Planck Foundation




GLOBAL FUTURE ANALYSIS


HEADWINDS | POLICY DEFICITS


Leaders are not many leaders left, but just crowds of followers. Followers that only read the newspapers of today, and not knowing history before they come into office and/or studying the future while they are in office. Just servicing the daily store operation is something else than steering a chain of outlets into the future. Using history only in defending a laissez fair attitude concerning the future. No high altitude in or masters of history, present and future. Jet they're intelligent people: if they change their focus (as in: rise in their altitude) they become the leaders we need. It's certainly not morality issue (although there exceptions that underlines the rule). It's just a short term focus issue. Concerning the Credit Crisis, the Energy Crisis and the Water Crisis (and all the consequential crises -like the Food Crisis- caused by these severe situations), any short term focus doesn't fix or answer these huge problems. A historical example? The big mistake all the NATO alliances had made is to walk away from the Cold War scene after the USSR collapsed, leaving Gorbashev with nothing (as in: no chance) for internal/domestic politics. In Russia there is a huge respect for Reagan and his 'driving the USSR to bankruptcy' politics. His international economic war strategy was based on 4 tactics: 1) Paying the Saudis and Iran in security and weapons to oversupply the world market with oil and this way rob the USSR of its export income. Oil was accountable for 70% of the foreign currencies earnings of the USSR in the 80ties, and the cheap/easy production in the west of the USSR must also be replaced by the more difficult/expensive Siberian production extension. This low oil price on the global market robed the USSR of her purchase power needed for buying foreign commodities and foreign innovations. 2) Going 'closed short' (offering and purchasing the same amount) on a lower value on the ruble on future positions (only costing some banking fees and at the end when the ruble crashed gave a huge profit on these large positions). 3) Financing the Afghan Resistance against the USSR: just a little money did a lot damage for the USSR troops in Afghanistan (it's therefore a miracle that the US has invade Afghanistan: they could now that the geology of the country made it impossible to ever win a war there). 4) Pushing the weapon run in a more technological direction, a direction the USSR could not perform in as digitalisation wave of the 80ties has passed the USSR economy. All these four tactics of the USA back the 80ties are in Russia seen as huge strategically acts of the Reagan Administration. But Russia has not all these four forgotten, nor the complete walk away of NATO from the scene after the collapse. This complete walk away from the collapse has fuelled once again the Russian relatively narrowed world view that Russia has no real friends in the global community. Reagan and Thatcher had bad long term geopolitics under­standing successors. In the eyes of most Russians, Russia has only a few (as in: zero) true friends. This walk away of the collapsing scene of the NATO and its countries is the biggest mistake in modern history, caused by stupid generals in the armies who took the wrong way (finding new military markets) instead of cleaning up the mess of the collapse and build sustainable relations with the changed former enemy. Politicians are to blame that they not replaced/retired the complete overhead of any army in the world (as the issue they have lived / where trained for / where focused on disappears by the bankruptcy of the enemy. New (to the new reality adjusted/focused) military leaders has helped Russia the way the USA has helped Europe and Japan after WW II and open that way a huge market and tight/real friendship to an administration that controlled a huge reservoir of reserves. US Aid had must gone into Russia everywhere the Russian Administration could/should demand for it. Instead of doing that the US continued with messing around (as in: sleeping around with any involved party that wants to sleep in exchange for something) in the Middle East (and thereby giving nobody real satisfaction and just multiplying uncontrollable turbulence). This by both Bush Senior and Clinton made policy error has damaged the interests of the US severely for decades. The post WWII behaviour of the US has been the power behind the of the US in the second half of the 20th century, so they could know the benefits of it. It would solved the problems on both sites (changing economies on both sides from Cold War to Warm Cooperation). Every Russian was (and still is) an admirer or the US and here economic success in the 20th century, but also every Russian also thinks/says: 'you can't trust them very well, as they're apparently not being able anymore in thinking in mutual interest models'. Today Russia has no foreign debts, and has increased their GDP 7 times since 1990. Who's strong and who's weak today? Russia will certainly harm the USA with the same two weapons as the USA has harmed them: oil prices and currency manipulations. Russia will do everything to increase the price of oil, like the US has done to lower the price of