Deep Future

Mayan

Loco Gringo

 

“Like modern industrial society, the Maya built their civilization on a nonrenewable resource base. In their case it was the fertility of fragile tropical soils, which couldn’t support intensive corn farming forever. On that shaky foundation they built an extraordinary civilization with fine art, architecture, astronomy, mathematics, and a calendar more accurate than the one we use today. None of that counted when the crops began to fail. Mayan civilization disintegrated, cities were abandoned to the jungle, and the population of the Mayan heartland dropped by 90%.”

John Michael Greer – “The Long road down: decline and the deindustrial future

 

Writing this month’s post has proven a challenge. I was planning to write an update on the latest twists in the on-going Brexit saga but the truth is that it is difficult to predict the eventual outcome of this drama.

So, I changed my mind.

I hope you readers clocked the recent news story of the successful drone attack on the Abqaiq oil fields in Saudi Arabia, the second largest in Saudi Arabia. Saudi oil supply has been halved as a consequence, oil prices are expected to spike to $100 per barrel and it could take weeks to get supply back to normal.

Imagine if, instead of a few drone attacks, a far bigger attack of Saudi oil facilities occurred and the bulk of Saudi oil supply went off-line for months on end, if not, forever? Could you imagine the economic and geopolitical chaos that would result! In such a scenario you would be wise to stockpile food and other core goods if you haven’t already got your secret supplies sorted.

This is a reminder of how fragile our industrial civilization is to major shocks.

I’ve just started reading a superb new novel, called The Second Sleep, by the brilliant British writer Robert Harris. On the surface, the novel is based in our medieval past among the ruins of the ancient Roman Empire but you realise, within a few chapters, that it is instead placed in our deep future where the Church is dominant, population is a fraction of today’s and we have returned to an era of lords and peasants.

The reason I’ve dedicated this month’s post on Forecasting Intelligence to our deep or far future is that it gives us a sense of perspective on the turmoil of our current era. I have focused on this blog on the likely challenges and trends within the next few decades given that this is what myself and you will be most concerned about since we will be living through them.

However, I probably have not covered in sufficient thought the longer-term fate of our industrial civilisation.

To start with, those readers who find this topic fascinating should read the following books, the Robert Harris one just mentioned, but also John Greer’s “The Long Descent” and “The Ecotechnic Future: Envisioning a Post-peak World”. They all provide an interesting fictional and non-fictional guide to the likely pattern of our own civilizational collapse and the potential future civilizations that could arise from the collapse.

Our human history has seen dozens of civilisations rise and fall and there are certain patterns that can be seen across the thread of history.

Our own industrial civilisation, as noted in the quote from a brilliant Greer article on the subject, seems to be tracking closely the Mayan civilisation which had a relatively “fast” collapse. This was because it was reliant on a non-renewable resource, fertile soil, in a similar way we are reliant on non-renewable fossil fuels.

There are not unlimited supplies of oil, gas and coal to sustain our civilisation for thousands of years to come and the consensus is that within decades we will be facing major supply problems, in particular oil.

And it isn’t just fossil fuels. Phosphate is a critical fertiliser that underpins the global food system which, if continued to be consumed at current levels, will be in critical shortages by 2040. Now, I would expect a degree of mitigation, adaptation and eventually strategic restrictions on the supply to global markets of such a strategically vital resource so it is unlikely to run out within twenty years. However, it is likely, given that the world population is likely to grow for at least another decade that demand for this critical resource will continue to grow for the foreseeable future.

Major supply problems for phosphate, geopolitical tensions over access and potentially even resource wars, are looking probable by the 2040’s. And that is just one non-renewable resource challenge the world is facing.

So where is all this taking us? My understanding is that our civilisation will peak, decline and collapse into a deindustrial Dark Ages within 150 years or so. Evaluating when we peaked as an industrial civilisation is a tricky art but the business-as-usual Limits to Growth modelling, which I originally reviewed here, indicates a global peak around 2020.

limits to growth update

Our finite world

 

There are alternative arguments, that within specific countries peaks occurred earlier. Greer himself argues that the United States peaked in the late 70’s in terms of energy per capita. For the sake of simplicity, I will go with a global “peak” which would indicate that our civilisation will end, 150 years from now, around 2170 AD.

How does this macro, and let’s be honest, slightly terrifying analysis, translate into our lives and perhaps more importantly our children and grandchildren who will bear the burden of handling this descent into a future Dark Ages?

This beautiful quote from John Greer describes the fate of a three generational American family over the next 150 years or so and it is a good description of any on our future destiny.

“Imagine an American woman born in 1960. She sees the gas lines of the 1970s, the short-term political gimmicks that papered over the crisis in the 1980s and 1990s, and renewed trouble in the following decades. Soaring energy prices, shortages, economic depressions, and resource wars shape the rest of her life. By age 70, she lives in a beleaguered, malfunctioning city where half the population has no reliable access to clean water, electricity, or health care. Shantytowns spread in the shadow of skyscrapers while political and economic leaders keep insisting that things are getting better.

Her great-grandson, born in 2030, manages to avoid the smorgasbord of diseases, the pervasive violence, and the pandemic alcohol and drug abuse that claim half of his generation before age 30. A lucky break gets him into a technical career, safe from military service in endless wars overseas or “pacification actions” against separatist guerrillas at home. His technical knowledge consists mostly of rules of thumb for effective scavenging, cars and refrigerators are luxury items he will never own, his home lacks electricity and central heating, and his health care comes from an old woman whose grandmother was a doctor and who knows something about wound care and herbs. By the time his hair turns gray the squabbling regions that were once the United States have split apart, all remaining fuel and electrical power have been commandeered by the new governments, and coastal cities are being abandoned to the rising oceans.

For his great-granddaughter, born in 2100, the great crises are mostly things of the past. She grows up amid a ring of sparsely populated villages surrounding an abandoned core of rusting skyscrapers visited only by salvage crews who mine them for raw materials. Local wars sputter, the oceans are still rising, and famines and epidemics are a familiar reality, but with global population maybe 15% of what it was in 2000, humanity and nature are moving toward balance. She learns to read and write, a skill most of her neighbors don’t have, and a few old books are among her prized possessions, but the days when men walked on the moon are fading into legend. When she and her family finally set out for a village in the countryside, leaving the husk of the old city to the salvage crews, it never occurs to her that her quiet footsteps on a crumbling asphalt road mark the end of a civilization.”

Only a lucky few, will escape the burden of poverty within neo-feudal conditions a century or so from now when our future descendants take the path described by John in the early 21st century away from the ruined cities to the villages.

In a world of warlords, military strongmen and neo-feudal aristocrats who own the future means of production (arable farmland, mines and traditional property in our towns and cities) it will be challenging, to say the least, to carve a profitable niche for our future families.

It is not impossible though. And it has been done before.

For those inclined, I would recommend acquiring arable farming land and good quality traditional property stock (e.g. pre 19th century) within those places within the world more likely to survive the coming collapse largely intact.

