Across the teetering world today, often two key questions; which will come first, the next financial crisis or the next election. Some 100 general national elections due within the next 500 days, at least in Canada, the Prime Minister Justin Trudeau is now calling the next general elections on September 20,2021. Well done, Prime Minister
Winning elections during pandemics is like adding up the list of hurdles faced by the last Olympics in Japan, but Justin Trudeau will win for the following three reasons. Understanding the future, as worklessness causes restlessness therefore taking care of citizens and their mental balance will create smooth transition, understanding global affairs, refugee’s crisis of sorts, climate and social justice of kinds and understanding women and minorities.
The triangulations of the above earned Trudeau the popularity across the world, which also bounced back to the immigrant population of Canada as positive messages from overseas. Canada is the world’s top brand and Trudeau has the right stuff to play in this space. Other factors, like scattered opposition still inventing anti-campaign without real contents and myopic illusions have a long way to go. Of course, there were errors and there were apologies, but the experiences and daily front line on camera battles sums up a new majority. The next toughest frontier is the midsize business economy and via meritocracy Canada has unlimited potential. (Author’s Disclosure; Liberal since last 50 years, harsh critic on policies affecting small medium businesses and lack of entrepreneurial mobilization and exportability)
Nevertheless, globally speaking, the post-pandemic economies are testing new narratives, as the certainty of exotic disruption keeps leadership awake and citizenry on edge. The world is demanding big changes; therefore, it is no longer important where you sit but rather where you stand.
Two new challenges, mask on face and pockets with holes, when billions wandering amongst broken economies where lack of real value creation crushed against value manipulations shaking the national foundations. Will the jungles of hedge funding provide the ultimate answers to hide behind bushes or the Robin Hoods of sorts so bravely save, or simply laugh at humankind? Pandemic needling already kicked the global public opinion in the wrong place; short on drips, economies of the world already cracking on stress tests, awaiting the black-masked financial collapse appear to kick hard humankind in the wrong place, once again. The stirred but not shaken cocktail of “Remote + Occupation + Living + Health + Trust + Economy + Business + Skills + Future” now showing its lingering potency and hangover.
Ignoring “worklessness” of futurism is less an economic issue rather than an entrepreneurial challenge. While survival of billions of displaced, replaced and misplaced workers advances towards a new ‘worklessness’ of futurism, haunts like a mysterious case study for the academic mind, urgently needed are the entrepreneurial mindsets and real value creation attitudes. The silence is deep; the confused murmur only clouds clarity of vision. Over manipulation of economic data by most nations to fit, its own, the national agenda and unlimited printing of currencies, on-again or off-again masking will no longer silence the global populace.
Scream they will
Two new options; post pandemic recovery pushes all nations towards new thinking.Hidden is the future of global diversity of micro-trade, micro-manufacturing and micro exports to save national economies and save restless citizens from populism. Rise of the midsize economy, nation by nation, yet so feared by the top players of national economy and their subservient policies.
No nation without upskilling will stay in the race, no leadership without meritocracy and mobilization skills will survive. Decipherable only via global logistic chain mindsets, visible only via digitized economies of entrepreneurial mindsets and actionable only via entrepreneurial initiatives, such deployments are meritocratic administrations hungry and global-age leadership starved. This is where mastery of national mobilization of entrepreneurialism on digital platforms of innovative excellence and exportability finds the driver seats. This is also, where new understanding explores the revival of global trade in harmony and blending of upskilling with entrepreneurialism to cement progress.
Two new adjustments, the secrets of evolution hidden in the elimination of “Economic-Myopia” when all focused on just local and internal economics. Too much focus just on local limitations, while ignoring global-age mobilization and entrepreneurial advancements and not exploring collaborative synthesizing engaging extremely large populated worlds are just entrapments. Exploring globalization and buying powers of sorts, therefore needed are new mindsets with less reading of newspapers and more gazing at world-atlas. Binoculars are not for looking at feet but searching beyond the horizon. Digital divide is a mental divide; rejection of change and progress is fear of competition and fear of entrepreneurialism is fear of exposing levels competency, therefore, the post covid economies are not about numbers, and they are all entrepreneurial gusto, deep immersion needed to differentiate the new powers and “global borderless- competitiveness”
The search for fearless warriors, identify the frontline teams on national economic developments and differentiate on the lack of understanding on national mobilization of entrepreneurialism, now absence of such a liability to national economic survival. If there are some 200 nations in the race and some 10,000 cities on the line, there are some 100,000-trade-associations, there are some 11,000 chambers and they alone have 45 million members. Why are such numbers important, as most trade groups and national ministries of trade and commerce, export promotion agencies despite decades of existence have grossly missed digitization, not as their fault, but rather too focused on arbitration and trade-facilitation-paperwork mindset? What would it take to create a new mindset; ready to uplift small midsize economy on digital platforms, as these institutions are already halfway there?
