Here's my article on what happens when this collapse occurs: http://themeanoldinvestor.blogspot.com/2010/05/after-crash.html
For me, and Mesquita from what little information is out there about his future predictions, see is a race between technology and the growing food situation, vastly complicated by an unstable monetary system. I fully believe that better usage of land, conservation techniques and birth control in places like Nigeria can overcome the challenges ahead. A credit based monetary system can be introduced. But will they be implemented on a global scale before the problems become apocalyptic in nature ?