That could be in central-eastern Europe, Canada or parts of the far East. I would probably avoid the bulk of central America, north Africa and the greater Middle East, along with southern Europe and India given the likelihood that these areas of the world will be rendered uninhabitable by climate change or hugely impacted by the climate migrations, violence and chaos coming.

For those whose ambitions are more modest (and probably more sensible as a result), I would stick to the tips outlined recently in my post on the coming collapse of market economies. Most importantly, the key is to be useful in a world of the future and that will acquire learning, or to be precise re-learning, skills and traditions that have been lost in the developed world.

Deep Future

The coming Economic Dark Ages

planet-of-the-apes-ending

Screencrush

 

“Global population has to contract — 7 billion is way above this planet’s permanent carrying capacity — and yes, that’s going to involve the unravelling of the entire structure of growth-based economics. That’s standard in the late stages of a civilization, by the way — it’s why market economies give way to non-market economic arrangements as things unravel.”

John Michael Greer

“Again, the growth in potential consumption among the far poorer populations in no way offsets the declining potential of consumption among the declining wealthier populations…without ZIRP (or more likely NIRP) and debt of gargantuan proportions.”

Econimica – “Global Endgame looms – soaring debt smashes shrinking populations

“Emperors came to believe that the army was the sole source of power and they concentrated their efforts on sustaining the army at all cost. As the private wealth of the Empire was gradually confiscated or taxed away, driven away or hidden, economic growth slowed to a virtual standstill.

With the collapse of the money economy (3rd century AD), the normal system of taxation also broke down. This forced the state to directly appropriate whatever resources it needed wherever they could be found. Food and cattle, for example, were requisitioned directly from farmers.”

Cato Institute – “How excessive government killed ancient Rome”

 

Before I discuss how our market based economic system will unravel this century with the end of economic growth, I hope some of my readership were able to take advantage of my political betting tip on the Tory leadership election.

Those of you who followed my recommendation in betting between the 60 to 79% victory margins on Prime Minister Boris Johnson would have received a guaranteed profit (if they had betted equal amount on both victory margins). To paraphrase the new British prime minister, a case of having your cake and eating it!

Those of you who placed a short position on sterling, following my Brexit post on 26th May, would be enjoying a decent return now that GBP/USD has collapsed from 1.27 to 1.22. However, going into a sterling short at this point is probably too late given that in the event of a no-deal/hard Brexit (not a given!) sterling is likely to fall to 1.15. The risks of an unexpected bounce in sterling should the UK avoid a hard Brexit makes this an unsuitable trade to recommend from a risk versus reward perspective.

I will continue to look for opportunities with the appropriate risk versus reward ratio and will flag them when they come up.

Making money has proven a relatively easy thing to do over the last century because of economic growth. As a general rule, economies across the world have grown during most years so the typical business or investor has operated in a growing rather than shrinking economic environment.

We take this for granted but it is, historically, speaking, an exceptional period in human history. Until the discovery of fossil fuels economic growth was at best patchy and limited.

Now that we are in the long twilight era of fossil fuels it’s not surprising that global growth rates are declining throughout the world and will, at some point, flip over into outright economic contraction. I recently discussed this issue in my post “Economic Winter and the coming end of globalisation” which is worth re-reading again. In my post I quote John Greer, one of the few writers who have given this matter genuine reflection, who writes that “…timing of the turn into contraction is complex, not least because it’ll be papered over by the manipulation of abstractions for a good long while. I expect it to happen one country or region at a time, with some maintaining growth while others begin to contract, but the tipping points are to my mind likely to cluster around 2030.”

I also concur with that time-frame, taking into account the broadly accurate Limits to Growth modelling which pinpoints a permanent global economic contraction around 2030.

As John Greer notes in the quote at the top of the blog post, this is not the first time a market based economy unravels in the later stages of a civilization’s rise and fall. In fact, it has happened repeatedly throughout human history.

The history of the Roman Empire can give us clues to how the shift from market economies to non-market economic arrangements occurs. Reading the CATO Journal article on the fall of the Roman Empire was a disturbing experience for me. As somebody who works in financial services and follows political and economic news closely, much of the events of those ancient times feel oddly contemporary.

For example, the financial crisis in 33 .D. was caused by a severe shortage of money. The response by the Roman government was for the state make “large loans at zero interest in order to provide liquidity”. That sounds remarkably similar to the quantitative easing measures introduced by the global central banks to provide liquidity after the 2008/9 financial crisis!

The debasement of the Roman coinage, the gold aureus and the silver denarius, by repeated Roman emperors tracks the long-term decline in the real value of fiat currencies ever since the end of the Gold Standard. Under the generally well regarded reign of Marcus Aurelius (161-180 A.D.) the silver content of the denarius was reduced from 85 to 75%. If that sounds bad, by the reign of Claudius II Gothicus (268-270 A.D.) the silver content of the denarius was reduced to only 0.02%!

The consequences of this gradual debasement of the Roman coinage was that Roman citizens hoarded the higher quality silver and gold, trade shrank and eventually people preferred to deal via non-monetary means e.g. through gifts, bartering or feudal style economic arrangements.

Given the monstrous global debts, an ageing population and incessant demands of a modern welfare state, it is likely that future governments will carry on printing money (the 21st century version of debasing the currency) just like the Roman emperors. Cash is likely to remain used for day-to-day use for a long time to come, at least 50 years and more likely up to 150 years from now but it should not be considered a long-term store of value.

One of the main reasons successive Roman emperors resorted to debasing the coinage was the financial demands of the Roman military for money. Despite imposing excessive tax burdens on the productive classes of society the state couldn’t keep up with the spending demands of the ancient military-industrial complex. Does that sound familiar to you reader? American readers should be aware that America national debt is now over 20 trillion.

US debt

trading economics

 

The deficit – the gap between revenue and expenditure, is heading towards $1 trillion per year.

deficit

bipartisan policy

 

Politicians from the Left are increasingly talking about the so-called “Modern Monetary Theory” that justifies massive printing money by central banks. And politicians from the Right are de facto practising the theory in government.

The message to expect is that the real value of the paper money in your wallet or handbag will continue to lose its value over the coming century.

The deficit is also leading to increasingly aggressive attempts to seize assets from private citizens. Roman Emperors like Domitian (81-96 .D.) “…would use trumped-up charges to confiscate the assets of the wealthy”. Recently, Western governments have given themselves the powers to seize assets of the wealthy through Asset Forfeiture Powers. The UK London police last year seized assets from UK criminals worth £94 million.

In America, a growing source of revenue is the seizure of assets from citizens. According to the Pulitzer Centre, “the federal government took in $36.5 billion in assets police seized from people on America’s roads and in its poorer neighborhoods, many of whom never were charged with a crime or shown to have drugs.”