The Four Players of Small Business Economies: One: Founders are the true entrepreneurial risk-takers, job-creators and grassroots prosperity fertilizers. Two: National trade groups and chambers are the umbrella where such founders gather to improve trade-flows. Three: National governments collecting taxes from founders are policy makers to improve the trades. Four: Customers are the buyers that prove the validity of the existence of that small medium enterprise, study more on Google
Facts from across the world; normally, founders of small medium businesses are outcast as out of the box thinkers, risk-takers and not large enough contributors on photo-op trails. Trade associations and chambers treat them for being too small to pay what big corporations pay in membership fees. National economic developments prefer just the lip service compared to how they serve the big corporate players. Customers of small medium businesses are appreciative and loyal to businesses ONLY with superior performances, quality of goods and services of real value. Study Expothon and global narrative on upskilling midsize economy
Why is it so important? These are the four groups constituting four pillars, each with special characters, each needing special handling and not just bundled as “SME Crisis” of sorts, brushed under the rug repeatedly, since the last many decades. This is also not about some flag raising ceremony at local city hall; gala-plastic-award-dinner-night or declaring a flag covered SME week, none of this will work in post pandemic recovery. National mobilization of entrepreneurialism will uplift midsize business economies and create critically needed growth.
The rest is easy
Finding Fulcrum to Move the World Economics
Where hidden is the fulcrum to bring about new global-age thinking and escape current mysterious economic models that primarily support super elitism, super-richness, super tax-free heavens and super crypto nirvanas; global populace only drifts today as disconnected wanderers at the bottom carrying flags of ‘hate-media’ only creating tribal herds slowly pushed towards populism. Suppose, if we accept the current indices already labeled as success as the best of show of hands, the game is already lost where winners already left the table. Finding a new fulcrum to move the world economies on a better trajectory where human productivity measured for grassroots prosperity is a critically important but a deeply silent global challenge. Here are some bold suggestions
ONE- Global Measurement: World connectivity is invisible, grossly misunderstood, miscalculated and underestimated of its hidden powers; spreading silently like an invisible net, a “new math” becomes the possible fulcrum for the new business world economy; behold the ocean of emerging global talents from new economies, mobilizing new levels of productivity, performance and forcing global shifts of economic powers. Observe the future of borderless skills, boundary less commerce and trans-global public opinion, triangulation of such will simply crush old thinking.
Archimedes yelled, “…give me a lever long enough and a fulcrum on which to place it, and I shall move the world…”
After all, half of the world during the last decade, missed the entrepreneurial mindset, understoodonly as underdog players of the economy, the founders, job-creators and risk-taker entrepreneurs of small medium businesses of the world, pushed aside while kneeling to big business staged as institutionalized ritual. Although big businesses are always very big, nevertheless, small businesses and now globally accepted, as many times larger. Study deeply, why suddenly now the small medium business economy, during the last budgetary cycles across the world, has now become the lone solution to save dwindling economies. Big business as usual will take care of itself, but national economies already on brink left alone now need small business bases and hard-core raw entrepreneurialism as post-pandemic recovery agendas.
TWO – Ground Realities: National leadership is now economic leadership, understanding, creating and managing, super-hyper-digital-platform-economies a new political art and mobilization of small midsize business a new science: The prerequisites to understand the “new math” is the study of “population-rich-nations and knowledge rich nations” on Google and figure out how and why can a national economy apply such new math.
Today a USD $1000 investment in technology buys digital solutions, which were million dollars, a decade ago.Today,a $1000 investment buys on global-age upskilling on export expansion that were million dollars a decade ago. Today, a $1000 investment on virtual-events buys what took a year and cost a million dollars a decade ago. Today, any micro-small-medium-enterprise capable of remote working models can save 80% of office and bureaucratic costs and suddenly operate like a mini-multi-national with little or no additional costs.
Apply this math to population rich nations and their current creation of some 500 million new entrepreneurial businesses across Asia will bring chills across the world to the thousands of government departments, chambers of commerce and trade associations as they compare their own progress. Now relate this to the economic positioning of ‘knowledge rich nations’ and explore how they not only crushed their own SME bases, destroyed the middle class but also their expensive business education system only produced armies of resumes promoting job-seekers but not the mighty job-creators. Study why entrepreneurialism is neither academic-born nor academic centric, it is after all most successful legendary founders that created earth shattering organizations were only dropouts. Now shaking all these ingredients well in the economic test tube wait and let all this ferment to see what really happens.
