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Henry Thornton - SMERSH: A discussion of economic, social and political issues Megatrends and Megashocks, #2 Date 30/05/2010
Member rating 4.5/5
The Henry Thornton Writers Group - including PD Jonson, Mike Davis and Nick Raffan - have engaged in some 'foresighting'.
We are surprised at the pessimism of our conclusions, but young people we have consulted have been unable to provide a different picture.
Now we solicit comment - contact address is provided at the end of this article.
Short and punchy is preferred to long and ponderous, but long and full of insight is welcome and will be published after a lag as we attend to our day jobs.
By Henry Thornton Writers Group Email / Print


1. The rise and urbanisation of China.  Recent trends continue, with China becoming the world’s largest economy (in absolute terms) by 2050 (this assumes the US grows at 4% and China at 10%) and the world’s richest (in per capita terms) by 2060. (USA income per capita growing at 2.9% and China’s growing at 8%).  China will become a dominant global superpower.

China had invented steel ball bearings by 2nd Century BC, to make these it had to have blast furnaces which it did, in 3rd Century BC. In terms of a timeline, China led the world in too many inventions to name. Internal squabbles and Communism delayed China’s bloom that is now on show in Shanghai for the next six months at a reported cost of US$50 billion – gosh China could have bailed out Greece instead.

The Chinese have demonstrated the art of business for a couple of thousand years and must chuckle at the gross inept financial management in the West. With the USA, UK and most of Europe bust and heading for administration, China and India are left carry the bag and its full of money – in fact they are heading down the path to own us all.

Implications: 5-6 years ago one of us told a pompous UK corporate guy from an old English firm of stockbrokers that is no longer with us, that the world financial centre would gravitate to the Bund in Shanghai, where some might argue where it used to be anyway. The Pom nearly fell off his bar stool – and where are we today?

Whether we all like it or not, the western world of finance is going to dance to a different tune. It is not going to be bagpipes in Edinburgh or a fiddle in New York or Boston, or an oompha band at the German Beer Festival. It’s going to be to an Erhu, or perhaps a Banhu, or a Ruan and a Guan, traditional Chinese instruments that can be heard walking along the Bund, and very pleasant they are to listen to as well.

Having flooded the world with borrowed dollars from China the final trick for the West will be to remove the liquidity without triggering the mother of all downturns. We have to pay for our saviour and it might not be pleasant experience for most of us.

2. The American economy continues to decline over time as ever more jobs and industries are allowed to die because they can be replaced, temporarily, by imports. The decline cannot be halted because ever more Americans drop out from the political process and just give up caring.

Implications: The USA reverts to its traditional isolationist position, which enables it to improve its budgetary position and strengthen its ability to defend itself, invest in less polluting energy sources and the health of its peoples.  The new focus of the USA government and the largest global mining companies will be on winning the race to exploit prospective planets and asteroids as new sources of high value resources.

America’s allies, including Australia, will be ‘on their own’ strategically, with immense consequences for their ability to remain independent without immense focus on defence, at great cost to budgets and their ability to invest in areas such as health, education and infrastructure.  The increased spending on defence will also limit spending on social welfare.  The cost of remaining independent may include adopting a more selfish, tough, market oriented society.

3. The world’s population becomes older, better educated and, with notable exceptions, more prosperous.  These are the trends, which depend on continued free trade and the absence of severe adverse shocks.

Implications: There will be new pressures on government and private budgets as older people transition from paid work to leisure or unpaid work, fall ill and require expensive, but technically feasible, treatments.

Birth rates will drop and in some countries or regions – especially Japan and Europe – there will be unused and potentially decaying infrastructure.  This will provide vast opportunities for people to move to underpopulated countries or regions, but such movement will at best create serious new ethnic or cultural conflict.

4.  A world of expensive oil, raw materials, food, clean water and tension between important cultural and ethnic groups becomes far harder to manage. 

Democracy will come under pressure because of China’s economic and military success, because of the massive complexity of so many problems and in particular because so many democratic nations have huge debts which limit the freedom of their governments to act.

The Internet will become increasingly important, and also subject to various forms of sabotage. Internet censorship by western governments will proceed despite huge opposition from the voters. Giant bureaucracies will rise to administer the censorship which is nevertheless constantly broken by ever younger school children who are too clever for lumbering bureaucrats.

Implications: More and more decisions are made by firms, which are inherently undemocratic entities and focussed on profits ahead of customers, workers or the environment.

Governments will lose power relative to their peoples and to agile businesses and indeed criminals. Standard regulatory agencies will become less effective, and globalisation will receive a growing impetus – ‘we ain’t seen anything yet’.  Young, internet savvy people will gradually gain the ascendency in business and society in general.

The decline of the power of western governments, and perhaps also powers of totalitarian governments, will make transactions, especially transactions in cyberspace, both more frequent and far harder to prohibit. Effectively, cyberspace will become the new Wild West, with ‘let the buyer beware’ as its mantra.