Is this any different to the ancient Roman practice of armed soldiers seizing assets from private citizens on trumped up charges? We are in the early stages of this process and it is likely to get far worse in the coming decades. Draconian wealth taxes and the arbitrary use of asset seizure powers by cash starved governments are increasingly likely and you should prepare accordingly. Already, capital is flowing into bitcoin – the 21st century version of gold – to escape restrictive government measures on capital.

Next decade, I expect to see wealth taxes introduced on the rich across the Western world which will drive capital further underground.

And as the experience of the Roman empire illustrates, it will ultimately be the middle to lower classes who will be worst impacted by this process wealth confiscation, inflation and higher taxation.

“As the private wealth of the Empire was gradually confiscated or taxed away, driven away or hidden, economic growth slowed to a virtual standstill. Moreover, once the wealthy were no longer able to pay the state’s bills, the burden inexorably fell onto the lower classes, so that average people suffered as well from the deteriorating economic conditions.”

Given the demographic trends of an ageing population, shrinking birth-rate and escalating national debts across the developed world the inflation and zero interest rates mega-trend looks likely to accelerate into the next decade.

Whilst economic forecasting remains a difficult art, the Investing Haven team have recently published an article noting that the next major stock market crash will be in 2022. Given the presidential cycle (usually presidents do everything they can to goose the economy prior to an election year), the mixed economic data and the renewed push by central banks to lower interest rates, this seems broadly right.

Whilst the stock market is elevated there seems little – outside the corporate debt, tech IPO’s and private equity/venture capital markets – of the euphoria you tend to see during the final stages of a stock market boom. Retail investors still shy away from stocks, having been burned by the 2008 crash and until they return the stock market should continue to rise into the 2020’s.

It seems to me that the course of the next 10 to 20 years will be periodic deflationary crashes, when asset prices temporarily collapse in value, before the central bankers and governments intervene by printing trillions to prop up the money economy. If Investing Haven are right, the next one is scheduled in early 2020’s – interestingly a time frame also mentioned by John Greer.

At some point around or after 2030, the world will be heading into a “perfect storm” of biophysical (resource scarcity and climate change), demographic (collapsing birth rates) and economic/geopolitical trends (collapsing economic growth and mass migrations from a dying MENA region).

The trends outlined above: wealth taxes, inflation and massive debasing of fiat currencies, asset seizures and growing interventionism into allegedly “free markets” by increasingly authoritarian states) will get far worse in the 2030’s and 2040’s. Politics will see a further wave of Caesars come to power across the world, on a bigger scale than our current decade, as frightened populations turn to strongmen for economic and geopolitical security.

One of the lessons of history is that the status quo can last longer than many realise. It is quite possible that in 2038, the news headlines could include a report on the rise of the stock market after QE25 had been announced, the rise of wages for skilled tradesmen due to the shortage of workers and the rising disorder in southern Europe struggling with a massive wave of migration from a climate troubled Middle East. That world is not dissimilar to 2019.

One of the lessons of the collapse of the Roman Empire is that the debasement of money eventually destroys the money economy. “People fled to the countryside and took up subsistence farming or attached themselves to the estates of the wealthy, which operated as much as possible as closed systems, providing for all their own needs and not engaging in trade at all.” At the same time, wealthy landowners developed their own militias to protect their estates and exert power as the Empire slowly disintegrated.

This trend of emerging war bands is a common pattern in a declining civilisation and if you look closely, proto-war bands are already lurking around the margins of our core industrial civilisation. The Mexican drug cartels whose tentacles reach deep into America, the jihadi militias operating in Libya, Syria and the wider Sahal and the fascistic Ukrainian militias fighting the Russians in the Donetsk are all future war bands.

If you think I’m exaggerating the UN envoy to Mali recently warned that the Sahal (the zone between the Sahara to the north and the Sudanian Savanna to the south) “… is becoming an open military arsenal. There are more than 60 million weapons circulating in the Sahal. If the Europeans and the other powers are not stopping it… will obviously contaminate Europe and contaminate the rest of the world”.

 Eventually, these various dynamics will drive the collapse of the money economy and drag us into a world of non-market economic arrangements. In Roman times the State imposed a type of feudalisation of society where “…people were tied to their land, home, jobs and places of employment. Workers were organised into guilds and businesses into corporations called collegia. Both became de facto organs of the state, controlling and directing their members to work and produce for the state”. I can hear my readers already exclaiming this would never happen! Of course, this sounds remarkably similar to the state socialist model which collapsed in the late 20th century.

My point isn’t that it is a good system (it isn’t) but it is a functional system that has existed in our lifetime. It could reappear in the future. In 2010, the German magazine De Spiegel published a report by the Bundeswehr, the German military, into the implications of peak oil which you can read here. The secret report concluded that the security implications of a peak in global oil production would occur from 2025 to 2040. Shortages of petroleum would trigger, in the medium term, the collapse of the global economic system and every market-oriented national economy. More pertinently to our study of Roman history, the report predicted that “peak oil could lead to a ‘partial or complete failure of markets’. A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis.”

That, my friends, is how our free market economy slowly dies. Increasingly disruptive oil supply shocks going into mid-century which triggers the partial or complete collapse of market based economic arrangements around the world.

Recommendations

If you wish to avoid penury in the coming decades, which is the likely fate of the bulk of the middle classes of the developed world, I would recommend the following:

  • Invest in scarce asset classes including a small fraction of your wealth in physical gold and silver (https://www.goldmoney.com/). Although cryptos are highly controversial speculative products I wouldn’t rule our also owning a small amount of bitcoin, ripple and other top cryptos with the intention of selling them once the market likely peaks again in the early 2020’s.
  • Consider investing in fine wines (https://www.bbr.com/). Climate change is a serious risk to the wine making industry in France, Italy and Spain and as noted here, there is a reasonable chance that fine wines could grow in value due to the lower supply and increased global demand.
  • Property is almost certainly overvalued but if you can afford it, there should be bargains to buy during the deflationary crashes which should periodically occur over the next few decades. Many of the rich Roman landowners acquired their vast lands by buying up bankrupt small farmers during the periodic deflationary depressions. Eventually those landowners and their descendants who survived the barbarian invasions during the Dark Ages became the warlords of the post-Dark Ages feudal era. Arable farming land (above sea level) is a good long-term investment along with quality buy-to-let properties.
  • Blue-chip stocks are still worth holding, given that central banks are likely to try and prop up financial markets for many years to come. However, I would largely avoid government and corporate bonds which seem to be particularly leveraged to permanent economic growth.
  • Consider investing in quality, sustainable and well-run local businesses that provide a real good or service to the local economy. Greer has written before that every era of globalisation ends with a lurch back towards localisation and protectionism. That local brewery might be a sound investment which should survive the economic and geopolitical disruptions of the coming decades.
  • Develop your own skillsets and income streams in the real world. That could include massaging, gardening, DIY, brewing beer or anything else that can get some cash-in-hand or bartered favour with a neighbour, friend or colleague. As the money market economy slowly dissolves, these informal networks and skills will become increasingly useful for most of us outside the privileged circles of the wealthy.

