Goodbye 2023, hello 2024

This year 2023 will be remembered as a tipping point when almost all mega-trends of finance, technology, trade, geopolitics, war, and climate heating accelerated in speed, scale, and scope. You can call this a state of permacrises, a series of cascading shocks that seem to be building up to a bigger shock sometime in the future.

In finance, the year began with the collapse of Silicon Valley Bank on March 10, followed by Signature Bank. The Federal Reserve (Fed) and Federal Deposit Insurance Corp. acted fast to guarantee all deposits to stop deposit runs against banks. In Switzerland, Credit Suisse was taken over by UBS Group AG on March 19, after the bank lost nearly $75 billion worth of deposits in three months.Although prompt action by the Fed and Suisse financial authorities averted global contagion and restored calm to financial markets, the Fed hiked interest rates four times in 2023 to 5.25-5.5 percent to tackle inflation. This month, gold prices touched a record high of $2,100 per ounce, signaling anticipated inflation abatement, but escalated geopolitical tensions.

In technology, 2023 marked the seismic arrival of generative artificial intelligence (AI), through the public launch of ChatGPT in November 2022. Commercialized AI is considered the next big thing after the internet, sparking off a United States tech stock rally, led by the Magnificent Seven companies in AI-related software and hardware.

The outlook for 2024 is pessimistic because trade issues are now geopolitical, rather than purely market-driven. Global supply chains are either decoupling or de-risking in order to avoid possible sanctions which have been imposed for geopolitical reasons.

Geopolitics dominated headlines in 2023, as diplomacy played second fiddle to the militarization or weaponization of everything. The biggest risk faced by businesses today is national security risk, in case companies or financial institutions are caught in geopolitical tit-for-tat arising from binary differences in values.War broke out in Gaza/Israel in October with a scale of civilian slaughter more horrific and intense than the Ukraine war, which began in February 2022. The latest war count by The Armed Conflict Survey 2023 (May 1, 2022–June 30, 2023) showed global fatalities and events increasing horrendously by 14 percent and 28 percent, respectively.

The Stockholm International Peace Research Institute reported that 56 countries were involved in armed conflict in 2022, five more than in 2021. Three (Ukraine, Myanmar, and Nigeria) involved 10,000 or more estimated deaths, with 16 cases involving 1,000–9,999 deaths. Expect more conflicts when natural disasters hurt food, water, and energy supplies.

At the end of COP28, the United Nations painted an upbeat tone that the conference marked the “beginning of the end” of the fossil-fuel era. Scientists confirm that we have already passed the point of being able to limit carbon emissions for the average global temperature to remain below 1.5 degrees Celsius above pre-industrial levels. Most studies show that if most governments fail to meet their current commitments to net zero, the planet will be struggling with temperatures above 2 degrees, meaning more natural disasters, rising seas, and/or migration/conflicts. As one cynic said, natural disasters are where the rich just pay in money, but the poor pay in lives.

Putting all these mega-trend micro-disasters together suggests that a mega-system disaster may be on the cards. Historically, these seismic-scale disturbances are settled through a massive recession, like the 1930s Great Depression, or wars, which wipe out debt and make everyone poorer.

So far, the world has neglected to address these looming issues by either denying or postponing—printing more money and incurring more debt. Painkillers do not fix structural imbalances.

As my favorite poet Thomas Stearns Eliot said, the world ends not with a bang, but with a whimper. The world is in permacrises, with no one fully in charge. Democratic governance is in flux when no one can agree on the problems, let alone the solutions.

The bottom line is that there is no shortage of technology or money to deal with the global existential threats of climate change and social imbalances. We cannot align policy intent (what politicians say they will do) with the reality that current policies are not delivering.

If man-made or natural calamities are looming, do we mitigate or adapt? On a single planet, we can run but not hide. So each of us must decide to do what we can, rather than relying on politicians to fix themselves, let alone our problems.

There is a wise saying about Christmas charity: Give with warm hands. Do that now, or we will be giving with boiled hands or none at all.

Best wishes for 2024. Asia News Network

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Andrew Sheng is former chair of the Hong Kong Securities and Futures Commission.

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The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.