Thomas Schinkel and Associates

The Coming Multi-Polar World:

A Reality Check on Contemporary  Globalization

By

Thomas Schinkel

January  2011

Over the last thirty years, and especially the last ten, it seems as though the whole world has been obsessed by a single driving force, to build one large global village with standardized rules that would apply everywhere and all the time for everyone. Well, folks, that hasn’t quite happened, and however close we have gotten to achieving that state, things are going to change really fast.

The crisis of 2007-2010 has revealed serious dents, if not ever-widening cracks in this vision. While things in some way are improving, especially in the realm of local solutions, the global problems are far from resolved and chances are they never will be. Why? Because the idea of a monolithic, standardized global village never was realistic anyway.

The financial and economic crisis that remains with us in so many ways is merely a broad manifestation of the fact that power structures around the world are being rearranged – at breakneck speed – and the contours of what is coming are already in view. It seems to me that the new shape of globalization will resemble a multi-polar structure where the powers that be cooperate and compete with each other on the basis of enlightened self-interest, and not on the basis of singular coercion around the strongest player’s agenda.

A multi-polar world? For example six global villages instead of one? With all due respect to Thomas Friedman, are you telling me now that the world is not flat after all? Wow, I am all for it! Throughout my thirty years of traveling around the world, I always liked the diversity of human nature, the different cultures that had populated our planet, the excitement of meeting people who lived their lives in so many different ways.

The re-emergence of a multi-polar world has important ramifications for all aspects of international business, ultimately reverberating in adapting business strategies around value chains, channel partner development, finance, mergers and acquisitions, and human resources.

In America, the single most important shift in thinking will be understanding the need to turn away from an economic model that has seen the financial services industry as the singular driver of the economy and the middle class as the world’s consumer of last resort. In hindsight, while this model on the surface of it offered certain benefits, it is now apparent that in more than one way, this model was flawed to the core.

Knowing what we have learned over the last three years, the de-financialization of the American business model is unavoidable, even though many pundits have a hard time recognizing, let alone acknowledging, the implications. In the realm of public policy, there are implications for health care funding and delivery, energy, mobility, industrial and employment policy, and for fiscal and monetary policy.

Throughout the transformation to a new economic model, we will need to become a more self-reliant bunch, more in sync with our traditional American character than we have been during the last thirty years. The adjustment process can be painful and will require intense effort and leadership at all levels of society.

Brace yourself for a turbulent ride on the way, but in the end we’ll be okay. My best wishes for a happy and healthy 2011 to all my readers. Thank you for your feedback, comments and criticisms. The Internet, what a great to place!

Yours truly,

Thomas Schinkel

America’s New Deal with Capitalism

By

Thomas Schinkel

January 9, 2009

2008 may very well go into history as the year most everybody wants to forget. What started in 2007 as a seemingly obscure set of problems in the arena of sub-prime mortgage lending morphed into a much larger banking crisis, that culminated in the now infamous $800 billion Banking Sector Bailout Request to Congress last September. Along the way, another equally threatening crisis emerged, with the cost of fuel running amok during the summer, but then rapidly fading during the fourth quarter of the year.

But the crisis of the Financial Services Industry ended up inviting a much larger problem, a massive decline in real estate values, combined with a major retreat of stock markets, not just in America but around the world. Through the fog, it is sometimes difficult to separate one crisis from another, let alone trying to get a fix on what caused one crisis and what exactly triggered the next.

Everybody agrees that this crisis is really big, and that it is a real challenge. But how big is the crisis? Is it $800 billion? Will a stimulus package of $700 billion fix the problem? After all, during the summer of 2008, every family in the country got a stimulus check from the Federal Government and whatever it did – it did not stimulate the economy!

So, let’s start at the beginning and try to get a fix on how big the total group of embedded crises really is. We’ll take a five-year look at Real Estate Markets, at the Stock Market and at the Bailout numbers for the Financial Services Industry. We will look at these three interconnected crises through the prism of the American Middle Class, that rapidly shrinking sector of society that seems to be hardest hit by the crises that are all around us right now.

I. Real Estate

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