Outside the Box

A Leaderless World

John Mauldin

May 8, 2012

I recently had a chance to speak at a conference where Dr. Ian Bremmer spoke after me. I was very impressed with his thought process and asked him to give me an outline of his speech to share with you for this week's Outside the Box. It's a shorter version of his powerhouse book, Every Nation for Itself: Winners and Losers in a G-Zero World. I highly recommend it.

And what, you're asking, is a "G-Zero world"? In a word, it's a leaderless world. A world in which, as Bremmer says, "Not so long ago, America, Western Europe and Japan were the world's powerhouses. Today, they're struggling to recover their dynamism…. But nor are rising powers like China, India, Brazil, Turkey, the Gulf Arabs and others ready to take up the slack…. If not the West, the rest, or the institutions where they come together, who will lead? The answer is, no one."

And that means the world's big problems won't get addressed as effectively as they should, as long as the leadership vacuum persists. Talk about Muddling Through!

This book by Bremmer is going to make a difference, and I'm not the only one who thinks so –

"Ian Bremmer combines shrewd analysis with colorful storytelling to reveal the risks and opportunities in a world without leadership. This is a fascinating and important book." –FAREED ZAKARIA

"Every Nation for Itself is a provocative and important book about what comes next. Ian Bremmer has again turned conventional wisdom on its head." –NOURIEL ROUBINI

Tonight I am in Chicago, where I spoke at the CFA conference this morning. It went well. I will try to get a link for you later. It hasn't been all work, either. David Rosenberg, Barry Ritholtz, and I all had dinner gigs, but we met up at the bar and just hung out for about three hours. Got to love O'Doul's NA beer. Not quite the same as a good chardonnay but healthier for me.

I will hit the send button as I have to get up for a breakfast meeting with Sam Zell. We have never met and I am looking forward to it. He is quite the legend. I will give you an update on the conference next weekend. The reviews are coming in quite strong. It was interesting to see the European elections after the analysis we were given. There is so much that seems up in the air. You can almost feel the changes coming. I feel like the kid in the back of the car on a long road trip: "Are we there yet?"

Your holding out for a world that works analyst,

John Mauldin, Editor
Outside the Box

Like Outside the Box?

Then you'll love John's premium publication, Over My Shoulder. Each week, after sorting through vast amounts of economic, political, and investing news, John sends Over My Shoulder subscribers his pick of the week's most important commentary and data.

It's your opportunity to get the news John thinks matters most to your finances.

Learn More About Over My Shoulder

Every Nation for Itself: Winners and Losers in a G-Zero World

Ian Bremmer

One beautiful fall evening in October 2011, I gave a speech on international politics to a group of Canadian business executives in Napa Valley, California. As part of the introduction, I included a few thoughts on the G20, the forum in which 19 countries plus the European Union bargain over solutions to pressing international problems. I made my case for why…

Discuss This

10 comments

We welcome your comments. Please comply with our Community Rules.

Comments

DAVID MCCULLAM

May 13, 2012, 12:56 p.m.

Given the disaster visited upon us by our past/present “leaders” it is inevitable that another method/mode of leadership will arise.  This evolution carries no assurance that we will enjoy the trip given that the disruption of status quo is seldom pretty.  A final legacy from our past “leadership”.

Chris Haight

May 11, 2012, 2:29 p.m.

Ian, I pray that all of the members of the political stage will read and adhere to those last two paragraphs. If we keep printing money the way we have been, we will look like Greece looks today within just a few more years. The talking heads don’t talk all that much about how our financial debt creates a huge national security issue for us that will take a generation to dig out from if we don’t stop that run-away train right now.
I just read a Stratfor article about how weak the military has become in all of Europe. When we can no longer afford to be the world’s calvary, then the evil empires of the world run unchecked. And that time is already upon us.

Joe Kuchar

May 9, 2012, 5:11 p.m.

Who guards the guardians?

Who saves us from the world savers? Especially when the world savers are the cause of our problems.

This guy is a worshiper of top-down hierarchical power structures based in force. In other words: not one of the good guys. What he believes should be relegated to the animal world where it belongs.