The key takeaway from this post is that our world is changing fast and only those who adapt will survive and thrive in the coming decades.

 

 

The coming Economic Dark Ages

Political betting alert: Boris Johnson victory margin opportunity

Boris alone

BBC

 

This is a new feature of my blog and is not intended to be a deep dive analysis into politics. Instead, I will present what I think is an opportunity to make a profit in the political betting markets.

As a disclaimer, political betting is about probabilities and there is no guarantee that you will make profit from taking bets. You should only bet on what you can afford to lose.

In line with my previous Brexit updates, I continue to forecast that Boris Johnson will win the Tory leadership contest. I have now also concluded that the most likely scale of his victory will be between 70 to 79%, with a tentative prediction around the mid-70’s.

Recent polls, conducted by Conservative Home and Yougov, have indicated that Boris is going to win around 67% of the vote. The huge gaffe committed by Jeremy Hunt over fox hunting has damaged him at this critical stage of the leadership contest when Tory members are starting to vote en masse.

Wavering Tory members are more likely to vote for Boris given that Hunt’s pro-fox hunting comments have only strengthened the perception that Hunt is Continuity May.

The latest poll in the Daily Mail today shows that Johnson has now crashed through the 70% mark and is likely to win by 75% of the vote. There is a core anti-Boris tendency within the Tory membership so it is unlikely, although certainly not impossible, that Boris may end up with 80% or more.

Taking a probabilistic and risk-based approach to this, given the current odds (which are likely to change within 48 hours), I would say that there is currently an excellent opportunity to make a profit by betting on a margin of victory between 70 to 79% on betfair.

For those who want to play it safer, they can also place a bet between the 60 to 69% margin of victory, which ensures that you will make a profit, either way, depending on the amount you place on both trades (assuming that Boris wins between 60 to 79% of the vote).

You will need to register with betfair to do these trades and I can’t provide any advice for those of my readership who are outside the UK (different countries have different rules on gambling).

Just remember, this is betting and there is no guarantee that you will get your money back! Best of luck!

Betfair 1

Betfair 2

Political betting alert: Boris Johnson victory margin opportunity

Brexit update: Caesars, high stakes poker and a looming global recession

 

Ceasar

cinema blend

 

“Our overall conclusion is that it is not possible for the UK parliament to frustrate Brexit by October.”

Eurointelligence public briefing – 27 June 2019

“So we are getting ready to come out on October the 31st. Come what may… Do or die. Come what may.”

Boris Johnson – Tory leadership contender 

“The next austerity episode will spark revolution and bring the Jacobins to power on the Left, and the new Caesars on the Right.”

 Ambrose Evans Pritchard – “If the next Tory leader does not tear up the rule book on spending, Corbyn will do it for him”

 

Those of you who placed a political bet on Boris Johnson winning the Tory leadership contest after my last blog post, on 26th May 2019, will already be sitting on a nice profit on betfair. The cautious among you may wish to use the option of “cashing out”, guaranteeing your stake and a decent profit, or stick it out for a bigger profit assuming Boris wins the contest.

Despite the brief wobble over Boris late-night domestic with his lovely blond girlfriend last week, Boris remains the favourite to win the Tory leadership contest. Boris is the hard Brexit candidate and that is all the majority of the Tory membership want to hear. The alternative, as I explained in my last post, is electoral oblivion.

I have also placed a bet on a Hard Brexit by the end of 2019, which is currently at 3 to 1 odds (£100 stake yields a £200 profit) which is rather steep given the growing probability that we are heading for that outcome. Eurointelligence, a pro-EU intelligence newsletter, noted today that the UK parliament has already lost the opportunity to stop a no-deal Brexit if that is the determined wish of the next British prime minister (PM).

Of course, Boris Johnson remains a political enigma and there is doubt whether he really intends to take Britain out of the EU without a deal on 31st October. His “do or die” comment this week certainly gives the impression that he is serious but the financial markets and political commentariat remain convinced that a Hard Brexit is a low probability event. Either way, a high stakes poker game is going to start soon between the UK and the EU.

Let’s assume for the moment, that Boris wins the contest, fails to get meaningful concessions from the EU on the Irish backstop and succeeds in driving the UK out of the EU without a deal by November 2019. Berenberg Bank, a pro-EU German investment bank, recently noted that the worst-case scenarios predicted by the UK media will prove wrong. The trucks will carry on moving, the planes will land and we won’t see Armageddon on the supermarkets. Yes, there will be disruption but it will likely be short term and relatively manageable.

Should a Johnson government go through with a Hard Brexit it is likely that relations with the EU will go into a strategic Ice Age. The UK will prioritise relations with a pro-Brexit Trump America. A fast track free trade deal will be negotiated and the UK will pivot towards America on key foreign policy issues like Iran, Israel and China.

A Johnson government, with Sajid Javid as the likely next Chancellor, will prove far more radical on domestic economic policy than the current incumbent Philip Hammond. In 2016, I wrote that the Labour leader’s “…emphasis on a strong industrial strategy, the revival and expansion of the state and the proposal that central banks print billions to invest in national infrastructure, like renewable energy, are policies that could enter the political mainstream within the next ten years”. This increasingly looks like the right call.

All the signs are that a Javid Treasury will adopt much of the proposals outlined in Ambrose Evans Pritchard’s recent article in the Telegraph. A national investment bank, paid by central bank QE, will pump tens of billions into infrastructure spending: “flood defences, to railway electrification, full fibre broadband, 5G networks, renewable energy, space technology, research on advanced materials, beamless light, or semiconductor catapults, as well as smart motorways, super sewers, and social housing.” The shock of a no-deal Brexit will provide the perfect laboratory for a radical shift in economic policy away from fiscal austerity to full blown activist state spending.

The global economic picture is darkening. Technical indicators suggest that the stock markets will peak around September 2020 before recession hits in 2021 or so. Global central banks have given up on the rate rising cycle in the face of trade tensions, stock market wobbles and poor economic data. The historical pattern is that prior to the next recession hitting, which we are now overdue since the last one was in 2008/2009, there is an oil spike and a rollover in the stock markets. We haven’t yet seen either of those so the good times should roll for at least another year.

The breaking out of gold and bitcoin in recent weeks is another sign that all is not well with the global economy. Global capital is starting to shift assets into offshore safe havens which will survive a coming deflationary Ice Age. As Ambrose indicated in the quote at the top of this post, the centrist political classes across the Western world are likely to be crushed if they don’t alter course on economic policy. Just as the UK led the way in 1979 with the Thatcherite revolution, 2019 might prove to be the start of a new Johnsonian revolution, influenced by the rise of Corbynism in the mid-2010’s, in macro-economic policy.

The wider global background hasn’t changed since I started blogging in early 2016. Our industrial civilisation is in long-term decline and we remain on track, along the lines of the Limits to Growth modelling, for a major systemic crisis after 2030. The only certainty is that the status quo is unsustainable.