The world will become a tougher, more competitive and environmentally less pleasant place.  Wealthy people will retreat to personal cocoons protected by elaborate and costly security arrangements' others will take their chances in 'free zones'.

 (4a)  Environmentalism suffers a massive loss of credibility as the 'sky is falling' approach of so many environmental causes is seen by the broad mass of people to be simply not happening. Apocalyptic environmentalism is replaced with concern for sensible use of resources and general cleanliness of the society and environment.

Implications: Depends on whether or not current mainstream concern for drastic environmental damage is correct or not. If the climate skeptics are right all will be well with current ‘business as usual’.

If the climate worriers are correct, we shall all be struggling to adapt.  Some regions will become more productive, some far less so, and there will be many, many millions of environmental refugees. This will surely present massive challenges for Australia in particular.

(4b) Developing energy crisis causes disruption. 

Looking ahead, there is no absolute shortage of oil. However, it seems highly unlikely that other sources, like oil shale and tar sand will meet demand fast enough to stop the oil price soaring. Lithium batteries and gas are possibilities but the rate of penetration will be slow.

Implications: Soaring energy prices will adversely affect all people and will throw many governments into disarray. Energy producing nations, like Australia, will become far richer, but at a cost to their non-energy producing sectors – see section on the two-speed economy below. Superpowers who are energy importers may decide it is cheaper to subjugate energy producing nations than pay the market prices

(4c) International food supplies begin to be a problem. Countries which can feed themselves start worrying about the future and sales of food on the open market decline as the powerful nations and companies start to lock in food supplies for themselves by use of deals and threats. Small scale crises and wars erupt over the issue.

Implications: Food prices will rocket up and many poor people suffer hunger and disease.

Food producing nations need to protect their productive capacities, including water, disease free herds and crops and markets. Spending on defence needs to be greatly increased, especially if America reverts to isolation, as already discussed.

Objection to genetically modified organisms (GMOs) will fade as the realisation dawns that this is the only way to feed 9 billion people.  (Similar developments may help solve health problems – EG spare parts grown in genetically modified animals.)

5. Increased emphasis on new technologies put to work – ‘innovation’. Already there is massive investment to discover and bring to market (or keep secret within government) new technologies in the USA, China and progressive smaller developed nations.

Implications: In many areas there will be a race to develop technologies to solve problems caused by environmental degradation, increasingly expensive raw materials, food, clean water and energy.

Savvy technologists will become more highly respected and remunerated.  Nations whose budgetary problems or culture puts a low value on innovation will fall behind in standard of living and ability to defend themselves.

Australia should be better able to afford an innovative culture than most, but its culture needs to change to be far more welcoming of technically based innovation if it is to compete in the most important race of all.  Currently, Australia's main political parties just do not get this point.

 6. A two-speed global economy in crisis.

The world is currently a two-speed economy, with China and other ‘developing’ nations growing rapidly and most of the ‘developed’ nations struggling. (Australia sits in between these two groups as the fastest growing rich nation.)

Implications: To some extent this is natural, as less developed nations can learn from and emulate current leaders.  But, as we see now, vast parts of the world growing at different rates and with different cultures creates ‘imbalances’. The chief cultural difference is that developed nations have become very consumerist in orientation, with lifestyles based on consuming ahead of the ability to earn, a lifestyle funded by debt ultimately and increasingly owned by the developing nations that still save and invest a large proportion of their (far lower) incomes.

It is a great historical irony that communist China is capitalist America’s banker!  How this major imbalance plays out is impossible to predict, but common sense suggests the Americans need to save more and the Chinese need to save less, but with current technologies the global environment will be under great strain as Chinese consumption rises.

6.1. Implication for Australia: Australia is a classic ‘two-speed’ economy.  It is one of few countries raising interest rates that are in effect waging war against small businesses, most of which have no direct connection to what is happening in the great mining provinces in the Pilbara or in the NSW and QLD coalfields.

Rising interest rates are pushing up the Australian dollar, which in turn is driving up imports and decimating many small exporters outside the resource sector. Without far wiser economic management than currently on offer, Australia's two-speed economy is likely to end in a disaster that will lead to widespread job losses and business failures as interest rates and the Australian dollar rise. 

The big spending Labor Government is out of control. From this Writers Group perspective what more could we have rightly expected from a bunch of politicians and bureaucrats most of whom seem to have strong socialist tendencies and almost no experience of business or technology?

Perhaps it does not really matter because there are not enough folk with the desire or skills to work in the plus 45 degree temperatures of the Pilbara. And anyway, we should not be selling off the farm like we are. Treasury Secretary Dr Ken Henry – keen advocate of a ‘Resource rent tax’ - is clearly willing to kill the goose that lays the golden eggs.

This Writers Group reckons that the people of Australia should be allowed to vote on a strategy for and ownership of Australia's resources. The mega trend of selling off our mega resources will impact generations of Aussies to come. This suggests the need for the development of a "set in stone" policy, voted on by all Australians at a referendum.

