Comments on: Investment Themes for the Next Decade http://www.getreallist.com/investment-themes-for-the-next-decade.html Deal With Reality or It Will Deal With You Mon, 02 Jan 2012 04:09:51 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Paul Denlinger http://www.getreallist.com/investment-themes-for-the-next-decade.html/comment-page-1#comment-1901 Paul Denlinger Sat, 02 Jan 2010 01:09:39 +0000 http://www.getreallist.com/?p=1492#comment-1901 I am in Beijing, and while China's aggressive plans to corner the market on commodities look smart now, they really don't mean a lot unless there are consumers who buy the finished products. So here is my prediction for this coming decade: for practical purposes, the consumer will gradually disappear. Worldwide. People will increase their savings, and the world will shift from one of cornucopianism, where there is an abundance of anything you want at a cheap price, to one where there are shortages of everything, including fuel, energy, food, water and good money (the kind which actually keeps its value over time). Economies will become more local and long-distance transportation will become much less frequent. Some of this travel slack will be fulfilled with online applications like Skype, which may charge starting fees as they find more traction in the marketplace. Let's not forget that some of the effects of global warming will accelerate too, and some populations will move because of food and water scarcity. As governments become increasingly desperate, there will be less international cooperation. COP15 will become the norm, not the exception. For those outside China, it is very easy to look at it and say "My god, those guys are so smart!". In fact, management decisions in China are made in the short-term too, and in 2010, some of those decisions will not look very good. Michael Pettis discusses these in some detail in his most recent article on his blog: http://mpettis.com/2010/01/china-new-year-and-one-more-vote-for-gdp-adjusted-bonds/ I am in Beijing, and while China’s aggressive plans to corner the market on commodities look smart now, they really don’t mean a lot unless there are consumers who buy the finished products.

So here is my prediction for this coming decade: for practical purposes, the consumer will gradually disappear. Worldwide.

People will increase their savings, and the world will shift from one of cornucopianism, where there is an abundance of anything you want at a cheap price, to one where there are shortages of everything, including fuel, energy, food, water and good money (the kind which actually keeps its value over time). Economies will become more local and long-distance transportation will become much less frequent. Some of this travel slack will be fulfilled with online applications like Skype, which may charge starting fees as they find more traction in the marketplace.

Let’s not forget that some of the effects of global warming will accelerate too, and some populations will move because of food and water scarcity.

As governments become increasingly desperate, there will be less international cooperation. COP15 will become the norm, not the exception.

For those outside China, it is very easy to look at it and say “My god, those guys are so smart!”. In fact, management decisions in China are made in the short-term too, and in 2010, some of those decisions will not look very good. Michael Pettis discusses these in some detail in his most recent article on his blog:

http://mpettis.com/2010/01/china-new-year-and-one-more-vote-for-gdp-adjusted-bonds/

]]>