top of page

Opinion | The World Isn’t Broken: The Investor Model Is

Businesses must adjust to an era where economic and geopolitical shocks are the new normal


The Three Cs

The point is, rather than shocks, we are witnessing normal, long-run events. Empires go to war. Economies and currencies collapse. Kings are assassinated. We need to forget the concept of ‘shocks’ and instead think about structures that drive the events of today. Let’s call them the ‘Three Cs’.


The first driver is conflict. The best example is China, a non-cooperative player, gaming the cooperative system of global trade. Through technology transfer, China has, by hook or by crook, made Western know-how its own. This has led to systemic rivalry and a budding trade war between the US and China.


Second is climate. The upside of modern industry and transport, namely scale and speed, has the significant downside of carbon emissions. The changes required to adapt society to climate change will bump against our core assumptions, including human rights. How many people will want Donald Trump’s border wall if millions of desperate climate refugees begin to move across the world?


Third is currency, or rather, currency debasement. Fiat currency is an experiment: government, private sector and household debt levels are extreme and the long-term effects of quantitative easing are yet to be seen. Who knows what happens at the end of a debt mega-cycle if your currency is, effectively, only backed up by a wink and a smile. Buckle up.

So, no more calm baselines. The abnormal is now normal. But at least there is some good news: if investors update their model with the three Cs, they need never be surprised — or shocked — again.



Commentaires


bottom of page