Multiple unchartered risks - All at the same time

The world today is going through multiple unchartered risks, all at the same time.

Finance:

1. US debt gone to unsustainable levels that multiple people have commented on the sudden fall of the US economy and the US Dollar. Ray Dalio calls it the economic heart attack. We haven't seen anything like this after world war 2 where an empire is coming down. USSR was a breakage. This is different.

2. Japan has continued the zero interest policy causing massive borrowings in Japanese Yen and conversions to USD and investments in treasuries. The increase in the Japanese interest rate would easily cause the mass selling of the USD and the treasuries to pay back the Japanese borrowings. For the first time, the Japanese central bank is at risk and a Central bank at risk has never happened before.

3. France and UK have worsening finances and are expected to go to IMF next year for debt restructuring. This is the first time, giant western economies are under so much financial stress and IMF is small to carry the load of these economies. A first again.

4. Global finance decentralisation and derisking - From Asian countries planning alternate payment mechanisms to SWIFT, multiple countries decreasing their assets of US treasuries, most countries buying physical gold, BRICS discussing a new currency, bilateral trade in some countries being done in each other's currencies. A first again.

Trade:

1. Decades of established specialisations is being turned useless with unexpected turmoil by illogical tariffs by the US Administration.

Wars:

1. No one expected a physical war in Europe when Russia attacked Ukraine. A first of its kind since world war 2. And continuing so long? That is something no one can even fathom.

2. The Israeli massacre of the starving people asking for food aid is cruelty of another era, of the bygones, or so we thought.

3. USA threatening Venezuela with war (as if we need another US based forced leadership change after so many of them)

4. 19 Russian drones in Poland shot down as on 10 Sep 2025. (Start of NATO-Russia war leading to world war 3?)

Technology:

1. AI is disrupting human work. The future of many works remains uncertain.

2. AI - singularity, where it gets smarter than millions of humans together can break human superiority and become the apex controller and the humans the slaves/ pets/ prey. Humanties' first instance of more intelligent life.

Unemployment:

1. Tariffs and geopolitical disputes (US tariffs, Bangladesh-India, Russia-Ukraine war) causing industries to rupture and unemployment to increase.

2. AI bringing more unemployment its own way

3. US cutting down departments and uncertainty of outsiders in USA by creating visa issues and even threatening green card holders.

Countries standing up:

1. India and Japan standing up to the bullying of the US

2. France being the first western country to recognise Palestine as a state

Each of the above are volatile enough to cause a cocktail of furious unexpected events to happen in multiple domains of finance and/or economic turmoil each affecting the other one and our lives in unexpected ways.

But with all these risks running simultaneously, I think the world is in the most dangerous phase I have ever witnessed in my lifetime.

Any month could be our last (in case world war 3 happens).

The long slowdown

 India is witnessing a long winded slow down in retail.

https://economictimes.indiatimes.com/industry/services/retail/retail-chains-restaurants-shut-stores-as-consumption-slows/articleshow/119054679.cms?from=mdr

This has been in the news recently after a year or so of the slowdown which the retailers have been experiencing over a year now.

Many retailers across segments, clothing, shoes, belts, vendors across India have clearly been able to witness it firsthand. A few days or weeks have seen sales as low as during those of the covid lockdowns.

The reasons however, were never clear and many attributed it to the following:

1. Hot weather to shop

2. Lack of cash as the general elections were there in 2024

But the real reason is somewhere else.

1. Saurabh Mukherjea suggests stagnant earnings, automation-driven job losses, and an ongoing economic slowdown after the covid revenge shopping.

https://economictimes.indiatimes.com/news/new-updates/income-down-debt-up-saurabh-mukherjea-gives-three-reasons-why-indias-middle-class-is-facing-a-major-crisis/articleshow/119419834.cms?from=mdr

2. Secret back door rate increases profitting the companies at the cost of the people of India.

https://www.instagram.com/reel/DHtBQHnyryO/?igsh=am4zeWwzcTd0bDBs

Maybe there are more plausible reasons.