The brings us to the question of how much of our mineral heritage are we willing to sell and over what timeframe.

6.2.  Legislated ownership of Australian resource projects with clearly defined caps on project equity and ownership of Australian public companies.

Over the past decade the mineral industry has witnessed big corporate changes, In Australia Rio Tinto acquired North Limited and Ashton Mining. BHP acquired WMC and merged with Billiton. Xstrata took MIM Holdings for a song and in recent times overseas energy companies have preyed on coal seam gas/LNG projects around Gladstone in QLD.

There have also been many takeovers and mergers in North America. Helping to offset global consolidation in the resource sector new companies have sprouted including ENRC, Kazakhmys and Vedanta.

If we look at a collection of the less than 20 major resources houses accounting for probably over 80% of output as a forest, the forest is growing and is strengthening every day. Fertiliser is being provided by China, Brazil, India, South Korea, Poland and Russia, etc. The forest is benefiting from the “demon of compound growth”, something that many pundits don’t seem to grasp the implications of. When you start from big numbers like the seaborne trade in thermal coal, small annual increases in demand, of say of 3-4%, translate into big tonnages in terms of annual increases.

The forest can’t keep growing apace because it will run out of land and probably water, but the demands for fruits from the forest are going rise relentlessly. Nations will end up quarrelling over the forest to get to the fruit. Some (like Australia's Treasury) would like to apply some defoliant, but that would reduce the amount of fruit and increase demand.

Again, this logic leads us to a clear conclusion that we must be ready either to roll over or fight to defend our part of the forest.

1.  Islam is suddenly hugely resisted in Europe. Governments get elected on the basis of removing Muslims from Europe.

The Muslims began to come to Europe after the Second World War in response to the serious manpower crisis that existed there due to the losses of the war. They came principally from the French North African Empire. They were well attuned to European life and many of them spoke some form of rudimentary French. The Germans brought in Turks.

There were no problems with these groups until the 1970s. The immense increases in the price of oil suddenly flooded the backward Muslim oil countries with dangerously large amounts of money. Much of this went to Islamic organizations.

At the same time the western Left was engaged in its 'long march' through the institutions of state and society in all the European countries. The cultural Left advanced the notion of 'multiculturalism' and 'cultural equivalence'. These notions were directly used to undermine the traditional nation state. this undermining of the European nation state was connected with soviet policy toward Europe.

The aim of the Western Left has always been to be the 'bridesmaid' to the Soviet policy of excluding America from Europe and then steadily reducing Europe to being a Soviet satellite. All this collapsed in the late 1980s under pressure from the intransigent anti-soviet policies of Reagan/Thatcher/PopeJohnPaul II. These policies hastened the financial crisis of the USSR. The failures of socialism finally became too much to bear and the Soviet Union collapsed. the Russian Duma voted to destroy the Soviet Union on Stalin's birthday ... December 21 1991.

 This turn of events left the European cultural and political Left stranded. They were deeply engaged in attacking the traditional west on behalf of Socialism, that Wave of the Future, when it all fell over. Never ones to be fazed by realities the cultural Left then threw themselves like Sinatra 'bobby soxers' onto the cause of Muslims in Europe.

The smashing of Saddam Hussein's invasion of Kuwait and the subsequent American sojourn in Iraq in the early 1990s caused a wave of revulsion among the European Left as they were forced to look at another victory for America and the West. It also gave them their opportunity. They grasped it with both hands.

From the 1990s the Muslim communities in Europe have become very substantially captive to the well financed and uber-tough Wahhabbi operatives of the 'Islamintern', which is run from Egypt and Arabia. The aim of this group is the same as that of the defunct Soviet Union ... conquest of Europe. The Left had found a home!

In the avalanche of Leftist support that fell into the Wahhabbis laps in the early 1990s: leftist women instantly abandoned their feminism in relation to misogynist Islam with indecent haste; militant Leftist atheists sobbed lyrical about the 'religion of peace', Islam; searing Leftist social critics in Europe fell mute as bricks when faced with Islamic public hangings, decapitations, floggings; trenchant enemies of that 'bourgeois cesspit', marriage sang hosannas to the stability of Muslim married lives and defended polygamy; anti-semites wept with joy as they rushed out from under their rocks to nail themselves to the cross of the Palestinians and  attack, defame, abuse and lie about Israel (aka Jooooooos).

In the face of all this the governments of Europe, riddled with newly faithless non-Christian politicians and public servants, decided that Europe now had to accept that the culture of the Muslims was equal to the culture of the West and therefore the European countries had to 'Islamify' at least to some degree. It hasn't stopped.

All this was done in the face of a mute and inattentive European population whose standard of living was steadily rising. With this improved situation the Europeans went to the beach for 20 years.