Humans and monkeys share Machiavellian intelligence

http://www.eurekalert.org/pub_releases/2007-10/uoc-ham102407.php

JOSEPH HAGEDORN

May 9, 2012, 2:59 p.m.

A lot of great comments.

I like the idea of sidewalks and bike paths on all roads, streets, etc., but not by incurring more debt.  Safety is still not guaranteed.  This 76 year old jogger has been nearly run over twice by crazy drivers on sidewalks.

Jerry Clemons

May 8, 2012, 7:57 p.m.

America is a failing nation.  We are doing it to ourselves with endless, uncontrolled deficits and a severe lack of political leaders with the courage to take any meaningful action to reduce them.  We are already approximately 16 trillion in debt with one trillion plus deficits predicted for at least the next decade and probably longer.  In addition our cities, counties and states are floundering in debt.  This kind of spending is ‘unsustainable’ - and anything ‘unsustainable’ will eventually end.  As all failing nations do, we are beginning to decimate our military - because we cannot afford both it and our entitlement programs.  So with crushing debt and a lack of military might, the US will soon join the likes of France, Belgium, Great Britain and other has-beens.

jack goldman

May 8, 2012, 2:34 p.m.

The machines are in charge. People are now inconsequential. People no longer create wealth. Machines create wealth. Middle people are not in charge. It’s a middle man, women and minorities, do nothing, service sector, currency debased society. The world is built out. The baby boom will retire. The debt will explode to devour the civilization. The children are addicted to computers and the false pretend cyber frontier that does not exist.

Twenty years from now people will rediscover wilderness if there is any wilderness left by then. Government does not create jobs or wealth. Government destroys jobs and destroys wealth or transfers wealth from productive to unproductive people. Government subsidized failed sports teams are subsidized with stadiums and the teams are over paid in monopolies and unions. It’s a “what’s in it for me, me, me, world”.

It’s a currency bubble. In real US silver money the Dow was $700 in 1963. In the same exact silver money, the Dow is below $600 in 2012. In bank debt notes the Dow is $12,000. It’s just a money bubble, inflating the currency. This is the source of all the fake growth, the internet build out, and the fake women and their allies service sector do nothing wealth destroying economy of subsidies. The value of the economy as measured by the Dow has fallen since 1963 in real silver US Treasury money. In fake bank debt notes, it’s a bull market of immeasurable expansion, all based on currency debasement. Gold is the best performing asset class in the past ten years. Stocks are high risk and failing to hold buying power.

Protect yourself. No one else can or will. Good luck to us all.

Ski Milburn

May 8, 2012, 10:20 a.m.

Ian Bremmer is a smart guy, and has made a real contribution to the world over the decades, but he’s as trapped in his frame of reference as all the world’s leaders.

Everybody loves free markets and sings their praises, even as they work tirelessly to create some kind of advantage that frees them from them.  It’s just as true for governments as it is for Facebook.  In a truly free market, all actors have equal knowledge and access to the market and all are equally disadvantaged, with none having any leverage over any other.  These markets trade in every sort of currency, from barter to financial exchanges, for goods, property, services, risk, affection, power (including political power) and more.

In other words, the Free Market is a leaderless free-for-all.  When applied to world governance, it scares the living bejessus out of everybody.  But it does seem that the world is headed for a long period of “free market politics”, by which I mean a state of independent disadvantaged actors, not the ideology.  It’s going to be hard on those used to the advantages gained from the supression of competition, like the US, Canada and the rest of the G20.

And I don’t know where he’s been, but far from a highly unlikely scenario, we’ve clearly entered the first phase of “G-Subzero” in the US, and nothing on the political landscape suggests any reversal until things get so bad they’re simply intolerable.

Richard Schneider 31849

May 8, 2012, 6:52 a.m.

Just a philosophical observation.  On a small planet dominated by a single intelligent species it is absolutely impossible to maintanin political boundries indefinitely.  This article is just another example of the enormous political and economic problems that result from having separate countries.  The economic and political forces driving people together are gradually becoming more powerful than the forces keeping them apart.  I predict that wihtin the next two centuries the world system will look like the United States, a diverse group of individual states joined into one country.  If we can do it here there is no reason it cannot be done globally.  “The United States of Earth”.  Makes sense to me.

