FEATURES - Boardroom Report
June 08, 2015

Fasten Your Seatbelts: Winning Strategies Plan for Turbulence Ahead

I just finished reading Peter Zeihan’s “The Accidental Superpower” which basically traces the history of the world before the impact of Bretton Woods. European wars, Barbarian invaders, China, Russia, and Turkey all have rich histories of aggression based on the need for resources. The impact of World War II on the rest of the world was devastation and opportunity for total collapse. However, with Bretton Woods’s accord enabling economics to be based on free trade, most countries were able to acquire resources in peaceful ways with the understanding that the U.S. Navy was out there in case goods were pirated or stolen.

Today, the world is again facing interesting financial problems. However, the motivation for the U.S. to patrol the seas to protect trade is dwindling. The primary reason the U.S. is losing interest is because the U.S. has gone from being an oil importer to an oil exporter thanks to the horizontal drilling and the vast shale deposits. These shale deposits are actually better than most deep drill oil reserves in terms of purity, which makes the cost of producing the energy cheaper to refine. Lower energy costs to retrieve, and lower costs to refine, equate to the price drop we’ve seen at the pump. This price drop is going to stay available in the U.S. for at least the next generation if not beyond.

The U.S. is becoming self sufficient in energy, the U.S. as a marketplace is still the largest economy in the world and shows no sign of losing that dominance. So while some of the media pundits and politicians claim that we are on the decline and look to the past, Zeihan’s perspective is that the U.S. is going to be experiencing better years for generations to come. Geographically, the U.S. is unique. Whether by divine providence or just the luck of the draw, the U.S. spends the least amount in finding materials, distributing products, and consuming our own “dog food”.

While the U.S. is a melting pot that looks to integrate all the races and religions, most of the rest of the world has identity issues that associate nationality with race. The bottom line is that the past will come alive again around the world when the U.S. retracts. And retraction is definitely in the cards. Additionally, where the U.S. has spent decades trying to nation build, the result has not added to the world’s stability.

Now Dr. Zeihan’s book does a great job of looking at capital, consumers, and citizens to understand what the impact is of the marketplace. However, the biggest “Aha” came from his discussion of 3D printing. 3D printing is an interesting experience, and lots of plastics are being printed that can be guns or plowshares. 3D printing is conquering the printing of mixed materials, and by 2020 may be able to replace most molds and dyes. This means manufacturing that was sent to other countries because of the high cost of labor is going to come back to the edge or the distribution centers. Once again, as stated above, the U.S. has the cheapest transport system in the world.

So with the machines doing the work and the consumption being in the U.S., skilled jobs are going to return to North America. Even Mexico is experiencing a surge of opportunity as the cost of labor in China rises.

Finally, the impact of the concern of population growth back in 1965 has resulted in a tapered population growth around the world that has made sure the young cannot pay the bill for the old as had been the case for the baby boomers. While the U.S. as an immigrant nation will manage to weather the debt, many countries, like Russia, will be facing austere alternatives.

All of this data points to the need to have strategies that don’t expect the status quo, but expect turbulent markets and tactical opportunities.

Carl Ford is CEO and community developer of Crossfire Media. (www.xfiremedia.com).

Edited by Ken Briodagh

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