In those two decades since 1990 the Islamintern has made great strides. One only has to visit Europe and see, from a distance, the Islamic 'no go' areas in most European countries to realize how effective the work has been over the past 20 years. The only country where these areas do not exist is Germany.

(Germans have a reputation for dealing with minority groups which over-reach themselves in the view of the Germans.)

 Comes 2010. 

 Implications: The reaction has begun to set in. Fist fights in the streets over the burka have now been reported in Europe; minarets have been banned in Switzerland; some politicians are making headway in the polls with a strident anti-islam pitch. The Left is frantically throwing down the 'racist' card but no-one is picking it up any more. The key moment in this whole drama will occur in June. The Dutch go to the polls. Indications are that Geert Wilders will emerge as Prime Minister of Holland. This result will determine a great deal.

A Wilders Government would likely put a referendum to the Dutch people which will encapsulate all the problems which stem from Muslims in Europe. In the end, the compromise will allow those Muslims who have actually integrated to stay but will drive out the unassimilated. This is a right and proper result.

Mitigation: Deal with our own problem of immigrant fifth columnists or whatever ethnic or cultural background.  Here are some relevant suggestions.

2.  China invades Taiwan and America does nothing to stop it.

The settlement deal requires the USA to essentially disengage from Asia, North and South, leaving China as hegemon.

The presence in Asia of the United States is a central pillar of US foreign policy and its standing in the world. The two cores of this policy are the US guarantee for Japan and the guarantee for Taiwan. These guarantees were given in the early 1950s in the face of the victory of Communism in China by Mao over the American candidate for dictator of China, Chiang Kai Shek. The guarantee to Japan was in exchange for no Japanese re-armament after the defeat of Japan in 1945.

The world sixty years later is very different.

America is a deeply wounded economic entity ... all debt /no savings. This is the serious version of the Texas designation of someone who is a fraud ... all hat, no cattle. China is now dramatically awash with money and steadily producing a blue water fleet.

The 'return' of Taiwan to the embrace of the Beijing administration is a central plank in China's polity. Every nation with diplomatic relations with China has to affirm the 'one China' policy. 

China may use the Taiwan issue as a trial run against America; it being a central element of Chinese policy to remove America from its position in Asia. It is feasible for the Beijing administration to decide to send an expeditionary force (an Armada) to Taiwan and proclaim it to be an 'internal Chinese matter' ... a simple matter of moving Chinese troops from one part of China to another!

 The US would be faced with confronting this armada in the straits of Taiwan. The US Seventh Fleet is stationed there so the US has the firepower to do this. As the Chinese 'internal troop disposition' was slowly sailing across the rather wide straits the world would be in a state of major nervous collapse. Chinese generals in Beijing would be shouting about nuclear war (all according to a well scripted performance, naturally) and the American government would be drowned by a tsunami of hostility on the American blogosphere and internet. This major weapon did not exist in 1950.

As the Chinese would coincide this exercise with some serious wounding of the American government due to another extraneous crisis having nothing to do with China, the US would be torn between two fires. Given the quality of brainpower now residing on the Potomac the Chinese could expect to be confronted with a frozen American government.

 Meanwhile the 'internal troop disposition' would be still sailing slowly toward Taiwan.

 In Taiwan there would be an immediate division between the 'independence people' and the 'we're all Chinese people'. There would be riots. These riots would help convince American public opinion that the Taiwanese 'don't know what they want'.

The armada keeps sailing on.

The commanders on the Seventh Fleet would be, at this stage, at the yelling point trying to get some clear orders from a frozen Washington. Chinese involvement would be pushing to aggrevate the 'other crisis' that would be imapacting on Washington ( ... some internal corruption matter or the Iranians, on Chinese orders, firing a dud missile at Israel which the Israelis were able to shoot down over the Iraqi desert.) This 'other crisis' would be a serious distraction while the armada sailed slowly to that point in the straits where the crisis reached its apogee.

At this point, the 'we're all Chinese people' crowd would win the day in Taiwan due to the emotion of not firing on 'brothers from China'. Chinese TV from the mainland would be beaming 24/7 horrifying films from the Chinese civil war of the 1930s and 40s. The rich Taiwanese would start leaving the island for their prepared boltholes in the West.

Implications: Opponents in Congress to any American involvement would begin to move for the repeal of the 'Taiwan Defence Act'. It would fail to pass by a vote of, say, 225 to 210. The US administration would see the vote and cave in.

The armada would arrive in Taiwan and the evening news in the USA would show Chinese and Taiwanese soldiers hugging and kissing each other in floods of tears. The world would be mightily relieved.

The Australian media would report the arrival of the Chinese armada at Taiwan on page four, generally. Our press would still be reporting the ongoing crisis with the gay life of the member for Bullamakanka. His shocked wife would be interviewed that night on the 7.30 Report.

Due to total inattention to Taiwan on the part of the Australian government over fifty years, the Taiwanese business class fleeing the arrival of communism in Taiwan would not come to Australia. They and the 500 billion dollars of their wealth would go to Europe. In Canberra Prime Minister Someone or Other would say something or other in the House. The House would rise for lunch. The Japanese government would fall.

