THE FUTURIST: Significant economic disruption ahead – Sarasota Herald-Tribune

By David Houle

My last column in this space provoked the most number of positive responses I have had since I started contributing to Business Weekly. That column was about the massive amount of disruption that will occur in the next 20 years.

Whenever there is a lot of disruption or, to use a more traditional phrase, creative destruction, there will be a lot of economic uncertainty and pain. The old order crumbles and the new order emerges. Holding on to the past becomes costly and even dangerous. In this column, I want to suggest that, along with all this change and with baggage from the Great Recession, significant economic disruptions also are ahead.

First, a few caveats. I am not an economist. I do not deal with economic theory when looking at the future. Second, I am not a financial adviser, and I do not give people advice on their investments or on market timing. I am a futurist and so I look at what was and what is to be able to best forecast what will be.

Here are some things I see that have great likelihood of happening in the next few years;

I think the stock market is in for a significant correction. It will be triggered by several things, some of which I mention below. I was dumbfounded that the Snap IPO was so strong out of the gate. Its day of reckoning began arriving with its earnings report. I think this IPO and the emerging difficulties of the unicorns, such as Uber, will severely dampen the blind fever around tech stocks. The current market is fueled by speculation and the lack of alternative investments and is more sensitive to external events than earnings.

I think the Eurozone is shaky at best and beginning its move to its demise at worst. I have been consistent on this since 2011. The Great Recession may well be looked back upon as the beginning of the end of the Eurozone. A massive amount of debt was run up, there is no real growth, interest rates have been negative at times and unemployment and, certainly, youth unemployment are in double digits in many European countries. Twentieth-century thinking has not evolved in this century

China may well be headed for some unpleasant economic times. There seems to be a looming debt crisis, the government is being ham-handed in some of its efforts, there is an opacity that hides any true weakness and growth has slowed dramatically. One must remember that there are 1.4 billion people in China and that 1 billion of them live in relative poverty and have yet to participate in the economic miracle that created 300 billion-plus new members of the global middle class. That may soon cause social unrest. Lastly, the wealthy are moving vast amounts of money out of the country, creating huge currency outflows.

Russia is only now emerging from two years of significant GDP contraction as it is selling oil for less than cost. In addition, it is the largest country in the world geographically with a shrinking population. The Putin dictatorship has not created a dynamic market economy, so there is no real growth. Many more people are walking through the exit door than the entrance door.

The above two points about China and Russia are exactly why they are both being bellicose and nationalistic on the global stage. When there is nothing to praise internally with the economy, national leaders, and specifically autocrats, do some external saber rattling. This will continue. This will only increase tension and make markets jittery.

Our federal government has been in gridlock for almost two decades. This means that such necessary things as legislation and goals so essential at this time in our countrys history are not being dealt with intelligently. Now layer over that the emerging crises President Trump is creating with the country and his own party and you dont have any of the certainty that markets and investors like. The partisanship afflicting Washington will create growing problems for this country for the next few years. More than 20,000 bridges are approaching collapse and what is Washington focusing on?

In my last column, I wrote about the coming transformation of the auto industry to electric cars and autonomous automobiles. This will cause old players to fade away and new ones to emerge. The gearheads of Detroit are ceding ground to the techies of Silicon Valley. And what are the existing car companies doing? They are committing fraud and have racked up a record number of recalls. How can you trust a company such as Volkswagen, which overtly committed fraud in multiple countries, apparently colluding with suppliers? In addition, multiple car companies knowingly sold new cars with airbags that had deadly faults.

When your industry faces its largest existential crisis, it is plain stupid to commit fraud. No wonder Tesla is valued more than many much larger companies. Invest in what is being born, rather than what is dying or committing suicide.

The biggest economic transition in the next 10 years will be the global movement away from fossil fuels to alternative and renewable energy sources. Fossil fuels are now a no-growth industry. I have forecast for years that the collapse of the price of oil will cause economic upheaval that will lead to the collapse of national economies. Take a look at Venezuela and Nigeria for the first examples of this phenomenon.

Lastly, there will be hundreds of billions if not trillions of dollars of property value lost globally due to sea-level rise and climate change between now and 2030-'35. Florida has some 5,000 miles of shoreline and much of it will be worth much less in the future. Real estate will be underwater before it is under water.

Oh, one more thing: The national debt of the United States may be $20 trillion, but the debt and all the unsecured liabilities of the country now add up to almost $100 trillion if you include unfunded Social Security, unfunded Medicare, pension and retiree benefits and publicly held debt. One-hundred trillion dollars is more than the global aggregate GDP. Any good ideas on how to retire it?

This list could go on. The single thing to keep in mind is that the reality you have assumed would continue will not. So dont invest in thinking it will.

Sarasota resident David Houle is a globally recognized futurist. He has given speeches on six continents, written seven books and is futurist in residence at the Ringling College of Art + Design. His website is davidhoule.com. Email him at david@davidhoule.com.

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THE FUTURIST: Significant economic disruption ahead - Sarasota Herald-Tribune