In America, the political class are gearing up for a brutal presidential election race with over a dozen candidates running in the Democratic primaries. It is early days but it looks like Biden is the establishment favourite who will likely win the race. The polls suggest that Biden would defeat Trump in a general election but I would treat such polling cautiously. I continue to think that President Trump is likely to get re-elected but we will see in the coming year.

The on-going Brexit saga is only one facet of the electoral rise of nationalistic leaders like Johnson, Trump, Modi, Bolsonaro, Putin, Jinping and Salvini which confirms the prophetic writings of Oswald Spengler on the rise of the Caesars in the 21st century as our global economic system dissolves.

Brexit update: Caesars, high stakes poker and a looming global recession

Brexit update: Clowns, circuses and would-be Churchills…

Churchill

votewinneruk.com

 

 

“New PM will have to pivot towards No Deal. UK assets to struggle.”

BlondeMoney consultancy – Boris might be a clown but hes no fool

“Johnson appears to be working to a carefully constructed plan. He avoids press comment over Brexit and writes about anything else in his Monday column at the Daily Telegraph. His contributions in Parliament have been brief, the few on Brexit generally confined to democracy rather than trade. He has positioned himself to rescue the party from electoral destruction if called upon, rather than appear to be an overtly ambitious politician, unlike all the other contenders. It is quite Churchillian, in the sense there is a parallel with Churchill’s election by his peers to lead the nation in its darkest hour…”

Goldmoney briefing  

“Unless something changes very drastically by the time of the next UK general election, the Tories may be facing the kind of electoral annihilation that ended the Liberal Party as a significant political force in 1922. One recent survey I saw indicated that if a general election was held today, Labour would win a narrow majority, the Brexit Party would be the opposition party with 11 fewer seats than Labour, and the Tories would have all of three seats in the House of Commons.

 If Farage does as he’s announced he’ll do, and unveil a detailed political platform for the Brexit Party once the EP elections are over, I expect to see continued shifts of pro-Leave voters in his favor; I would not be at all surprised if Brexiteer MPs begin to bail out of the Tory camp to join the Brexit Party; and if Corbyn continues to try to finesse the Brexit question, he may lose a lot of pro-Leave Labour voters in the midlands and the north.”

John Michael Greer – A Conversation with the World 

 

I’m sure many of you have been following the extraordinary developments in British politics over the last few days now that the zombified government of Theresa May has fallen and a new leadership contest is underway.

In my last blog post, which you can read here, I discussed where we were shortly after the original deadline for leaving the European Union (EU) expired on 31st March 2019. So where are we now given that the results of the European elections are to be announced tonight?

I wrote in my last post that “should a Conservative party go for a long extension with the humiliation of UK participating in the May European elections, it will be politically suicidal.” Well, that call has been spot on so far, with the Tory vote at the European elections expected to be wiped out.

Even worse for the Tories, their polling at a general election is in a state of collapse with Nigel Farage’s Brexit Party surging in the polls.

This general election poll of polls chart captures it beautifully.

UK polls

Wikipedia

 

I also maintain that the Tory party, if it wants to survive as a major political force in British politics, has to ensure that the UK leaves the EU, deal or no deal, on the 31st October 2019. If the Tories, whoever gets elected leader now that Theresa May has resigned, fails to get us out their core vote will migrate en masse to the Brexit Party and will almost certainly never return.

The Tories would be committing political suicide.

There are growing signs that the Tory parliamentary party is starting, slowly, to get this political reality. MP’s across the board are coming out in support of Boris Johnson who has committed to leaving without a deal, if required, on 31st October 2019. There is a powerful anti-no deal faction within the cabinet who are fighting a rear-guard battle to stop a hard Brexiteer coming the next leader. Should those soft Brexit/covert Remain forces win the internal struggle over the next 4 weeks, the Tories will face electoral annihilation at the next general election.

Some may argue that, long-term, the Tories need to reach out to the younger generations who tended to vote Remain. By firming up their core vote and going for a Johnson or Raab Brexiteer candidate, the Tories only make themselves more toxic to those layers of the electorate who could be convinced to vote Tory.

The problem with that analysis is that whilst longer term it does have some validity it shows a shocking lack of awareness of the peril the Tory party faces right now. The bulk of the Tory 2017 electorate voted Leave and want to see the UK leave the EU. Interestingly, the poll ratings of the party only collapsed after April, suggesting that it isn’t so much May’s semi-soft Brexit deal that angered the Tory vote but the failure to leave the EU on time.

The rise of the digitally savvy Brexit Party, under the quasi-dictatorship of Nigel Farage, is now putting huge pressure on the Tories to deliver Brexit, and a hardened Brexit for that matter, by the next deadline on 31st October.

Leadership elections are notoriously hard to predict and I have been burned once already when forecasting a victory by Boris Johnson in 2016. So far, it looks like a race between the Brexiteer wing, with Johnson and Raab the main contenders fighting it out for the Brexit vote and a cabinet level battle between the Foreign Secretary Jeremy Hunt and the soft Brexiteer Environment Minister Michael Gove.

Michael Gove has evolved into a resolute loyalist of May and apparently an opponent of leaving without a deal. His background as a Leaver might encourage those anti-no deal forces within the cabinet to turn to him rather then the Remainer Hunt. The party activists are unlikely to support a Remain backing candidate after the disaster of May.

My best guess is that Boris Johnson, who seems serious about the leadership this time around, will get sufficient parliamentary support to get into the final 2 and go on to win with the party activists.

Boris and Trump

Project Syndicate

 

Boris Johnson is widely considered a clown in British politics and like President Trump, his haircut, regular “gaffes” and chaotic personal style are key reasons for this public perception. I would argue that Johnson is a more complicated, serious and underestimated political player then many within the media and political bubbles would like to admit.

Like his friend President Trump, Boris has the capability to energize a crowd, communicate effectively with the wider public and distill complex issues into “retail friendly” politics.

The key to Boris, which is outlined in the Goldmoney article quote above, is not an unprincipled showman but an egocentric leader who sees himself as a 21st century Winston Churchill. Boris considers himself as commanded by manifest destiny to lead the UK in its darkest hour just as his personal hero Winston Churchill did in 1940.

The real question you should be asking is not what Boris will do in the weeks coming up to that pivotal 31st October deadline but what would Churchill do. Would Churchill make that brave and fateful decision to leave the EU, if required without a deal, and leap into the unknown free from the bureaucratic shackles of Brussels? If your instinctive answer is yes to that question then it is likely that Boris will do the same.

I assume that if Boris does get elected, it is likely that he will attempt to get the backstop renegotiated with the EU and make full scale contingency planning for a no-deal Brexit.

Given the survival logic of the Tory party, the fear of Farage’s Brexit Party supplementing the Tories as the main party on the centre-right and the Churchillian instincts of Boris himself, my forecast is that the most likely outcome will be a Hard Brexit by the end of 2019.

There is certainly a lot that can go wrong with that forecast. An anti-no dealer might manage to become the next Tory leader and given that May has failed to get a deal through the House of Commons, it is unlikely that her replacement would have any more luck by the October deadline.

