Pete’s blog

Just enough time to squeeze in one last weekly email for the year. A look back at some of what happened this year and a few guesses about next year.

This year has been a year of consequences – a year of straws so to speak. Time will tell if the straws are going to break camels’ backs or if lessons have been learnt.

Starting in South Africa:
- We are facing the consequences of government not listening to Eskom’s supply concerns, with ‘load-shedding’ and a potentially cold and dark winter next year. On the negative side, this means higher electricity costs (note that our electricity is currently amongst the cheapest in the world) and more load-shedding. Hopefully the government has learnt about long-term planning.
- Thabo Mbeki faced the consequences of underestimating Zuma’s popularity and his own unpopularity. The worst that could happen is that Zuma becomes state president and goes on a power-crazy Hugo Chavez rampage. But hopefully everyone instead learnt a valuable lesson about democracy and the dangers of arrogance.
- On a sad note, we are still facing the consequence of a persistently high crime rate, with Lucky Dube being the most recent high profile victim of crime. Hopefully the lesson is being learnt and our leaders stop denying that crime is a problem.

Globally the biggest issue by far is the environment. I have heard it said, but haven’t been able to confirm it, that this year has been the worst year in modern history in terms of extreme weather and natural disasters. But the scariest thing that I heard this year was that the North-West passage was ice-free, ie ships in theory don’t have to use the Panama Canal, they can sail around Canada. One scientist is predicting an ice-free arctic by 2012 (Arctic summers ice-free ‘by 2013′). This scares me. Locally, an estimated R1 billion of damage was done to our coastline by abnormally high tides – a freak occurrence or a sign of things to come? Meanwhile China continues to build 2 power stations a week and is starting to feel the consequences of all this pollution, one wonders how many Olympic athletes are going to be hospitalised with respiratory problems next year (Beijing’s Olympic Quest: Turn Smoggy Sky Blue). But one of the consequence that happened this year offers some hope. Oil has finally become a finite resource – prices have soared from $60 a barrel at the beginning of the year to $95 now, even though everyone is producing oil flat-out (even Iraq is back at pre-war production capacity). Why is this a good thing? Well unfortunately you are going to pay more to drive your car, but it finally makes environmentally friendly alternatives viable. Expect to see more solar panelling, wind turbines and other fun stuff. The further consequence of the high oil price and alternative fuel gold-rush is higher food prices. More farming is being devoted to bio-fuels making foodstuff more expensive. This could either break the back of the poor and malnourished of the world, or it could finally make farming viable in Africa and other developing countries (without waiting forever for the EU and US to drop their farming subsidies).

Economically in the world:
- China is facing the consequences of very high economic growth that is outstripping regulatory growth. The most obvious example is the Chinese product safety issues we have had this year, but I fear it covers all aspects of society. China is between a rock and a hard place – the worst possible thing that could happen is that China goes into low or negative growth, but unrestrained growth could also trigger economic collapse. The Chinese camel has an awful lot of straw on its back – will the camel be able to build enough strength to support it? On the positive side, China is on two majorly important thresholds. First its GDP per capita is approaching the magic transition amount. Above a certain GDP per capita, people start demanding certain freedoms – a free press, input into government decisions, rule of law, property rights, etc. If the Chinese government gets this transition right, it will make their economy far more robust. Getting it wrong however means a revolution. The second threshold is self-consumerism. Currently China produces mostly for foreign markets, but as its people become more wealthy they will start buying and using more of their own production. A billion people is a massive market and its growth will provide China with more economic stability.
- US banks are feeling the consequences of recklessly lending to high-risk people and believing that just because they had packaged the debt in complex structures that made everything look alright, everything was alright. A couple of billion written off, a $100 million dollar resignation deal and everything goes on. Unfortunately the poor consumers are facing the consequences of buying everything on credit and may be left with no assets and huge debts. I doubt that the banks have learnt to lend responsibly after this, and although some of the consumers might have learnt – it is hard to save when you have thousands of dollars of debt to repay.

Politically in the world:
- The US is facing the consequences of ignoring the Taleban and making friends with a nuclear-armed military dictatorship in order to pursue a war in Iraq. The instability in Pakistan and the assassination of Benazir Bhutto is going to have severe repercussions in the area. Let’s hope America has learnt that lesson and instead of going after Iran which has some degree of democracy and currently does not have nuclear weapons, they turn their attention to sorting out the Pakistani mess which they played no small part in creating.
- The US also faced the consequences of their gun-obsessed society with their worst ever mass killing at Virginia Tech – 32 people dead.
- In Venezuela, Hugh Chavez also learnt Mbeki’s lesson about arrogance and democracy, with voters finally putting a stop to his over-the-top, oil funded personal ego trip. The defeat of his constitutional amendment to make himself lifetime president showed that the Venezuelans still care about democracy.
- The UK and Australia also practiced democracy, with Tony Blair resigning and Kevin Rudd being elected over John Howard in Australia.

Iraq continues to be a site of lessons to be learnt:
- The consequences of making private security firms legally untouchable and then relying heavily on them in Iraq resulted in the persistent killing of bystanders and civilians by the Blackwater security company and others, and the resultant backlash by Iraqis.
- America had its deadliest year in Iraq with 900 soldiers being killed.
- But the locals seem to be learning their harsh lessons. Persistent, indiscriminate violence, include suicide bombers in mosques, has changed the attitudes of many. The Sunnis and the Shiites are both turning against extremists.

Lastly I am going to make some small predictions about the US elections next year – a very significant event… maybe. I reckon that although Barack Obama will have an early lead, Hillary Clinton is going to narrowly win the Democratic primary – she won’t however choose Obama as her running mate. On the Republican side Mike Huckabee is almost certainly going to be the running mate of choice, but I am not sure who their main candidate will be – John McCain maybe? Clinton will most likely be the next president. The wild card person to watch however is Michael Bloomberg – a billionaire who is calmly waiting in the sidelines. If none of the candidate start facing the real issues directly or if there is inter- or intra-party mudslinging and fighting, expect to see Bloomberg run as an independent candidate, and take a significant number of votes (probably mostly from the Republicans).

Well, happy New Year everyone. Let’s hope people learn from the consequence faced this year and that next year will be the ‘year of taking responsibility’.