Now picking up any nation, selecting any region and any high potential vertical market; searching any meaningful economic development agenda and status of special skills required to serve such challenges, paint new challenges. Interconnect the dots on skills, limits on national/global exposure and required expertise on vertical sectors, digitization and global-age market reach. Measuring the time and cost to bring them at par, measuring the opportunity loss over decades for any neglect. Combining all to squeeze out a positive transformative dialogue and assemble all vested parties under one umbrella.
Not to be confused with academic courses on fixing Paper-Mache economies and broken paper work trails, chambers primarily focused on conflict resolutions, compliance regulations, and trade groups on policy matters. Mobilization of small medium business economy is a tactical battlefield of advancements of an enterprise, as meritocracy is the nightmarish challenges for over 100 plus nations where majority high potential sectors are at standstill on such affairs. Surprisingly, such advancements are mostly not new funding hungry but mobilization starved. Economic leadership teams of today, unless skilled on intertwining super-hyper-digital-platform-economic agendas with local midsize businesses and creating innovative excellence to stand up to global competitiveness becomes only a burden to growth.
The magnifying glass of mind will find the fulcrum: High potential vertical sectors and special regions are primarily wide-open lands full of resources and full of talented peoples; mobilization of such combinations offering extraordinary power play, now catapulted due to technologies. However, to enter such arenas calls for regimented exploring of the limits of digitization, as Digital-Divides are Mental Divides, only deeper understanding and skills on how to boost entrepreneurialism and attract hidden talents of local citizenry will add power. Of course, knowing in advance, what has already failed so many times before will only avoid using a rubber hose as a lever, again.
The new world economic order: There is no such thing as big and small as it is only strong and weak, there is no such thing as rich and poor it is only smart and stupid. There is no such thing as past and future is only what is in front now and what is there to act but if and or when. How do you translate this in a post pandemic recovery mode? Observe how strong, smart moving now are advancing and leaving weak, stupid dreaming of if and when in the dust behind.
The conclusion: At the risk of never getting a Nobel Prize on Economics, here is this stark claim; any economy not driven solely based on measuring “real value creation” but primarily based on “real value manipulation” is nothing but a public fraud. This mathematically proven, possibly a new Fulcrum to move the world economy, in need of truth
The rest is easy
Evergrande Crisis and the Global Economy
China’s crackdown on the tech giants was not much of a surprise. Sure, the communist regime allowed the colossus entities like Alibaba Group to innovate and prosper for years. Yet, the government control over the markets was never concealed. In fact, China’s active intervention in the forex market to deliberately devalue Yuan was frequently contested around the world. Ironically, now the world awaits government intervention as a global liquidity crisis seems impending. The Evergrande Group, China’s largest property developer, is on the brink of collapse. Mounding debt, unfinished properties, and subsequent public pressure eventually pushed the group to openly admit its financial turmoil last week. Subsequently, Evergrande’s shares plunged as much as 19% to more than 11-year lows. While many anticipate a thorough financial restructuring in the forthcoming months, the global debt markets face a broader financial contagion – as long as China deliberates on its plan of action.
The financial trouble of the conglomerate became apparent when President Xi Jinping stressed upon controlled corporate debt levels in his ongoing drive to reign China’s corporate behemoths. It is estimated that the Evergrande Group currently owes $305 billion in outstanding debt; payments on its offshore bonds due this week. With new channels of debt ceased throughout the Mainland, repayment seems doubtful despite reassurances from the company officials. The broader cause of worry, however, is the impact of a default; which seems highly likely under current circumstances.
The residential property market and the real estate market control roughly 20% and 30% of China’s nominal GDP respectively. A default could destabilize the already slowing Chinese economy. Yet that’s half the truth. In reality, the failure of a ‘too big to fail’ company could bleed into other sectors as well. And while China could let the company fail to set a precedent, the spillover could devastate the financial stability hard-earned after a strenuous battle against the pandemic. Recent data shows that with the outbreak of the delta variant, the demand pressure in China has significantly cooled down while the energy prices are through the roof. Coupled with the regulatory crackdown rapidly pervading uncertainty, a debt crisis could further push the economy into a recession: a detrimental end to China’s aspirations to attract global investors.
The real question, therefore, is not about China’s willingness to bail out the company. Too much is at stake. The primal question is regarding the modus operandi which could be adopted by China to upend instability.
Naturally, the influence of China’s woes parallels its effect on the global economy. A possible liquidity crisis and the opaque measures of the government combined are already affecting the global markets: particularly the United States. The Dow Jones Industrial Average (DJIA) posted a dismal end to Monday’s trading session: declining by more than 600 points. The 10-year Treasury yields slipped down 6.4 basis points to 1.297% as investors sought safety amid uncertainty. The concern is regarding China’s route to solve the issue and the timeline it would adopt. While the markets across Europe and Asia are optimistic about a partial settlement of debt payments, a take over from state-owned enterprises could further drive uncertainty; majorly regarding the pay schedule of western bondholders amid political hostility.
