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01/14/2013 5:25 AM |
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MOST CRITICAL TIPPING POINT ARTICLES TODAY |
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WEF GLOBAL RISKS - Chronic Fiscal Imbalances Ranks First
The 17 Biggest Risks To Our Hyperconnected World 01-13-13 BI
Climate and governance dominate the World Economic Forum's eighth-annual Global Risks report published this week. "Dynamism in our hyperconnected world requires increasing our resilience to the many global risks that loom before us," writes the WEF's Klaus Schwab.
A total of 1,234 top experts from around the world submitted responses. One of the questions asked the experts to rate the likelihood of 50 major events on a scale of 1 (least likely) to 5 (most likely).
We've ranked the 17 they said were most likely to occur.
- Chronic Fiscal Imbalances
- Rising Greenhouse Gas Emissions
- Water Supply Crises
- Mismanagement Of Aging Populations
- Cyber Attacks
- Severe Income Disparity
- Failure Of Climate Change Adaptation
- Pervasive Entrenched Corruption
- Extreme Volatility In Commodity Prices
- Persistent Extreme Weather
- Global Governance Failure
- Mismanaged Urbanization
- Chronic Labor Market Imbalance
- Species Overexploitation
- Rising Religious Fanaticism
- Terrorism
- Critical Systems Failure
World Economic Forum - Global Risks 2013

COMPLEX NETWORKS
The Cases – Making Sense of Complex Systems
The 50 global risks in this report are interdependent and correlated with each other. The permutations of two, three, four or more risks are too many for the human mind to comprehend. Therefore, an analysis of the network of connections has been undertaken to highlight some interesting constellations of global risks seen in Figure 3.
In Section 2, these constellations of global risks are presented as three important cases for leaders: “Testing Economic and Environmental Resilience” on the challenges of responding to climate change, “Digital Wildfires in a Hyperconnected World” on misinformation spreading via the Internet, and “The Dangers of Hubris on Human Health” on the existential threat posed by antibiotic-resistant bacteria.
Each case was inspired by the findings from an initial network analysis and further developed through extensive research into current trends, potential causal effects, levels of awareness and possible solutions. Unlike traditional scenario methodologies, the risk cases do not attempt to develop a full range of all possible outcomes. They are instead an exercise in sensemaking as well as a collective attempt to develop a compelling narrative around risks that warrant urgent attention and action by global leaders. Readers are encouraged to refine these cases further and to develop their own scenarios based on the data presented.iv
Resilience – Preparing for Future Shocks
This year’s Special Report examines the increasingly important issue of building national resilience to global risks. It introduces qualitative and quantitative indicators to assess overall national resilience to global risks by looking at five national-level subsystems (economic, environmental, governance, infrastructure and social) through the lens of five components: robustness, redundancy, resourcefulness, response and recovery. The aim is to develop a future diagnostic report to enable decision-makers to track progress in building national resilience and possibly identify where further investments are needed. The interim study will be published this summer, and we invite readers to review the proposed framework and to share ideas and suggestions with the Risk Response Network.
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01-14-13 |
GLOBAL RISK
MONITORS
WEF |
3
3 - Risk Reversal |
GLOBAL TRENDS - National Intelligence Council
Global Trends 2030: Alternative Worlds Natiional Intelligence Council
A report by the National Intelligence Council predicts that the United States will lose its superpower status by 2030, but that no country — including China — will be a hegemonic power.
Instead, the report says, power will shift to “networks and coalitions in a multipolar world.”
The council, which wrote Global Trends 2030, was established in 1979. It supports the U.S. director of National Intelligence and is the intelligence community’s center for long-term strategic analysis.
The council’s intelligence officers are drawn from government, academia and the private sector.
FULL REPORT: Global Trends 2030
“The world of 2030 will be radically transformed from our world today,” the report concludes. “By 2030, no country — whether the U.S., China, or any other large country — will be a hegemonic power.”
Intel report sees U.S. losing superpower status by 2030
MEGATRENDS: The 6 'Gamechangers' That Will Impact The Planet For Decades 01-11-13
The Office of the Director of National Intelligence is out with its annual forecast of what the world will look like in 2050. The report focuses on six "gamechanging" trends and events that will shape the world in the coming years.