Mitigation. Allocate more money to building up a powerful defence force so we can fend off boarders.
3.  Karakatoa explodes and 10 million people start to flee south to Australia. The world tells Australia to take them in.

We live in a physical world. This has been brought home to us recently by the Iceland volcano which has casually done about 25 billion dollars of damage and the current and apparently unstoppable oil leak in the Gulf of Mexico. Over these forces we have minimal, if any power.
In our region in the strait between Sumatra and Java and opposite our most important economic area is the super volcano, Krakatoa. It has exploded once before in the late 19th century. It's explosive force was felt in South Africa. It is not an extinct volcano.
Should this monster of nature explode again it would essentially shake apart the Indonesian (Javanese) Empire. Those affected would be numbered in the millions, dead, injured and displaced. The government in Jakarta would be paralysed with inaction as they were with the Boxing Day Tsunami.
This is a certainty. An equal certainty would be the immediate response of the proclamation by the Australian government that they are about to rush in, push aside the local help efforts (miserable and unco-ordinated as they will be) and actively proclaim our own moral virtue by giving orders and treating the locals like children. The money we send for assistance would also be stolen in Jakarta as happened with the Tsunami billions in donations.
The cry would immediately arise in Australia: 'take them in'!!
The confused response would be: 'maybe we should'.
We should not.
It is goes without saying that there would be no plan in Canberra for dealing with a scenario like this beyond the Left cultural demand for moral grandstanding. Here is what could happen:
The explosion occurs after 5 weeks of rumblings and minor blow ups. There is one story in that five week period about the matter in the Australian press. The leaders in Jakarta, raised on the idea of 'insha'allah' (Allah willing) make no move to assess the situation with a view to moving people away to safety. Where would million of people go? This central question is unanswerable in Jakarta.
The volcano goes off at 6.22am. The sound is heard in Sydney. The 'Sunrise' early morning TV program interrupts its interview with the daughter of a gay MP to tell us what has happened. They return to their interview.
By midday the wave has destroyed dozens of vessels in the Straits of Malacca and water levels in Singapore have risen 12 feet. The government of Singapore immediately moves to act on its disaster plan. Australian High Commission staff in Singapore are astonished that everyone in Singapore seems to know what to do in the crisis, despite half the windows in Singapore being shattered by the blast wave. Another wave has set out across the Indian Ocean toward Africa and the North West coast of Australia.
The government of Western Australia, led by a young and dynamic Labor Premier, tries to get someone in Canberra to move beyond fascinated interest in the event to actually do something. As there is no disaster plan the Premier is told to 'hold on, and we'll see what happens'. The Premier slams down the phone muttering in an obscure foreign language. The Western Australian government issues a general alert for the Western Australian coast and people start moving back. The Commonwealth Attorney General in Canberra makes some public noises about the legality of this Western Australian public alert. The media start interviewing lawyers in Sydney about the legalities involved.
By the end of the week about 1.5 billion tonnes of material has been thrown into the atmosphere. Much of it drifts toward Australia and over Asia. Indian scientists announce that the monsoon for that year will fail, causing the complete failure of at least two of the next year's crops of every sort in all of Asia. Panic buying in China leads to the declaration of martial law in that country and numerous riots are suppressed with shootings.
The imams of Australia put out a fatwa blaming the explosion on the wearing of short sleeves by Australian women, an act which is 'offensive to Allah'. Three-quarters of a page of Koranic references are supplied in support of the fatwa. A Sydney Morning Herald editorial analyses the fatwa and finds 'some interesting points'. The Green's Senators add that they can 'understand' the concerns of the imams.
People smugglers leap into action and start selling trips to Australia. The numbers involved at the end of the second week are uncountable. It is all done in public with people smugglers appearing on TV to proclaim that 'Australia will have to take these people'. Anti-Australian politicians in Jakarta take the opportunity to empty out the jails and mental asylums on the island of Java and get the inmates onto the boats heading for Australia.
Channel 7 does an in depth three-part investigation of gay refugees being held on Christmas Island. The Defence Department continues its very strong efforts to get some soldiers and equipment from the east coast over to the Western Australian coast. Logistic problems and jurisdictional matters hamper the effort but they keep trying. Lawyers are seen working until midnight.
Implications: The wave has hit the coastal mining infrastructure by this point. Damage is very severe and several ore carriers are broken in half by the wild waters.
The Immigration Department, Australian Customs and the Australian Federal Police all express their surprise that so many boats have been able to be found by people smugglers. The meaning of a country with 3000+ islands slowly dawns on these officials. A report on this matter is ordered by the Immigration Department.
The first wave of people from the affected area hits the Australian coastline. Half of Australia bursts into tears and the media calls for compassion. Channel 7 interviews Sumatran gays. The imams of Australia rub their hands in glee and praise allah. Naval officers at Garden Island in Sydney confidently tell the media that the Navy will 'soon be in Western Australia'.