Share yours thoughts in the comments

The fall of the US Dollar

Over the last 20 years, there has been multiple disquiets about the de-dollarisation. 

1. It has been stated that USA went to war with Iraq overthrowing Saddam Hussain and Libya overthrowing Gadaffi as these oil producers were exploring selling oil in currencies other than dollars, thereby removing USD hegemony.

2. Wars - The USA didn't do any favours for itself by constantly raising it's debt levels and printing more dollars and starting wars around the world directly like Iraq, Afghanistan or indirectly in Ukraine by expanding NATO countries continuously and then funding Ukraine. Also, funding Israel for it's war in Gaza.

3. BRICS - Over the last 10 years, the formation of the BRICS currency gained ground which would compete with the US dollar globally and almost all nations in the world trade with one or more of the BRICS countries.

The inter trade itself among BRICS countries itself is huge. Plus, the potential of Saudi Arabia, being the world's largest oil producer,  joining this alliance adds weight to the the new currency and more transactions.

4. Crypto currencies - The other counter weight underdog which has been waiting in the wings is crypto currencies. These have certain features of non-manipulation which is necessary to avoid the manipulation of countries and bring accountability to the countries.

The call of the imminent fall of the dollar is increasingly going up. The following are evidences. 

5. Big US based investors/ companies have accumulated crypto currencies. The current US administration of declaring to having a strategic crypto currency reserve. This means that it is moving away from Gold reserves to this.

6. The open talk by the current US administration of auditing fort Knox to check if the US gold is really there. This further highlights that maybe there is no actual gold there and it is a bogus trust. Adding Crypto currencies is a countermeasure to add value and trust.

7. Maybe, this in consonance with the tariff wars will bring down the value of the dollar and make it competitive enough to start manufacturing again. But, can the USA citizens afford the high cost of imports once the dollar goes down?

This would degrade the lifestyles and would become a true developing class nation which got hidden as a developed country just because of printing own money and having it's value just because it was a reserve currency and everyone traded in it.

I have been watching these signs over the years and for the last 2 years came to the conclusion that the USD would fall substantially over the next 5-10 years.

My prediction gets more substantiated when a famous investor like Ray Dalio starts ads on instagram on a book on the fall of nations indirectly or directly talks about the USA.

Update 4 Apr 2025: BlackRock CEO Larry Fink has joined the chorus of voices warning that the U.S. dollar's reserve currency status is at risk. Unlike most, however, he has gone one step further to suggest a likely replacement: Bitcoin.

Sports as a stimulus

Considering the amount of money that is being spent on the common wealth games to be held in New Delhi , India and the amount of business the Indian Premier League (IPL) is doing, I think the governments can definitely consider putting some money into sports during recession as part of the stimulus package. The multiplier effect of this is enormous: More drinks, eateries, logistics, advertisements, merchandise,etc.

In fact, IPL 3 is expected to have revenues of $1billion or Rs.4,600 crore for a period of just 45 days.

http://timesofindia.indiatimes.com/iplarticleshow/5718982.cms

Destroy the pyramids

Well, it is time we destroy the pyramids and start constructing apartments/flats. If we are to remove the widening rich-poor divide, the government will have to make some new policies and rules to discourage the people at the bottom of the pyramid to stop growing and simultaneously make them jump to the highest level. So how is it possible?

I have a probable solution. Yes, it is a little radical but here is a solution.

Make it compulsory for the rich to have/raise atleast 3 kids. If the family has one or two biological kids of their own, then they should adopt two or one kid respectively of their choice from the thousands of orphanage kids in the country and the adopted should have the same right as any other kid in the house and should also have the adopting parents' surname and religion. If they already have 3 kids, then they should adopt atleast one more. Such rules will make the following things possible:
1. There is a real chance for the poorest of the poor to come up in life if they are adopted.
2. The caste discrimination between the higher rich castes and the lower poor castes will come down drastically.
3. Parents who have always wanted either a boy or a girl but couldn't conceive one will have their wish come true.
4. The rich will be forced to have their riches divided between more children. So the average wealth of the richest will fall a lot bridging the rich-poor gap.

