Megathreats
by Nouriel Roubini
Roubini, an economist and professor, is best known for predicting (in 2006) the financial meltdown of 2008. As a result of that prediction, he’s been nicknamed, “Dr. Doom.” After reading this book, his nickname is well-deserved.
Megathreats explores the economic and geopolitical risks and challenges facing the world in the 21st century. Roubini examines the interconnections between climate change, technological disruption, geopolitical instability, and financial crisis. Through this (not rose-colored) lens, he present a comprehensive and (extremely) negative view of the state of the world and its future prospects. He tries hard in the final chapters to paint a potentially rosy future, but, in the end, the book is more dark doom than rosy bloom.
I bought the book because of confirmation bias. I wrote a blog post about a year ago in which I predicted some doom myself. My prediction is somewhat in the process of coming true. I predicted that in 2-3 years the NASDAQ would lose 70% value. Currently (one year in), it is down about 30% from the peak. I still believe that it will fall further. Long story short, I’m pessimistic about the current economic environment (while admitting that the stock market is not the economy). I’m certainly the target audience for this book. I was not disappointed. Actually, I was shocked at how negative it was (even considering my already pessimistic mindset).
The megathreats are:
- Increasing geopolitical tensions
- Rising inequality and poverty
- Climate change and environmental degradation
- Cybersecurity risks
- Financial market instability
- Inadequate policy responses to global challenges
- Populism and protectionism
- Technological disruption and unemployment
- Global health pandemics
- Systemic risks in the financial system
I won’t go into too much detail, but let me sum up.
On the negative: China, Russia, North Korea, and Iran are the opposing side in a new cold war. The rich are getting richer, while the poor are getting poorer. Global warming is going to drown most of our major cities. There’s way too much debt (public and private). Nobody is doing anything about these problems, or is incapable of doing anything. Fascism is on the rise. AI will replace you in your job, and you’ll be lucky to flip burgers. Covid19-like pandemics are going to happen again and again (because global warming pushes animals and people together). And the aforementioned debt problem will cause protracted stagflation that is nearly impossible to correct.
The good news: You can dump any investments you have and go to cash. You might lose value in your cash because of inflation, but it’s better than losing money because the stock market is going to tank.
I think that Dr. Roubini is leveraging his Dr. Doom fame to frighten people, and sell books.
At the same time, he might be right.
B.S. Donovan 