Economists believe that, while a financial crisis doesn’t seem like a plausible threat, a delayed response or a clumsy reaction could permeate volatility in the capital markets globally. Furthermore, a default or a takeover would almost certainly pull down China’s economy. While the US has already turned stringent over Chinese IPOs recently, a debt default could puncture the economic viability of a wide array of Chinese companies around the world. And thus, while the global banking system is not at an immediate threat of a Lehman catastrophe, Evergrande’s bankruptcy would, nonetheless, erode both the domestic and the global housing market. Moreover, it would further dent Chinese imports (and seriously damage regional exchequers), and would ultimately put a damper on global economic recovery from the pandemic.
Economy Contradicts Democracy: Russian Markets Boom Amid Political Sabotage
The political game plan laid by the Russian premier Vladimir Putin has proven effective for the past two decades. Apart from the systemic opposition, the core critics of the Kremlin are absent from the ballot. And while a competitive pretense is skilfully maintained, frontrunners like Alexei Navalny have either been incarcerated, exiled, or pushed against the metaphorical wall. All in all, United Russia is ahead in the parliamentary polls and almost certain to gain a veto-proof majority in State Duma – the Russian parliament. Surprisingly, however, the Russian economy seems unperturbed by the active political manipulation of the Kremlin. On the contrary, the Russian markets have already established their dominance in the developing world as Putin is all set to hold his reign indefinitely.
The Russian economy is forecasted to grow by 3.9% in 2021. The pandemic seems like a pained tale of history as the markets have strongly rebounded from the slump of 2020. The rising commodity prices – despite worrisome – have edged the productivity of the Russian raw material giants. The gains in ruble have gradually inched higher since January, while the current account surplus has grown by 3.9%. Clearly, the manufacturing mechanism of Moscow has turned more robust. Primarily because the industrial sector has felt little to no jitters of both domestic and international defiance. The aftermath of the arrest of Alexei Navalny wrapped up dramatically while the international community couldn’t muster any resistance beyond a handful of sanctions. The Putin regime managed to harness criticism and allegations while deftly sketching a blueprint to extend its dominance.
The ideal ‘No Uncertainty’ situation has worked wonders for the Russian Bourse and the bond market. The benchmark MOEX index (Moscow Exchange) has rallied by 23% in 2021 – the strongest performance in the emerging markets. Moreover, the fixed income premiums have dropped to record lows; Russian treasury bonds offering the best price-to-earning ratio in the emerging markets. The main reason behind such a bustling market response could be narrowed down to one factor: growing investor confidence.
According to Bloomberg’s data, the Russian Foreign Exchange reserves are at their record high of $621 billion. And while the government bonds’ returns hover at a mere 1.48%, the foreign ownership of treasury bonds has inflated above 20% for the second time this year. The investors are confident that a significant political shuffle is not on cards as Putin maintains a tight hold over Kremlin. Furthermore, investors do not perceive the United States as an active deterrent to Russia – at least in the near term. The notion was further exacerbated when the Biden administration unilaterally dropped sanctions from the Nord Stream 2 pipeline project. And while Europe and the US remain sympathetic with the Kremlin critics, large economies like Germany have clarified their economic position by striking lucrative deals amid political pressure. It is apparent that while Europe is conflicted after Brexit, even the US faces much more pressing issues in the guise of China and Afghanistan. Thus, no active international defiance has all but bolstered the Kremlin in its drive to gain foreign investments.
Another factor at work is the overly hawkish Russian Central Bank (RCB). To tame inflation – currency raging at an annual rate of 6.7% – the RCB hiked its policy rate to 6.75% from the all-time low of 4.25%. The RCB has raised its policy rate by a cumulative 250 basis points in four consecutive hikes since January which has all but attracted the investors to jump on the bandwagon. However, inflation is proving to be sturdy in the face of intermittent rate hikes. And while Russian productivity is enjoying a smooth run, failure of monetary policy tools could just as easily backfire.
While political dissent or international sanctions remain futile, inflation is the prime enemy which could detract the Russian economy. For years Russia has faced a sharp decline in living standards, and despite commendable fiscal management of the Kremlin, such a steep rise in prices is an omen of a financial crisis. Moreover, the unemployment rates have dropped to record low levels. However, the labor shortage is emerging as another facet that could plausibly ignite the wage-price spiral. Further exacerbating the threat of inflation are the $9.6 billion pre-election giveaways orchestrated by President Putin to garner more support for his United Russia party. Such a tremendous demand pressure could presumably neutralize the aggressive tightening of the monetary policy by the RCB. Thus, while President Putin sure is on a definitive path of immortality on the throne of the Kremlin, surging inflation could mark a return of uncertainty, chip away investors’ confidence: eventually putting a brake on the economic streak.
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