Willis Smith

May 8, 2012, 6:50 a.m.

To be a leader, one must have followers.  In our world today—whether it is an individual or a country—it is becoming increasing unlikely to find a follower.  It is like the father who has trouble convincing the teenager that he has the wisdom to call the shot and the best interests of his teenager at heart.  In times of severe crisis more followers generally immerge in greater numbers.  However, as the elections in Europe have demonstrated, Germany’s leadership on the questions of how to deal with the massive debt is now going to be frontally challenged.  In this globally connected internet world, everyone is convinced that s/he can call the shot for themselves without the help of Daddy.  It is going to be ugly.

Perry Noblett

May 8, 2012, 3:20 a.m.

Great article, I must read this book.

© 2013 Mauldin Economics. All Rights Reserved.

Outside the Box is a free weekly economic e-letter by best-selling author and renowned financial expert, John Mauldin. You can learn more and get your free subscription by visiting www.MauldinEconomics.com.

Please write to subscribers@mauldineconomics.com to inform us of any reproductions, including when and where copy will be reproduced. You must keep the letter intact, from introduction to disclaimers. If you would like to quote brief portions only, please reference www.MauldinEconomics.com.

To subscribe to John Mauldin's e-letter, please click here: http://www.mauldineconomics.com/subscribe

To change your email address, please click here: http://www.mauldineconomics.com/change-address

Outside the Box and MauldinEconomics.com is not an offering for any investment. It represents only the opinions of John Mauldin and those that he interviews. Any views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with, Mauldin's other firms. John Mauldin is the Chairman of Mauldin Economics, LLC. He also is the President of Millennium Wave Advisors, LLC (MWA) which is an investment advisory firm registered with multiple states, President and registered representative of Millennium Wave Securities, LLC, (MWS) member FINRA, SIPC, through which securities may be offered . MWS is also a Commodity Pool Operator (CPO) and a Commodity Trading Advisor (CTA) registered with the CFTC, as well as an Introducing Broker (IB) and NFA Member. Millennium Wave Investments is a dba of MWA LLC and MWS LLC. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article. Mauldin companies may have a marketing relationship with products and services mentioned in this letter for a fee.

Note: Joining The Mauldin Circle is not an offering for any investment. It represents only the opinions of John Mauldin and Millennium Wave Investments. It is intended solely for investors who have registered with Millennium Wave Investments and its partners at www.MauldinCircle.com (formerly AccreditedInvestor.ws) or directly related websites. The Mauldin Circle may send out material that is provided on a confidential basis, and subscribers to the Mauldin Circle are not to send this letter to anyone other than their professional investment counselors. Investors should discuss any investment with their personal investment counsel. You are advised to discuss with your financial advisers your investment options and whether any investment is suitable for your specific needs prior to making any investments. John Mauldin is the President of Millennium Wave Advisors, LLC (MWA), which is an investment advisory firm registered with multiple states. John Mauldin is a registered representative of Millennium Wave Securities, LLC, (MWS), an FINRA registered broker-dealer. MWS is also a Commodity Pool Operator (CPO) and a Commodity Trading Advisor (CTA) registered with the CFTC, as well as an Introducing Broker (IB). Millennium Wave Investments is a dba of MWA LLC and MWS LLC. Millennium Wave Investments cooperates in the consulting on and marketing of private and non-private investment offerings with other independent firms such as Altegris Investments; Capital Management Group; Absolute Return Partners, LLP; Fynn Capital; Nicola Wealth Management; and Plexus Asset Management. Investment offerings recommended by Mauldin may pay a portion of their fees to these independent firms, who will share 1/3 of those fees with MWS and thus with Mauldin. Any views expressed herein are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest with any CTA, fund, or program mentioned here or elsewhere. Before seeking any advisor's services or making an investment in a fund, investors must read and examine thoroughly the respective disclosure document or offering memorandum. Since these firms and Mauldin receive fees from the funds they recommend/market, they only recommend/market products with which they have been able to negotiate fee arrangements.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor’s interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staffs may or may not have investments in any funds cited above as well as economic interest. John Mauldin can be reached at 800-829-7273.