More generally, global transport of people and high values goods is greatly disrupted.  Crops are damaged, exacerbating food shortages, leading to food price inflation, food riots, mass starvation, war and famine.

Mitigation: Introduce industrial policies to restore some basic self-sufficiency to the Australian economy. Allocate more money to building up a powerful defence force so we can fend off boarders.

4.  Nuclear war occurs between Israel and Iran. Iran loses multi millions of people in an exchange which leaves Israel largely untouched. Sunni Muslims pleased with the crushing of Shia Iran.

Implications: Tension between Iran and Israel is one of the highest risk political pressure point in the world today. The Persians invented chess and the Iranians/Persians fancy themselves the smartest people on earth. Their self confidence is truly remarkable, given their derisory track record over the last few centuries.
The self confidence of the Iranians could lead them to think that they are more in control of a situation than is actually the case. The hubris which infects them also makes it virtually impossible to warn/advise them. In this situation the glaring problem is a misstep.
The Israelis are also not shy when it comes to self regard. However, they at least can point to a string of achievements that Jews have racked up since, say, 1789. 168 Nobel Prizes is an item that springs readily to mind; 60 years of military victories over Muslim armies is another item. The main item in Israel's favor in this fraught situation is the large secular minded and modern educated number of Jews. The government of Israel is in the hands of this group. The military of Israel is entirely in the hands of this group. In Iran/Persia it appears that the Shi'ite religious leadership is in control (both politically and militarily) ... and with this control comes all sorts of obscure but centrally important theological considerations.
Due to this fact (of secular and scientific Jewish control, not religious) it is extremely unlikely that it will be Israel that miscalculates if there is a miscalculation. Of course, the Iranians/Persians may be simply playing chess; making moves to get themselves into a position from which to dominate the board (the wider middle east). From this better position (which the possession of 'nuclear weapons' would give them) they can play the side politics of Shi'ite versus Sunni Islam. This is the 'game' that really thrills them.
The only certainty we would proclaim in this matter is this: President Achmadinejad is not in charge. He is a figurehead who serves the purpose of the real group running the country. Does Israel know what that purpose is? Unanswerable from outside the Kyria, the Israeli military Headquarters.

Mitigation: Prepare for the worst.
5.  The European Union and the financial Euro suddenly collapse as Germany and several smaller members suddenly announce their resignation.

Implications: A financial crisis in Spain brings about a wave of rebellion in Germany, Holland and Denmark against the endless draining of their financial reserves for countries which won't adopt serious economic and social policies to get their houses in order.

The EU is the latest European idea that seeks to combine the peoples, nations and tribes of the European peninsula into one big political entity. (Peninsula? Draw a line from Helsinki to Odessa.) Rome did it first and somewhat effectively. However, after the fall of the West (for convenience we choose 410 AD) the fragmentation of Europe began. This wonderful fragmentation created the brilliance that enabled Europe to invent (very substantially, although not entirely) the world we have today. The brilliance of China in these centuries was locked up entirely in China due to their ineradicable racism and superiority complex - two problems they still have today, incidentally.
The current EU (after attempts by Charlemagne and Napoleon) is a warmed over version of Hitler's idea for a German Reich encompassing all of Europe; German hegemony for most of it and direct rule for the rest. The aim of the EU after the most welcome defeat of the Third Reich in 1945 was to prevent a Fourth Reich. The horrors of WW2 were, and are, unendurable morally and socially. In the 1950s anything seemed better than what the European nations, peoples and tribes had lived through in the previous twenty years. However, the EU has failed in its essence.
Nations and Empires are held together not by armies and secret policemen but by the sentiments of their people. The people 'see' themselves and 'feel' themselves belonging to a nation. The EU has not engendered among the 500 million Europeans this seeing and feeling about Europe. Trivial numbers will identify themselves as 'Europeans' rather than French/English/Italian/etc.
The currency common in a country is more than a financial tool. It is a daily 'glue' that serves a psychological function. People 'trust' their own currency issued by their own government and written in their own language and honouring their own heroes ... or not, if the currency is weak.