Boris, or whoever wins the race, might bottle it at the last moment. There will be huge pressure within the civil service, cabinet and parliament to avoid a hard Brexit. And there are other scenarios to consider, including a successful no confidence motion being passed by parliament or an early general election which leads to a potential minority Labour government under Jeremy Corbyn.

However, I’m sticking to my gut call, made in 2018 and more recently in April 2019, that Britain will end up leaving the EU, most likely, in a hard/no deal Brexit.

For those who wish to “play the game”, there are a few options to consider. The first is to go to a betting website and place money on a hard Brexit outcome. The other is to short sterling which is likely to sink further in the event of a Hard Brexit. Please note that I’m not a financial adviser and you should only follow these paths if you know what you are doing and can afford to lose the money you deposit on these trades.

Brexit update: Clowns, circuses and would-be Churchills…

Brexit update: can the Hard Brexiteers pull it off?

brexit-flags

EUPICO

 

“1+2+3 = TM Deal is voted down + Parliament tries to take control but is unable to find an alternative + the PM accepts No Deal as the path to delivering Brexit.”

BlondeMoney consultancy – The PM will take No Deal over No Brexit

 

“…most senior officials in Brussels now believe a no-deal exit is less costly for the EU than a lengthy transition: senior officials across the EU’s institutions and capitals are highly sceptical of Theresa May’s ability to secure a majority for the Withdrawal Agreement in the Commons – many believe this “phrase of Brexit” can only be “unblocked” by no-deal and most now have this as their central scenario.”

Latest briefing from Mujtaba Rahman – Eurasia Group twitter feed

 

“It is tough, if not impossible, to find a single fund manager who genuinely believes a no-deal Brexit will happen, which is why it is not being built into the pound’s exchange rate already. “No one in the financial world thinks ‘no deal’ is a remote possibility,” as one hedge fund manager put it.”

Financial Times – Befuddled sterling shows market aren’t all-knowing

 

Tomorrow, Friday 29th March 2019, was supposed to be the day that Britain formally left the European Union (EU). That is not now going to happen.

In early January 2016, I forecast that Britain would narrowly vote to leave the EU which shocked my early readership. It has been a wild ride since that extraordinary day when voters rebelled against their own governing class, and with our next cliff edge date looming on 12th April, where are we now?

In my 2018 post “Beware the Ides of March” I considered the prospects of a no-deal Brexit (also known as a hard Brexit) and concluded that “…my head says there will be a deal but my gut is telling me it will be a no-deal/hard Brexit”. Since then I’ve gone with my head, most recently forecasting with a 60% chance that there will be an 11th  hour deal brokered to avoid a no-deal Brexit.

Having given this subject much soul searching, I am now increasingly convinced that we are, more likely than not, heading towards a no-deal Brexit within weeks or months, most probably at Midnight on Friday 12th April 2019.

The failure of May to get her Withdrawal Agreement and political declaration through the Commons has shown how toxic the backstop issue is with many within the Conservative ranks and the DUP who prop up the minority Conservative government. On the other side, Brexit remains deeply unpopular within the Remain strongholds of the major English cities and the Celtic fringe and any Labour or nationalist MP who facilitates Brexit will be hugely unpopular with their own voters.

The key reason why I now think that, on balance, the most likely outcome is a no-deal Brexit is the interests of the ruling Conservative Party. According to a recent ComRes poll, 44% of current Tory voters consider a no-deal Brexit the best possible outcome; nearly half.

When asked if they agree with the statement that “If the UK left the EU without a deal on 29 March it would briefly cause some uncertainty but then ultimately work out OK” a stonking 71% of current Conservative voters agree with only 11% disagreeing.

Conservative voters overwhelmingly support Brexit and a clear majority want the UK to exit the EU soon, with or without a deal. Should a Conservative party go for a long extension with the humiliation of UK participating in the May European elections, it will be politically suicidal. As the pollster James Frayne notes in Conservative Home, should the Tories appear to U-turn on Brexit “…its core vote will surely completely collapse and they will be left trying to go after voters who are mostly not culturally aligned to the party – an immensely difficult task”.

This electoral reality is reflected by the fact that in the indicative votes held by the UK Parliament this week, half of Conservative MP’s voted for no-deal. As the political consultancy BlondeMoney put it in their flash analysis of the results, “With half of Theresa’s own party choosing no deal as an option last night, it’s clear that if she continues to prioritise her Party, No Deal is the path she will take.”

The possibility, which I discussed at the beginning of the year, of a last-minute, cross-party consensus that carries enough Tory MP’s (that half that didn’t vote for a no-deal Brexit) of a modified version of May’s deal that includes the option of a permanent custom union remains a realistic scenario. However, it would be the case of May taking on half her parliamentary party, the bulk of the Tory party grassroots and a plurality of the Conservative electoral base at a minimum.

Moreover, Jeremy Corbyn, the Labour Opposition Leader, would need to whip his 125 odd loyal MP’s (who follow the party line) to save May’s deal, facilitate a Tory Brexit and own the political damage with his predominately Remain electorate. Is Labour really going to save a beleaguered Tory government in the interests of avoiding a no-deal Brexit?

The word within Brussels is that Corbyn is determined to remain a political virgin when it comes to Brexit and his inner circle secretly want a no-deal Brexit as the perfect conditions to pave the way for a future Labour government. It is hard to know what precisely the political calculations of Corbyn is although we do know that he is a life-long Eurosceptic and his closest aides backed Brexit and favour a return to a 1970’s type of socialist economics.

The betting and currency markets, as noted in the quotation at the top of the blog, continue to be in a state of collective denial about the possibility of an imminent no-deal Brexit in a spooky re-run of the days before the Leave vote.

The EU appear to be increasingly accepting of a no-deal outcome as a lesser evil to the alternative of a long extension, UK involvement in the European Parliament elections and the risk that the Brexit saga will never end. It was significant that the Irish leader confirmed to President Macron that Ireland could survive a no-deal Brexit which will be a key consideration for the EU leaders.

As Mujtaba Rahman notes in his most recent briefing after speaking to senior EU officials (see quotation at the top) Brussels consider a no-deal as their central scenario. Whether rightly or wrong, the EU Commission think that the bloc can handle a no-deal Brexit and this will encourage the member-states to play hardball should the UK fail to approve the Withdrawal Agreement in the next two weeks.

Outlier risks remain a general election which is unlikely given that May has promised not to commit to one and the majority of Tory MP’s would be horrified by the prospect. Alternatively, a majority could be found for a 2nd referendum within the House of Commons, but again, it is unlikely that the Tories could ever agree given that it would be the equivalent of committing electoral suicide.

A last-minute compromise deal which have proceeded the indicative vote process within Parliament, remains a viable scenario but is diminishing as we get closer to the 12th April cliff edge (45% probabilistic chance).