Some we were mostly aware of — like threats to global economies from developed countries' deficits. But many others — like the prospect of new technology and the potential for increased conflict — surprised us.
Gamechanger 1: The Crisis-Prone Global Economy
- CRISIS ECONOMY: “Drastic measures” will be necessary to curb growing fiscal liabilities in developed countries.
- CRISIS ECONOMY: The global share of financial assets becomes much more evenly distributed.
- CRISIS ECONOMY: Commodity instability will hit China and India, who remain import dependent.
- CRISIS ECONOMY: Durations of business cycles will become significantly shorter and less smooth.
Megatrend 2: The Governance Gap
- GOVERNANCE GAP: Growing middle classes in developing countries will increase demand for rule of law and government accountability.
- GOVERNANCE GAP: About 50 countries qualify as falling somewhere between "free" and "not free."
- GOVERNANCE GAP: And growth in the number of free countries has stalled in the past decade.
- GOVERNANCE GAP: Climate stress, which will exacerbate water scarcity, could actually cause some governments to collapse.
Gamechanger 3: Potential For Increased Conflict
- CONFLICT: Tensions have increased as the international system has become more fragmented and existing norms of cooperation fall out of favor.
- CONFLICT: Resource competition will intensify.
- CONFLICT: Cyber attacks have increased.
Gamechanger 4: Wider Spread Of Regional Instability
- REGIONAL INSTABILITY: The Middle East's youth population is getting younger, and unemployment is rising.
- REGIONAL INSTABILITY: Defense spending in Asia is increasing.
- REGIONAL INSTABILITY: Latin America's growing middle class will clash with countries' inherent populism.
- REGIONAL INSTABILITY: Using a new global power index, China will still surpass the US, but by 2040 instead of earlier.
Gamechanger 5: The Impact Of New Technologies
- TECH: Three key technology areas will see wide inovation: information, the ability to store which is getting increasingly cheaper
- TECH: Robotics and manufacturing, which is already affecting unit labor costs worldwide...
- TECH: And resource technology, which will have to increase to compensate for declining crop yields.
Gamechanger 6: The Role Of The United States
- AMERICA: For now, the U.S. continues to dominate the world in a number of areas.
- AMERICA: And the U.S.'s share of the oil market is only going to increase. Read more:
- AMERICA: But by 2050, China will enjoy greater purchasing power parity than the U.S.
- AMERICA: Our demographic prosperity window is closing fast, while others' have just opened.
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01-14-13 |
GLOBAL RISK
ASSESS-MENT
MONITORS |
GLOBAL MACRO |
DEMOGRAPHICS - Immigration, Regionalization, Dependency and Obesity
AMERICA 2050: Here's How The Country Will Look Three Decades From Now 10-19-12 BI
When economists forecast the future, they have to consider one key variable: people.
Using charts and info from Pew, the Census, and a Ph.D presentation put together by Elise Barrella & Sara Beck of Georgia Tech, we've found some interesting facts about what America will look like in a few decades.
The general trends: More Latino, older, and unfortunately, fatter. These evolving demographic dynamics will have consequences on the economy, which we also address in this feature.
- The Census says our population will jump another 100 million in just a few decades
- Put aging and immigrants together, and you get a working-age population that will be "majority minority" in 2050
- 11 emerging "megaregions," economies become so interdependent that they form larger distinct entities
- Dependency ratio — the proportion of nonworking to working people — is gonna surge. It's not clear whether we'll be able to support them
- There's another thing that's gonna happen...we're gonna get fatter. this, not aging, is what's going to cause medical costs to skyrocket

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01-14-13 |
INDICATORS
DEMO- GRAPHICS |
US ECONOMICS |
CHINA - Social Unrest
Why Chinese Leaders Are All Reading Alexis de Tocqueville 01-13-13 Patrick Chovanec, An American Perspective From China
A surprising number of people in China have been writing and talking about “revolution”. First came word, in November, that China’s new leaders have been advising their colleagues to read Alexis de Tocqueville’s classic book on the French Revolution, L’Ancien Régime et la Révolution (The Old Regime and the Revolution), which subsequently has shot to the top of China’s best seller lists. Just this past week, Chinese scholar Zhao Dinxing, a sociology professor at the University of Chicago, felt the need to publish an article (in Chinese) laying out the reasons China won’t have a revolution (you can read an English summary here). Minxin Pei, on the other hand, thinks it will.
