The economy cannot grow at the pace of increasing prices of commodities, so watch out. The Ukrainian war will impact all of us, and China and interest rates are all a part of it but there is a paradigm shift. I ask myself how employment seems strong in the US and how it happens with so many job layoffs – it seems all a little skewed, watch out.
These past years the globe has been under tremendous economic pressures of Corona, and many loved ones suffered, some passed, while others were fortunate enough to overcome the virus and continue on in a fog.
Since, the global geopolitical scene shifted dramatically with war, after suffering Covid, the work force has dramatically shifted. Many ponder over the idea of how the hospitality and services sector will regain satisfactory employment . There is no debating a staffing shortage and what it means going forward, a paradigm shift. Many of these workers are being repatriated, and or looking for other work paying more.
The Paradigm shift, a workforce replaced by a new and different way of working and thinking it is in play and here to stay.
“A major event changed the way life is, and will be, a forbidden fruit is a fruit of glory, or a fruit of sorrow.“
A severe shortage of qualified labor and rising labor costs, and a significant rise in everyday commodities., i.e. coffee, bread, etc. In Japan coffee is dramatically rising, and even McDonalds McMuffin set has been hit by a 20% increase: https://www.mcdonalds.co.jp/products/800071/ and luckily in Japan Purchase Power Parity PPP still buys more. The PPP is effectively the ratio of the price of a basket of goods at one location divided by the price of the basket of goods at a different location. A market basket is also used with the theory of PPP to measure the value of money in different places.
Crop devastation, global warming and facing a shrinking economy hence possible stagflation is getting closer. I used to always think of how bad things can get before they get better. I am not predicting the outcome of 2023, no one can except we all know the global economies are faced with a new set of difficult business challenges. So, what does it all mean for global economies? It means a roller-coaster until the news cycle starts to shift but even still, how can prices go down after going up.
The greed of industry, we see company leadership coming up with algorithms to help profitability. It is these very economic interests we create which leave us with a sense of uncertainty and instability.
First, we all continue to watch the teetering-tottering of all markets, it leaves us feeling queasy, yet there is always money being made. China is one global thermometer, the manufacturing hub, suffers politically and Covid variants play their role. But China is China and competing with a Capital Communist leadership makes all our futures very interesting. China was once a non-issue held far away and poor and in the past 40 years they have shaped their economy to becoming #2. The big question is can China’s government adopt and position themselves to sustain growth, or do they fall.
“The Chinese devastated Hong Kong and life goes on. The British devastated the United Kingdom and life goes on. The war devastated Ukraine and life goes on.”
The dog and the tail syndrome, Germany’s political and economic hurdles, the European indicator for what’s to come in the EU. The economy is likely to experience what we all face, inflation reducing real incomes and savings, damping private consumption, and GDP can suffer, let’s touch on it a little later.
A global mess, we have already accepted the perils of the hot global casserole: Brexit, as British political leaders sit back and rub their hands together in pursuit of taking the popular vote. It is quite incredulous to think a Tory government led the referendum to a narrow margin bringing what I consider to be the United Kingdom’s newest debacle after the Royal Family.
The United Kingdom is an example of how modern politicians lead voters to a point of no return. How do politicians like Boris Johnson survive, what a disgraceful man he is. Even Brexit is less exciting now the entire globe watches and is preoccupied with the Royal Family on Netflix. Prince Harry, the Royal Family has seen better days and we all wonder if Charles can hold it together with Camilla and his Polo ponies. Sit down and think about it, we all need to think more and reflect on what is going on. Sweeping reality under the carpet works only up and until a point and time. That’s not to say the world is coming to an end because it’s not.
The new world order, Ukrainian war and a continuum of war, will drag on until things shift by new global events. Putin, he has staying power as long as the war rages, and if it stops, he too may find himself with concrete shoes.
South Korea, North Korea and Japan, mixed with the tensions, and the Spratly islands and China’s threat to punish Taiwan and America for Pelosi’s visit. This will just fester until China makes a move which we believe is doubtful, risking their ranks in the race for the war machine isn’t in the cards. I do believe China is taking their time and would move militarily only when it is best suited.
But we cannot ignore the fact, China and Russia both have their sights on territories, neighbors who are vulnerable. The Philippines claims the northeastern section of the Spratly Islands, and Malaysia claims part of the Island, while China and Taiwan claim the entirety of the island group. Keep in mind, Natural resources include fish, guano, oil and natural gas.
Economic activity has included commercial fishing, shipping, guano mining, oil and gas exploitation, and more recently, tourism. The Spratly Islands are located near several primary shipping lanes, all key to global trade. On top of it, with melting icebergs, there is a new possible shipping route,
We all find it less exciting to live in political turmoil, the daily waves of economic uncertainty, and accepting the red lines of 2022. We forge on in 2023, whiffs of sulphur in the air. Can we go through another year of rollercoaster rides, the derailing of the economy and uncertainty.
The year of the rabbit, over 1.5 billion embrace a year of prosperity. Think about the idea of important company owners making decisions based on fortune tellers. It is a reality in Asia and something in the west we laugh at.
How quickly we begin to live off the threads of news; Twitter, Facebook, CNN etc., somehow these feeds dictate our daily feelings. Life with Elon Musk defines 2022, and leads us in 2023 as we watch techs hit a point of decline. But think about it, Google, Apple etc., instagram and many more are what makes us tick, each and every day. Living without technology is impossible for the poorest on planet earth.
