In a previous animation ‘Rise of the Rest‘, we put together a series of facts that shows how emerging Asia could grow into a position of dominance in a few decades. However, since the collapse of Lehman Brothers, we’ve seen how there is no independent ‘rise of the rest’ without the west. We are all truly linked in prosperity and decline.
The Great Reset is our attempt to describe the world as it emerges from the fog of the current crisis. Specifically, we look at where and what the nature of global demand will be like. Demand is king, not supply.
Niall Ferguson’s description of Chimerica as the driving engine of the world’s economy struck a chord. One half did the spending, one half did the saving. In all fairness, it wasn’t just the US that did the spending, so did the UK, Spain and other countries now left with burst housing bubbles. Likewise, it wasn’t just China that saved and accumulated huge amounts of US dollars to lend back to the USA to further fuel the cycle of Chimerica. So did Japan, Korea, Germany and the oil producing Middle East countries. But Ferguson’s Chimerica captured the essence of the imbalances nicely.
As these imbalances unwind, the way they unwind will send the world down several possible futures which we’ve termed Wounded Beast, Chasm and Abyss. Each possible future is a mixture of resource volatility, demand and political (un)stability that demands different responses and preparations. This is not a prediction of how the world will go of course, but rather something to ask yourself or your company how should I ready myself for a post-Chimerica world?
We’ve tried to illustrate Chimerica, and the three possible futures of a post-Chimerica world, in this animation below.
Here are the slides describing the Great Reset in slightly greater detail. We’ve also written a paper that dwells in depth in each of the scenarios, but it’s meant for internal circulation only. If you like to follow the train of articles I’ve looked at, click on ‘post-crisis’ in the tag cloud to pull them up.
(Update on 9 July 2009: The June edition of ETHOS magazine carries an abridged version of the paper, see below).
I think the great reset will be the large context of how we see Singapore’s role in the world for a while. This is an ongoing project, and we’ll make updates periodically.