The Euro is unloved because no-one owns it. It is just there. The corollary to this is it can also just go away.
Implications: This crisis with Greece is the death knell of the Euro because the 'bailout' will fail. The bludger nations will have to 'cop it sweet' and take big drops in their local standards of living. In the end the bailout fund is a hopeless act of faith by EU fanatics desperate to save their ideological world (and their life's work). It is only there to save the EU. That won't work either.
Germany has paid for all this over the past 50 odd years because they have been effectively browbeaten over the events of WW2. Those days of brow beating are now coming to an end. Not the actually brow beating itself, but its effectiveness on the coming German generations. Germans today are now discussing Hitler and co. in calm and unemotional terms ... treating it as the historical matter that it is. The 'mea culpas' are fading away like the Cheshire cat. With this fading will come the closing of the German wallet.
What will happen to the EU is similar to what happened to the Soviet Union. It expired after 75 years of murder, horror and drudgery with a whimper, not a bang. The EU will suffer a similar fate. The Germans will simply wake up one morning (not far off) and say: basta! enough! They will then withdraw from the EU and force its collapse and reduction back to the European Common Market.
This will involve dropping all the bludger nations who will go back to the low standards of living they had before they were able to get the Germans to pay for their higher standards of living. The situation may get so serious that some of these countries may even start to learn how to work properly. The first thing they will do is re-issue their own currencies
Germany will dominate this ECM because the Germans know how to work. It is as simple as that. They will re-issue the Deutsch Mark and a dozen European nations will link their own currencies to the DM. The German economists from 1933-45 will smile from their graves.

Mitigation: Nothing to be done as forces now unleashed will very likely bring an end to the Eurozone concept.
6. The UN passes a resolution requiring Australia to give up 5 million of the continent's 7.7 million square kilometres to countries in South East Asia so they can move their excess populations to more spacious areas.

We live in a world where. unfortunately, everyone minds everyone else's business. In international politics this amounts to real concern about poverty and the grinding dislocations that this causes. Due to environmental matters (both real and imagined) vast numbers of people are facing actual problems of hunger and work. Australia has the historical burden of living in a very crowded region when we are empty and a region where mouths to be fed are growing relentlessly when we produce food for 100 million (more if we needed to.)
The real world is also dominated by groups ... groups based on religious community, groups based on racial considerations, groups based on historical grievance, groups based on political ambitions. To be effective (and secure) a nation has to be smart enough to belong to as many of these groups as possible. Herein lies the root of Australia's problem ... we are not the same as our neighbours in any of the major associative group gatherings. The world is now organised within the framework of the United Nations where these groupings exercise their powers quite ruthlessly. Membership of the UN is, effectively, compulsory and its edicts ('Resolutions') are increasingly more powerful in their coercive effectiveness.
The United Nations has the internationally accepted power to draw boundaries on world maps. It has done so since 1918. The 'father' of the UN, the League of Nations was an heroic drawer of unhappy boundaries, most of which materially contributed to the outbreak of the Second World War. From Australia's perspective this map drawing facility has been in our favour: we received Papua New Guinea from the League in 1919. It is perfectly feasible for Australia to be subjected to another exercise of UN map drawing.

Implications: A UN which turned its toxic attention to the economic/environmental/social crises among our neighbours in the South Pacific and South East Asia will see Australia as a feasible solution to many of these problems. This hasn't happened yet because map alterations always have a long gestation period and all crises need to mature.
One of the 'bad luck' aspects of world map alterations is that they only apply to the weak. For example, the UN will not see the solution to any Mexican problem as involving altering the borders of the USA. This is for obvious reasons. This same application of 'realpolitik' will not apply to Australia because Australia is weak. We have chosen to be weak.  If not remedied quickly, this will turn out to be our central historical mistake, as a nation.
It would solve a great many problems if the UN took 5 million square kilometres from Australia and divided it up among indigent groups from our regions to the north and east of us, and left us with the remaining 2.7 million square kilometres. This would be a super serious shock to us, somewhat like a 14 year old girl getting raped. But, like the young girl, what could we do to stop it?
In such circumstances the main international players in the world would all have to agree to the step to be taken. Who among these countries would stand implacably firm on our side and oppose this? How could we resist alone?

This matter is never discussed in Australia. It is probably not widely discussed in our region, although there are plenty of Indonesian officials and thinkers who see it as an option. However, situations can move very quickly in international affairs, especially when it is a crisis which is the driving force.
The option of dividing our continent exists because Australia has made (and continues to make) a policy decision to be weak. Weak economically (exporting valuable dirt is not much of an economic policy in our view), weak militarily, weak politically and weak psychologically ... this latter is the worst of the lot. We are, psychologically, far too dependent on too many external factors and other players in the 'great game'. This is a long term danger and short term factor in promoting our current dangerous situation.
The guiding lesson for those few Australians who care a damn about these matters is the fate of the Palestinians. They always clung to other Arabs all through the 1920s, 30s, 40s to help them. (ANZUS Treaty). They got a bit of help but nothing with any heart in it. They kept themselves weak by clinging to a backward and anti-modern set of ideas from the seventh century AD. (More tax cuts and derisory military forces). They believed in some sort of magical solution to their problems. ('She'll be right', in Arabic). When the great day of impact came, the Israelis did them like a dinner and they lost almost everything. The bits they didn't lose then they are in the process of losing now.
This can happen to us.
Mitigation: Try thinking about this, gentle reader ... for your grandchildren's sake.   Have the public debate and decide what we are prepared to do to prevent this outcome.  Are we prepared to do whatever it takes, become like Israel in the South Pacific?  Allocate more money to building up a powerful defence force so we can fend off boarders.