Think of why Google gets harassed by Europeans, it has as much as 80+% of the internet search market – it is now up to them to materialise on all their alternate investing made over the last years when the markets were very buoyant. Never underestimate layoffs with a focus on profits – the world we live in needs more and more profits, a dog chasing its tail, the outcome is obvious.
The rise of interest rates left us feeling numb, and we began to understand how it impacts our psyche. Then social values change, the intercommunication between people, a new generation is born. Many on furlough realised there is more to life, careers are important but so is quality of life. There was a time when working at a notable place of employment made people feel proud enjoying regular employment. Not many were prepared to risk their career for change until such time they were laid off.
Everything changed when Covid changed the way we work and think; there was no more sacrificing social life or personal time.
The service industry was hit hard by so many who had time to re-think their careers, and made fundamental change. An immediate shift in social attitudes, nowadays temporary work is more desirable.
The Covid generation prefers their own social identity, freedom to re-define their dignity being more independent a priority. I see it as an affront to the social fabric of the working class. People realised they could have quality of life, work less hours, stay home and enjoy free time. Many businesses accepted the new conditions and it was too late to change the rules of the game. Hotels and restaurants especially suffered, and many face staff shortages as of now.
In some poorer countries Covid has caused school closures, increased child labor, adolescent pregnancies and early marriages. And many parents impoverished by lockdowns can no longer afford to send their children to school. The long term effects on our very social fabric will change our futures, and sadly many children’s educations are affected.
Even in Japan, the idea of community starts to unravel, Japanese start to develop a new social fabric, a new way of life, under social communications. We all see how life is exciting under independence, and after all governments dished out enough support to sustain significant change.
If we see it from a western perspective, it creates a new and prosperous generation of people seeking alternative way of life to the status quo; the idea of equal opportunity, a concept important in the west. It is true Japan has lost some glory since the Sony days when Japan held the international respect for being a small country with a long reach.
Today, an aging population it has become more like an exclusive boutique and yet it still boasts a world ranking of #3 in GDP. Some economists believe Japan will defined as a new economic power: https://japanoptimist.substack.com/p/japan-surprises-2023?utm_source=post-email-title&publication_id=894544&post_id=93826871&isFreemail=true&utm_medium=email
Perhaps the once popular idea of Japan being a leading exporter has diminished. The Japanese realized, as did the globe it would be cheaper to manufacture in other countries. In every growing economy as it grows the cost of manufacturing the cost of labor increases making it more difficult to produce competitively. Here comes robots….and self-driving cars, etc. Perhaps Japan’s shrinking growth will turn out better than thought if the work force are replaced by robots. Its a win-win for Japanese who will still have enough job demand, and in the west the rage of unions will rise.
In Japan, things are slow yet quick and consistency is an important factor, while the social fabric depends on some level of homogeneity there is still a focus on community. People co-exist within a well-defined system including many founded on Japanese traditions; humility, respect, and discipline.
Once these are compromised by young Japanese doing whatever they feel like, and once this happens in Japan, we will see the social fabric we are used to disassembling itself. It will take time; many traditions will become lost and those very values which have made Japan so strong will now be compromised.
We once thought this system would never be compromised, and once it is, Japanese will start to become more westernized wearing perfume, dressing more randomly, and see it fit to behave according to their individual needs.
Japan, a last frontier under social attack and when we stand back and see where the world axis is turning, it depends on how we see things. Communist leaders, Xi Jinping has a Ph.D. in Marxism, and is he a believer, or just a selfless leader.
“The dream is not the ruling class’s illusion but the young generations’ own dream, Xi continued to recommend the young people to work hard and achieve the dream.”
I cannot pretend to understand the social impact of 1.5 billion Chinese, representing almost 20% of our total population. The idea of a single ideology captivates the very essence of a new world order; capitalism, a control over a global economy is the target.
Does the future depend on how we coexist with China and share their domination in world power and order. The wheel is in motion, the next years in economic growth will focus on rebuilding the economy to exclude China, and its not sensible and will only lead to fiercer lines taken by communist China.
Some would argue there is nothing we can do but I believe we can influence China up and until a point. Yet we still depend on their economic reach, the Chinese own global strategic resources and we cannot ignore that. Rare earth minerals, transport, energy, infrastructure in Africa and throughout Europe, the Chinese have systematically, and quietly captured what they need, and right under our noses.
But our focus is now on ourselves and saving our domestic economies, humans are so predictable. Now we have to manage a shortage of labor, rising prices which are not going away. That means we should expect a general consensus on continued inflation.
The prices of everyday goods are already more costly than before, essentially, we all need to eat, so demand doesn’t disappear, and governments cannot let people starve, so they will subsidise energy and food. If they do, it’s a patch on the bigger problem, yet GDP, GNP is more the focus and debt is biting us from behind. It is a vicious circle, so we have no choice but to accept the way things are.
Unemployment is stable if business can sustain the costs of doing business and customers can afford the essentials. A rebalancing, less is more, no doubt in many places can sustain the new world order., i.e., Japan, Switzerland, etc., and that’s good news but what happens to the rest.
Travel costs, food costs, energy costs and labor costs will rise as employers will be forced to offer more bang for the buck some way or another. The dynamics make it very interesting, and many politicians will rethink how to stimulate the economy without raising interest rates.
I leave you with a thought, what will happen as Artificial intelligence and robotics start to take over replacing our labor force. Humans will always moan as we love it, and at the same time we are our own worst enemies. The only things we cannot control is our urge to have more and more, and the idea of quality is just a figment of our imagination.