To summarise, I consider, that on a balance of probabilities, the most likely outcome, given the factors discussed above, is that the UK will stumble towards an accidental no-deal Brexit (55% probabilistic chance).

Brexit update: can the Hard Brexiteers pull it off?

How to prepare for a dying future

Dying future

Metiza

 

“All in all, a new, highly complex and destabilised ‘domain of risk’ is emerging – which includes the risk of the collapse of key social and economic systems, at local and potentially even global levels. This new risk domain affects virtually all areas of policy and politics, and it is doubtful that societies around the world are adequately prepared to manage this risk. Due to the high levels of complexity, the scale of breakdown and systemic nature of the problem, responding to the age of environmental breakdown may be the greatest challenge that humans have faced in their history.”

IPPR – This is a crisis, facing up to the age of environmental breakdown

 

“It is not hard to see that these foreseeable catastrophes (glaciers melting within Central Asia) could lead to mass migration and even war on the Eurasian continent this century. The geological effects will start kicking in by in the middle of the century (which is only 30 years away) but the political effects are likely to hit much earlier, as those dramatic changes are being anticipated.”

Eurointelligence – public briefing 5th February 2019

“I expect the next really serious oil price spike to hit sometime in the early to mid-2020s, and it’s likely to be a doozy. Make your preparations now and you’re going to be in much better shape when the economy gets whacked again.”

John Michael Greer – “February 2019 Open Post

 

Over the last few years I have covered, on this blog, the rise of populist politics across the developed world, the growing risk of resource scarcity, the impact of a changing climate and the cultural and economic impact of demographic shifts and how these various dynamics will interact in the coming decades.

Long-term readers of FI will already know that the combination of climate change and growing scarcity of fossil fuels, fertile land and water across the tropics will trigger a rising cascade of crises, civil wars and eventually mass migrations into the cooler northern and southern hemispheres.

Mass migrations in the coming decades will be a symptom and trigger of a wider global economic crisis, as economic growth across the world withers away and growing parts of the world tip into a new world of permanent economic contraction.

Resource, geopolitical and climatic driven disruption, whether the rise of sea levels destroying coastal ports and cities, civil war in resource-rich states or the rise of nationalist strongmen who hoard key resources rather than allow them to be traded on the globalised market will strangle our globalised free market economy over the longer-term.

Within the context of this global story of the early decline of our industrial civilisation is the change of wealth and power on the international stage as the great Asian powers rise and the old Western world declines. Angst within the ruling elites of Europe and America about the future is ripe, with American policy elites waking up to the technological threat posed by China. Washington is now attempting to force their allies to ban the Chinese company Huawei from developing the next-generation 5g infrastructure. This may already be too little too late.

In Europe, a recent De Spiegel article focused on the growing threat posed by China to the mighty German economy with respect to electric cars. As the magazine noted “…according to P3’s predictions, two Asian companies will dominate the market by the middle of the coming decade: China’s CATL and South Korea’s LG Chem. The two companies will, according to forecasts, make up one-quarter of the global market. The rest will fall to manufacturers located mostly in China, South Korea and Japan — but not Europe.” Belatedly, after years of failing to invest in new technologies or infrastructure, the German political and economic elites are waking up to the fact that China is on course to displace Germany as a major industrial exporter.

It isn’t just in the economic or technological field that West is falling behind. Geopolitics also reflects this shift in power from the West to the East. The future of Syria, where President Assad has de facto won the civil war, will be decided in the capitals of Moscow, Istanbul, Tehran and behind-the-scenes, Beijing, not Washington, London or Paris. This is our new world order in action today.

So, what is a reader supposed to do with all this information, data and analysis? Here are my recommendations on things you can do in the coming decades to survive, mitigate and take advantage of the changes coming.

Stay healthy

To put it plainly, keeping physically and mentally healthy will become vital in the decades to come.

I haven’t discussed as much as I should the potentially shocking implications of the unraveling of our industrial health care systems and how even the common cold could become a lethal killer a generation or so from now.

One country is a harrowing example of our potential future. Venezuela’s healthcare and health research infrastructure has fallen into a state of collapse as a consequence of the wider socio-political crisis which also has a deeper energetic dynamic not covered by mainstream coverage of the country.

According to this article, there are “…over 400,000 cases of malaria in 2017, 15% of the rural population infected with Chagas disease, surging dengue, Chikungunya and Zika infections.” The huge migration of desperate Venezuelans into neighbouring countries raises the risks of regional wide pandemics, particularly, those refugees centred in the impoverished urban shanty towns.

Imagine a future world, let’s say the late 2030’s, where you have half a dozen Venezuela’s across the world going on simultaneously. Despite the best efforts of wealthy countries, the WHO and other international bodies, it is stretching the imagination to think that these issues can be contained indefinitely. At some point, major pandemics will become inevitable, leading to huge disruption of global and regional supply chains, international tensions and the closure of borders to refugees.

So, if you can, maintain a healthy diet, keep active and take care of your body. I would also recommend that you find ways of strengthening your mental fortitude because the coming decades will be a grim cocktail of depressing news and disruptive events. Whether that is gardening, walking, meditating or prayer or something else, it is advisable to cultivate healthy methods rather then go down the path of becoming addicted to legal or illegal drugs, alcohol or gambling like so many already.

Consider moving

The bulk of my blog readership live in either the outer edges of the northern or southern hemispheres (e.g. Europe, North America, Russia or Australasia) but for those who live around the tropics, in particular North Africa or the Middle East, I would strongly recommend moving.

Quite frankly, your part of the world will become uninhabitable to large-scale human life within a generation. Either you die, move now or attempt to move later when panic sets in.

Gideon Rachman, in the Financial Times, recently wrote about the growing tensions within the Muslim and non-Muslim worlds. The emerging superpower, China, has interned over a million Muslims as a national security measure after a series of terrorist attacks by the Uighur extremists. Rachman writes that fear of Islam “is now a central part of politics in most of the world’s major power centres — from the US to the EU, China to India.

Given the rise of hard-line Islamic fundamentalism across the Muslim world it is therefore sensible, if you are a Muslim living within that vast band of the tropics, to consider whether those power centres will tolerate future migrations from Muslim majority countries into their homelands.

You would be better off moving now before the doors shut for good.

For those of my readership who live on the future frontlines of this crisis, whether that is in southern Europe, south-west America and northern Australia moving should also be a major consideration. As a rule of thumb, if your part of the world is already impacted by refugee flows, its going to get far worse in the future.

Those who live within coastal regions should be worried too. Rising sea levels will destroy the value of properties exposed to flooding and force internal migrations in the future. Florida is a good example of a state that is already dealing with this challenge. My recommendation is to move to higher ground when you can still sell and insure your home should you reside in a low-lying area.

You should also consider the wider sustainability of your locality. If you live in a sky-rise penthouse in New York is that going to be the best place in say 30 years from now? It might be sensible to move to a large town with a farming hinterland with access to jobs, public transport and provide the opportunity to be less dependent upon the industrial system for your survival and subsistence. Within the UK, market towns and small cities are better places to live than some of the grimmer and dangerous large cities like London, Birmingham and Manchester where a crime wave is already occurring.