7.  The south west corner of the Big Island of Hawaii is reportedly moving and will eventually fall into the Pacific Ocean. The volume of water displaced will generate a monster tidal wave of around 1 km high. The big fault scarps near the Captain Cook Monument are testament to some very big collapses in the past. There is lots of geological evidence around the world for monster tidal waves.

Implications: There is nowhere to easily hide from a giant 1 km high wave racing across the Pacific. The weight of water would collapse most-man made above ground structures. The wall of water would spill right over the Great Divide. At least some parts of the Australian coast would be sheltered by New Zealand which would suffer first. 

Mitigation: Pray it does not happen in our lifetimes, or those of our children or grandchildren.

8.  The global population suddenly realises the world is running out of water. The great artesian basins are going to run on empty. Already fresh water (uncontaminated water) is rare except from deep ice cores from glaciers and ice sheets.

Implications: We all take water for granted but when the aquifers run dry then what? Hundreds if not thousands of desalination plants will be needed in addition to thousands of pumps and thousands kilometres of pipelines to water agriculture and stock. This colourless and odourless liquid is set to become priceless.  Watch prices rise. This is because there is a cost for water included in almost everything whether we realise it or not.

Mitigation: Become far cannier in conserving water, building desalination plants and recycling water.  Have the public debate now so that people can be prepared for far stronger policy action, including setting a far higher price on water.

9. A new super bug kills most of us.  Such a happening could occur through natural selection among bugs,  biological construction by innocent scientists or by terrorists or following a visit from an advanced intergalactic civilisation bringing previously unknown viruses or other agents of human destruction.

Implications: Such a calamity would mean the end of civilisation as we know it.  Whether there is a new dark age may depend on whether some groups can avoid the effects of the superbug or whether there is sufficient infrastructure to enable widely spread survivors to get together in groups with access to adequate skills and records to provide a base on which to build.

Short of this form of Armageddon, new or mutated diseases, some concocted in enemy laboratories, may wreak havoc with existing nations and cultures.

Mitigation: Continue to develop biotechnology with a bias to developing quickly vaccines or antidotes.  Be prepared to close borders quickly, ruthlessly and completely (including to australian citizens caught overseas) if there is a serious outbreak of a deadly disease elsewhere.

10.  Many people from Indonesia invade Australia. Not the army, but desperate civilians. Anyone who has flown over many of the thousands of islands making up Indonesia can’t help but notice the process of desertification. Many islands are stripped of vegetation except for the highest and steepest flanks of volcanos. Shear desperation will drive these people south.

Implications: Are we going to bomb innocent people? Or is there already a secret Government plan to give up a huge slab of Australia north of the Tropic of Capricorn and west of the NT/QLD border?

Mitigation: Have a necessary national debate and set policy ahead of this becoming a threat, as one sincerely hopes will not occur. Handling illegal immigrants will set the framework, and current policies would not be adequate to stem a mass inflow.

General mitigation - Reform the ADF

Careful readers will notice that several of the possible threats to Australia require a more focussed ability to defend the coastline, and indeed the nation.

As to the former, one expert we have consulted says Australia should adopt a military technique of 'fighting fire with fire'. Instead of the Navy having destroyers, submarines and frigates costing around the $600 million+ mark each, why not develop, quickly, a straight up and down, uncomplicated Australian version of the very fast Israeli 'Reshet' boat. (Around $20 million each) They have a crew of about 20 and can go like the wind across the water. We design and build an Australian basic model and make about 100 of them.
Set up a Naval Reserve Scheme which supplies the manpower for each of these boats to be manned by Reserve crews who do a month a year on them. The boats would be stationed in the Northern part of Western Australia and guarding the oil and gas platforms out at sea. These would used in the Indian Ocean to counter the floods of 'boat people' who think we are an easy touch.
The collected persons are taken to Christmas Island and sent back to Afghanistan, Sri Lanka or whereever. Once there they can await the outcome of the cases for asylum they have lodged on Christmas Island. With modern communications and transport they have no need to sit in Australia for five years awaiting a decision. They can do so back in the 'old country'. Those who have successful applications can then come to Australia.
The key to making this work is to get away from the grand imperial style of military forces, which we currently have and adopt the 'cossack' style ... lots of small powerful, tough and deadly units that suddenly descend on you, to your serious disadvantage.

As to the more general threats to Australia’s sovereignty, there is no lasting solution other than for Australia to adopt a nuclear deterrent.  This will take time and we shall rely on conventional arms, forces and alliances until we build a nuclear power generation industry and then follow Iran in equipping ourselves with necessary weapons that, of course, we hope will never need to be used,

Further reading

Innovation in History, The Economist, May 13, 2010.
Lesson for a lonely nation, The Australian, May 19, 2010
Megatrends and Megashocks, Henry Thornton, 12/4/10.
Australia - alone and friendless, Henry Thornton, 20/5/10

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