On the other end of the spectrum, the people at the bottom of the pyramid should be punished in some way for having more than two kids. Their selfishness to have more kids is putting more strain on the society and making the society as a whole poorer and creating excesses following the invisible leg theory
http://ajitjagan.blogspot.com/2009/09/invisible-leg.html

Till now, people are only avoiding to solve the real issues and problems and trying only to solve the symptoms of the problem. How else can people keep giving ideas of how to keep the people going up the pyramid structure while continuing to have the pyramid in the first place? Why not realise that the pyramid structure of society is not the most efficient and worthwhile of structures? I think the apartment structure is better. There is also a fair chance in the apartment structure that the non-performing may come down by a level and someone may have a better chance to go up.

The case of Perpetual Growth

Most of the problems of mankind today can be reduced to the simple economic concept of 'supply & demand'. Unlike other things in this world, where prices rise in case of excess demand and prices fall in case of excess supply, people excesses can neither be reduced in a short period of time nor can be raised fastly. The concept of continuous growth at all times puzzles me. Yes, to continuously improve the quality of life of the people, there needs to be growth. At some point in time in earlier decades when human population was less, there was a need for more people as most work was manual. But as of now, things have changed. I believe we have excess people in this world, far more than that required to improve mankind as machines help do the same tasks efficiently and faster. This excess has now caused a deterioration in the lives of humankind. The concept of growth has unfortunately moved from qualitative growth to quantitative growth.

There is only one country that has truly understood the effects of excesses of human population and that country is China. Over the last few decades, the one child norm has reduced the population of the country and it will continue to. China has realised that excess population is a drag on the economy. It also realises that in the globalised world, any work it wants can be done by outsourcing it. 

A farewell to Victory

 knoA beautiful article on the trends of how the definition of victory in wars has changed over time. Gives pros and cons of different victory methods and specific examples from around the world and what happened where and how.

An 8 page excellent brief of almost all the wars that mattered and matter.

http://www.newsweek.com/id/229869/page/1

People's priority indicator

Well, I was at it again. I went to google and typed "how to" and back came the response.

Two months ago, "how to write a resume", was the first in the list as mentioned here previously.

http://ajitjagan.blogspot.com/2009/07/understanding-economys-priorities.html

I guess people are back to wanting to make babies again.

Now that I am searching this pretty regularly, I am thinking of a fancy name I can give to this indicator. I can then report the monthly state of affairs and can observe the lastest trends in people's priorities. It may give some clue as to what people are upto these days.

Thinking it cross sectionally, maybe it can work as a crude indicator to predict the number of children born in the next year or so.

Having some hopes that one day, this will be refered to something like the long skirt theory, the leading lipstick indicator.

@readers: please suggest an appropriate/wacky name with/without including my name in the indicator :)

p.s: The search is for google.co.in..... You may get different results if you are in another domain/country.

Understanding economy's priorities

Well, here is one crude method to understand the people's priorties in various times(e.g. now in recession and a couple of years before).

Story: Today, I opened google search with auto fill option on and typed in "how to " and found something that really caught my eye. Right at the top was "how to write a resume".

The prelude: 2 years ago, I went to google search with auto fill option on and typed "how to" and found "how to get pregnant" as the number one option.

Well, things have changed and today "how to get pregnant" is at 9th position.

Shows peoples' priorities, I guess!

Marc Faber's comments

Marc Faber’s comment on the US economy: September 11, 2008 The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I’ve been doing my part.

Financial glut

The summarised Raghuram report on the Indian Financial reforms:

http://www.imf.org/external/pubs/ft/fandd/2008/09/prasad.htm

A description of the roles and functions of the Reserve Bank of India:

http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=396

I can gift you a Billion dollars, but would you then be happy?

http://www.portfolio.com/slideshows/2008/3/Worlds-Most-Worthless-Money?TID=advert/wired/worthless_money

And note the expiration date.

http://www.news.com.au/story/0,23599,23704105-38195,00.html