«War economy»: Saxo Bank’s 10 black swans for 2023
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By Laura Sanchez
Investing.com — «Gone are the days where low interest rates could foster dreams of a harmonious world built on renewable energy, equality and independent central banks. In 2023, world economies will shift into War Economy mode, where sovereign economic gains and self-reliance trump globalisation.» That’s how emphatic Saxo Bank, which has just published its report on the black swans for the coming year, is.
Black swans are known as events that apparently could not be foreseen, that have a great socioeconomic impact and that, once they have occurred, are analyzed with hindsight and finally become events that could have been expected.
These are the 10 ‘crazy’ predictions of the Danish bank:
1. Multibillion-dollar coalition creates new ‘Manhattan Project’, a trillion-dollar plan for energy
The world’s ever-growing need for energy drives the world’s richest to come together and launch an R&D project of a size the world hasn’t seen since the Manhattan Project gave the U.S. the first atomic bomb.
2. French President Emmanuel Macron resigns
Political deadlock in France and the rise of Marine Le Pen after the 2022 election corners President Macron, forcing him to quit politics and resign from office.
3. Gold soars to $3,000 after central banks fail to control inflation
As markets and central banks realize that the idea that inflation is transitory is wrong, and that prices will remain high for longer, gold soars, reaching a price of $3,000.
4. The European Union creates its own armed forces
With continuing challenges in the region and a U.S. military that is not exercising its traditional role as global protector, the European Union agrees to create its own armed forces to defend itself against various geopolitical risks, such as the Russia-Ukraine war.
5. One country agrees to ban all meat production by 2030
In an effort to become one of the world leaders on the road to net-zero emissions, one country decides not only to impose a heavy tax on meat, but also to ban domestic production altogether.
6. U.K. holds a referendum against Brexit
After a recession and great domestic pressure, the U.K. is embroiled in political turmoil that will end with a vote to back out of Brexit.
7. Widespread price controls to limit official inflation
History tells us that with wartime economics comes rationing and price controls. And this time is no different, as rulers begin to enact strict price controls leading to a variety of unintended consequences.
8. OPEC+ and ‘Chindia’ leave the IMF and agree to deal in new reserve assets
Sanctions against Russia have caused widespread turmoil due to U.S. dollar movements in countries around the world that do not consider the U.S. an ally. To free themselves from this, they leave the IMF and create a new reserve asset.
9. The USD/JPY is fixed at $200 while Japan overhauls the financial system
After the challenges faced by the Japanese yen in 2022, the Bank of Japan tries to prevent the currency from sliding. Without long-term success, Japan will launch a reboot of its entire financial system. USD/JPY rises to $160 and $170 as public outcry against skyrocketing inflation reaches a fever pitch. With the USD/JPY rising above $180, the government and the central bank step in and set a cap at $200.
10. Tax haven ban wipes out private capital
With the war economy comes an increased focus on national interests and the ability of sovereign countries to assert themselves. In that sense, OECD countries turn their attention to tax havens and pull out the big guns, banning them altogether.