One will also need to factor in community. Whilst it is hard to generalise, you will want to live within a shared community that helps each other out, where neighbours aren’t strangers and is reasonably safe. You certainly don’t want to reside somewhere that resembles, at worst, a low-level warzone because it is likely to get worse, not better, in the future as our industrial civilization declines.

Develop skill sets and multiple income steams

Since the post-war years, a good rule of thumb is that if you have gone to university, specialised in a professional career and climbed the rat race you would have done well. I’m sure many of my readership, including myself, have a specialised professional career niche which provides a comfortable income.

John Greer was written before that every complex civilisation developed economic niches which were colonised by the educated classes, whether these were the scribes within the Roman Empire or the professional niches within our own industrial civilisation – marketing to give just one example.

Civilizations in decline aren’t able to justify these expensive economic niches, and slowly but surely these jobs will get terminated, taking the middle classes with them. So, what do you do, reader? After all, we can’t all become plumbers, gardeners and hairdressers!

Given that I’m in the same boat here, I’ve given it much thought over the years. Ideally you should retrain your career into something that is more sustainable long-term but if that proves difficult or impossible, here are my suggestions.

First, try and clear any debts you have, in particularly mortgage debt which is the main debt for the average citizen of the developed world. If you are able to retrofit your home to reduce your expenses long-term through insulation, rainwater systems and maybe solar panel, you should be able to live with minimal expenses once the mortgage is paid off. At the very least it will give you peace of mind.

Secondly, you should cultivate skills which will prove useful and popular in the future. That could include gardening so that you can barter food with friends and family, brewing beer, sowing, massage or martial arts to give just a few examples. These skills could also provide income streams in the future which may prove a godsend if you are out of work for a while.

Thirdly, you should try and develop alternative income streams apart from your day job. This could be dividends from blue-chip stocks, or rental from a buy-to-let property or a hobby that provides capital return (doing up classic cars and selling them for a profit). Over time those modest income streams will grow in value and will provide future opportunities, if and when, your bread earner job disappears.

I have written before of the likely technological disruptive changes looming in the next decade, specifically the blockchain revolution, AI and robotics. This Ark hedge fund graph is a striking visual take on what technological forces could disrupt our world within decades.

Ark

Ark Invest

 

Opportunities exist to take advantage of these disruptive changes as anybody who brought Amazon stock in the early 2000’s could confirm. In late 2017, I noted the crypto token Ripple when it was only 20 cents. Those readers who had acquired the token shortly after I had noted it within my cryptocurrency blog post could have sold it for over 10 times more within a few months.

I take the personal view (and I’m not an investment adviser) that there are opportunities within the crypto/blockchain space which I have recently discussed here. The point is that whilst we are in the early stages of a long-term decline and eventual collapse of our industrial civilisation, for the foreseeable future companies will carry on innovating, trillions of wealth will carry on sloshing around our globalised economy and life will carry on.

If you are prepared to take the risk, have funds to spare and are interested there are opportunities to grow your wealth and over time, hopefully, convert that into income yielding assets which will help you weather the future storms coming our way.

Embracing simplicity

One of the biggest challenges facing anybody who is prepared to consider the challenges I write about in my FI blog is the psychological hit to our internalised “progress” mythology that permutates our societies.

The underlying assumption is that we, that is humanity, will carry on “progressing”, overcoming any challenges and that growth will carry on forever. John Greer wrote a brilliant book on this subject called “After Progress: Reason and Religion at the End of the Industrial Age” which I highly recommend. The high priests of this secular religion are the men (they are usually men anyway) in white coats, working in hi-tech labs, who will save us from our self-inflicted problems.

Accepting that we are not progressing but in most aspects are now declining is a profoundly humbling challenge for many of us. In truth, it takes years to internalise that message but it is worth it.

Why? Because it is this faith, and that is what it is if you are honest, that “they will come up with something” that stops us from changing our lifestyles and planning for the inevitable shocks that will shatter our world this century.

The long-term challenge is to embrace simplicity. Grow food within your own garden, recycle, make and mend, try and use public transport and other sustainable forms of transportation and enjoy the free and simple things in life; a nice walk in the countryside, playing card games with your friends and enjoying home brewed beer with friends.

This is a normal way of life for the majority of the globe and they aren’t necessarily unhappier because of it. If you embrace rather then resist the inevitable shift to a more basic way of life you will be better off, materially and spiritually as a consequence.

Managing political risk

One of the darkest aspects of the coming decades of disruption is that potential negative political impact which could affect you and your family. It is a common pattern in a declining civilisation that you see the emergence of Caesars, charismatic strongmen who rise to power, something that Oswald Spengler predicted in his prophetic book “The Decline of the West” in the 1920’s.

History is also a good guide to what also can happen to minorities, particularly ethnic or religious minorities during periods of political and economic trouble. So, what do I see as the most likely fault lines and political risks in the coming decades with a focus on the developed world?

Well the first is the rise of the populist left with a focus of swinging wealth taxes of the wealthy across the developed world as economic growth withers away, the costs of maintaining our welfare systems skyrocket and government debts balloon. If you are rich expect governments across the world to target you via various forms of direct and indirect taxes.

I will be writing soon on the impact of the above trends on the low-tax offshore finance centres (also known as “tax havens”) where many of the super-rich have started fleeing to in recent years. It won’t be easy to avoid the return of wealth taxes but it probably can be mitigated if you wish.

The shocking return of anti-Semitism within the UK Labour party and within the progressive wing of the US Democratic party is an example that the oldest form of hate is still very much with us. Sadly, political risk will be of acute concern to Jewish readers of this blog who will need to navigate two main risks going forward; the rise of violent anti-Semitic Islamist ideology and the less violent but equally unpleasant emergence of a hard-left “anti-Zionist” hatred that quickly morphs into anti-Semitism.

Jewish people are physically most at risk from jihadi extremism with old-school far right extremism now only a residual threat. After all, the French nationalist leader Marine Le Pen now considers herself and her rebranded National Front party a friend of the besieged Jewish community. The wider re-emergence within polite society of anti-Semitism is a worrying development and should concern the Jewish community.

My recommendation to any Jewish readers would be to move to places where there is little anti-Semitism and Jewish communities can reside and practise their faith in peace.

Political risk can also include the emergence of authoritarian regimes, even in places that were once democratic and counter intuitively the loss of state power with risks of rising crime and civil disorder. Apart from trying to avoid likely places of trouble it is hard to give specific advice on this area given the future variables are so hard to foresee. Still, as a general rule, consider moving if you already live in places of racial/religious tension and/or there is a high crime rate e.g. major cities within western Europe and parts of America.

Overall, the coming generations of change will reshape everybody’s life to a lesser or greater extent.

Wise folk will start thinking and planning now before panic sets in…

How to prepare for a dying future