oil artificial. They will it simple to by going 'closed long' (both future offering and future purchasing) on oil. It only costs them some Nymex fees and it will push the future (and thereby current) oil prices severe higher. This high oil prices are certainly in Russia her economic and political benefit and will also weaken the US global economic position. Russia will certainly try to manipulate sometime in thee future the value of the US dollar down by the same game of going double short in a weak dollar moment, like the US has gone double short on the ruble in the end of the '80ties and wreck the ruble to zero value by that. The US were strong. Real strong. The US had friends. Real friends. But every strong man gets old and than needs his true friends. Many parts of the world are (or have been?) good friends of the USA. Even of a level that if the USA stepped into war, they followed the US in it (that only does good friends). This credit is over, it's eroded the last 20 years, the brand USA is severely damaged by lack of long term politic vision and national focused egoism. The effect of the Credit Crisis will undermine the image of the US in the world dramatically. An economic heavy weight as Greenspan will be go into history as a low altitude and thereby single facet focused economist which guided the US financial system by his short sightedness into major defaulting. The FED is just a trivial financial sector interest driven body that was able to convince a weak president that the money presses where in better hands by the banks than by the democratic government. We have seen the result and the collapse of the financial world will be the abolishing of the FED. Money creating will go back to democratic steered governments and backed by national assets and secured by a financial 'constitution'. A strict financial constitution was and is the right answer for limiting the money hunger of governments. Money creating can't be done by just some bankers without any democratic government based control and financial constitution secured protection. Anno 2008 there is no other conclusion possible. Both the governments and the banks must be limited in money creation. This also reduce the appetite for war in each nation: seeking wars on credit is much more easier than seeking wars out of the yearly budgets. Both governments and banks should not have the possibility to blow-up sustainable wealth growth by irresponsible short term focused, economic total dump behaviour. The world needs politicians. Real politicians. Builders of real sustainable prosperity. Times with major headwinds will give them. The summer sailors are recognised by the first storm and leave the ship by the first opportunity to do so (if not thrown from the ship earlier). The whole Energy Crisis has one huge blank spot (or must we say: main origin): politicians who understand the problem and start addressing it. Politicians are the major absent group in the whole energy discussion. Taking time to think about the consequences take courage and maybe that's right the problem: politicians and courage are maybe two different worlds who only meet each other occasion­nally. There is no politic recognition on the Energy Crisis, without that there will be no answer. Only recognised problems will gets answers. An other huge mistake of the politicians of the Western World is that they haven't addressed the energy problem back in the '70ties and 80ties of the 20th century. One lost chance that will have a huge price in the near future. The politicians of the '70ties and '80ties will not be honoured for their energy visions. The non OPEC oil is just used in 30 years, without addressing any solution. Now the energy problem hits hard without any impact softening own energy reserves. Just based on want to believe emotion believing that oil was an infinitival resource. Even today the Minister of Economic Affairs in Holland believes in this fairytale. We got the leader we deserve, because we have chosen them and let them wreck our future without any comment of us. Situation anno 2008: Saving for our retirement by financials who gambled and bonused with our retirement savings, letting our saved pension money gets less valuation each year by inflation, guided by politicians with a horizon of maximum 4 years. Trusting financials and governments in taking care of your financial or actual future is like naming a robber head of security: just not a wise thing to do: they have statistics against them. Hello future, we are prepared for you. Hello children, we felt we doesn't have enough so we've taken your future in terms of creating debts and use up all the cheap available resources. Please pay our debts and pay also huge energy/resources prices (and our retirement and health costs) and have a happy life: we care very much for you and really love you. Don't doubt this please, we mend everything we do the right way. Conclusion: we don't get it and so our politicians don't get it. We're not better then them, we're made of wood of exactly the same tree. Politics is just economy/society with a 4 year delay. We need comprehensive orientated, very smart people in politics, that are able to steer us through this rough water. And maybe, maybe we must concluded that the