In the midst of this debate, I happened across an interesting set of passages in retired Harvard professor Richard Pipes’ slender volume Three “Whys” of the Russian Revolution. The first “why” he asks is “Why did Tsarism fall?”, an event that few saw coming:
If you read the Russian and foreign press before 1917, or memoirs of the time, you find that hardly anyone expected the downfall of tsarism either. On the contrary, people believed that tsarism would survive for a long time to come … For had not tsarism weathered all onslaughts and all crises [including the 1905 uprising], and emerged from them intact?
The answer, he argues, lies in the fact that Russian society changed dramatically, but its political system did not, leading to an explosive disconnect between the two:
So, around 1900, we have a mechanically rather than organically structured state that denies the population any voice in government, and yet, at the same time, aspires to the status of a global power. This aspiration compels it to promote industrial development and higher education, which has the inevitable effect of shifting much opinion and the power to make decisions to private citizens. Pre-1905 tsarism thus suffered from an irreconcilable contradiction. A not-insignificant segment of the population received secondary and higher education, acquiring, in the process, Western attitudes, and yet it was treated as being on the same level with the illiterate peasantry, that is, unfit to participate in the affairs of state. Capitalist industrialists and bankers made major decisions affecting the country’s economy and employment, yet had no say in that country’s politics because politics was the monopoly of the bureaucracy …
The result was a situation which Marx had rightly predicted had to arise when the political form — in this case, heavily centralized and static — no longer corresponded to the socio-economic context — increasingly dispersed and dynamic. Such a situation is by its very nature fraught with explosive potential. In 1982 [Pipes writes], when I worked in the National Security Council, I was asked to contribute ideas to a major speech that President Reagan was scheduled to deliver in London. My contribution consisted of a reference to Marx’s dictum that, when there develops a significant disparity between the political form and the socio-economic context, the prospect is revolution. This disparity, however, had now developed in the Soviet Union, not in the capitalist West. President Reagan inserted this thought into his speech, and the reaction in Moscow was one of uncontrolled fury: this, of course, was a language they well understood and interpreted to mean a declaration of political war against the Communist Bloc. Their anger was enhanced by the awareness that the statement was correct, that they were ruling in a manner that did not correspond to either the economic or the cultural level of their population.
Read that again carefully, line by line, with present-day China in mind, and I think you’ll find some fascinating food for thought. I have often observed that I know of no country that has changed as much in the past 30 years as China has, in terms of the kind of practical freedom people experience in their day-to-day lives. The greatest challenge facing China’s leaders is how — or whether — a fundamentally closed political system (rule by an elite) can cope with the dramatically more open economy and society that present-day China has become. That’s why they’re reading Tocqueville.
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01-14-13 |
THEMES |
SOSIAL UNREST |
MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - Jan 13th - Jan 19th, 2013 |
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EU BANKING CRISIS |
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SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] |
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RISK REVERSAL |
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CHINA BUBBLE |
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JAPAN - DEBT DEFLATION |
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BOND BUBBLE |
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CHRONIC UNEMPLOYMENT |
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GEO-POLITICAL EVENT |
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MACRO News Items of Importance - This Week |
GLOBAL MACRO REPORTS & ANALYSIS |
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US ECONOMIC REPORTS & ANALYSIS |
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CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES |
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Market Analytics |
TECHNICALS & MARKET ANALYTICS |
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COMMODITY CORNER - HARD ASSETS |
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THESIS Themes |
2013 - STATISM |
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2012 - FINANCIAL REPRESSION |
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2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS |
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2010 - EXTEN D & PRETEND |
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THEMES |
CORPORATOCRACY - CRONY CAPITALSIM |
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GLOBAL FINANCIAL IMBALANCE |
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SOCIAL UNREST |
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CENTRAL PLANNING |
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STANDARD OF LIVING |
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GENERAL INTEREST |
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