answer is not in politics or politicians, but that they are part of the problem. And let's hope that if there will be new leaders that they will be democratic and that they know when to stop and that they know the difference between the market (driving force) and government (steering force). A mix-up of these two (one way or the other) leads to huge economic damage. Can government do something? On the Credit Crisis? This will be difficult, throwing money to it, will not end the fire: there is the fire too big for. On the Energy Crisis? Yes, certainly. Germany taxes carbon energy and (very important and very difficult for politicians) don't put this tax income into the general budget, but use it 100% to subsidize renewable energy with it. The effect is that Germany is one of the global leading nations on renewable energy which also support their export income very much. But the main task of governments is just proclaiming the problem. People and companies are capable more than any governmental structure to address the huge problem/challenge. Till now we have politicians who (based on 'photo's' of the past) tell us that there is no problem. A good start will be just fire these problem worsening 'leaders'. We need politicians also for building good (based on mutual interest) foreign relations. The Asian Nations understand this very much, the imperialistic past of Europe and the US works internally (as in: poisoning our own perception of the actual reality) against us. Asian Nations don't preach to, don't humiliate and don't invade foreign nations. They offer real mutual cooperation possibilities. The energy/resources rich/surplus countries will survive very well. The energy/resources poor/deficit countries will have a mixed image: the bilateral co-operators will survive also. The nations of Asia understand this very well. They go around the world and offer energy surplus nations real mutual development deals, based on knowledge sharing, mutual trade, political support, building real friendship. It's also real friendship because both parties doesn't feel very much accepted by the western nations. The US and the EU could learn a lot and should study the energy deals of the Asian nations. The turtles (slow movers) will loose any energy 'game'. Neo colonial thinkers and racial thinkers will loose any deal by their haughtiness exposing attitude: these people really don't understand that the market polarity has changed and the other parties are now in the drivers seat. The on single side interest thinking 'users', aggressors and not real in mutual interest thinking 'friends' will be the losers of the 21st century. Having no energy/resources demands smart foreign policy in a completely changed world to survive. Sleeping around, insulting, invading are dead end streets in foreign politics in an energy/resources tide global future politic/economic world. Information and smart geopolitics are the two major tools for politicians. Forget legislation, taxation and subsidizing: too late for these 3 tools: the market situation has taken already the financial/economic lead in this. The time for vision on preventing is already over, the time for damage control has yet arrived. Politicians should inform their nations and cooperate bilateral international. Supra national structures can not deal with this huge problems (as even less effective than national structures). In energy politics supranational bodies worsen the impact by delay and muscle talks. National governments will choose 100% for a bilateral approach. The best example of the total useless of a supra national body and energy politics is the case 'Natural Gas and the EU'. The EU didn't want to be fully dependent on Russia for natural gas. Some EU officials analyzed 3 potential comparative suppliers and act not or slower than slow. Gazprom has acquired all three comparative suppliers by good joint venture models. The EU has proven not being able to even 'turn a page' in the energy book. Russia is smart. While the US has extent their huge governmental sponsored capital wasting facilities (you can't quite call Fannie Mae and Freddie Mac enterprises), Russia has build huge governmental sponsored capital earning facilities (Gazprom and Rosneft). Tell me, who's smarter and has more future? Trade, deals and earnings can't be done by government officials, making profitable deals is not in the 'genes' of officials, so Russia has annexed for exact 51% back the under President Jeltsin for a nickel privatized former energy departments by force/deals and let businessmen do the profit making deals. Therefore the EU will loose any energy game of Russia: slow formal more talking than acting officials against governmental backed smart businessmen. The odds are simple. The result of the Energy Crisis will be advanced localization of the economies. Leaving less budget and importance for national/federal governments. We don't realize this yet, so we have a polity deficit. And if we have knowledge and we have a policy (like invading Afghanistan, Iraq, Iran and Venezuela) we must ask ourselves now and than 'do we still have the right sustainable policy that insures the future of us the next 20 years?'.


Author: Gijs Graafland


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