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Even though this is my first post in 2010, I’d like to include a video from last year, featuring photos I took during my four-week stay in Hawaii in summer 2009.

I hope you enjoy this video. Traveling to Hawaii was an amazing experience. The place has such a positive energy which you can feel as soon as you are greeted by a lovely “Aloha” and get into a conversation with a local. The islands’ year-round pleasant temperatures and warm waters made Hawaii a dream destination for upscale tourism. Unlike any other place I’ve ever been to, Hawaii can be both, relaxing and exciting at the same time. The breathtaking landscapes, the intriguing culture and wonderful food make it hard to leave and easy to miss Hawaii. During my stay, I made some really good friends, learned a lot about Polynesian culture and became a huge fan of Hawaiian music - such as slack key guitar and ukulele.

If you have broadband, I advise you to watch the video in HD.

2010 is likely to be a year of uncertainty. As the financial crisis appears to be ebbing, the world is excitedly waiting to see major economies gaining back old strength. There is consensus that the Asia-Pacific region will be the epicenter of the next big global growth wave. During the crisis, China’s efforts to stem the meltdown were a blessing for the world economy. With the world’s third-largest economy maintaining high growth rates and strengthening domestic demand, Chinese consumers and companies have helped to stabilize the fragile global economy. Now it will be crucial whether or not China was overreaching by further building up overcapacities. If Chinese consumers fail to become American-style shoppers and remain thrifty, the implications for the Chinese economy could be disastrous. For many years to come, American consumers won’t be able to consume as they had been doing it in the years before the housing bubble popped. Therefore, China’s manufacturers need to find new customers, primarily within Asia.

Apart from China, some increased contribution to a global recovery from the rest of Asia can be expected. While Japan has not yet managed to end its “Lost Decade(s)”, marked by stagnation and deflationary pressures, Vietnam, Singapore and Indonesia are going to see strong growth in the years to come. Japan might also play a vital role when it comes to clean energy technologies and electric mobility.

The United States and Europe will be struggling with their out-of-hand public and private debt. Unless huge structural changes take place - such as the grand-scale deployment of smart energy technologies - growth rates might pick up but will remain low for an extended period.

Russia is now suffering from postponed economic reforms and its dependence on oil and gas exports. The global meltdown revealed a systemic weakness of the Russian economy. Therefore some analysts and economists argue whether the “R” should be taken out of the BRIC (Brazil, Russia, India, China) states. If Russia indeed gets kicked out, Indonesia is the most likely candidate to take its place: BIIC (Brazil, Indonesia, India, China)

Especially smaller European economies that were hit hard by the financial crisis such as Iceland, Hungary and Greece might face bankruptcy. A Greek bankruptcy would be a difficult situation for the entire Eurozone, however, it is rather unlikely that Greek might leave the currency union entirely. Even though the possibility to downgrade its currency would give the Greek government a tool to increase competitiveness in the short term, the downsides would simply be too big. Financing its debt would become even more difficult outside of the Eurozone. The important question will be whether fellow European countries would bail Greece out should it come to a do-or-die situation. The Greek economy is week, as is the government. National debt is close to 120% of GDP, unemployment is high - especially among young people - and individuals are also highly indebted.

Spain (because of the crisis in the construction sector), Austria (because of Autrian banks’ involvement in lending to fragile economies in Eastern Europe), Ireland (because of the meltdown in finance) and Italy are also struggling and have poor growth prospects for the future. Even Britain’s economy is not going to recover fast as the massive financial sector is still weak and other industries are failing to fill the gap.

Dubai’s importance as a financial and real estate hub is waning while its neighbor Abu Dhabi strengthening its position and working on its image by investing in alternative energy projects such as the lighthouse project Masdar City.

Some predict escalating trade wars for 2010 and 2011. I hope that the United States, China and the European Union are aware of the enormous downsides of protectionist measures. Whether or not trade battles will erupt this year largely depends on the individual governments’ ability to resist populist calls for trade barriers.

Another point of uncertainty is the risk of other huge bubbles being created by the influx of money from stimulus packages and central banks around the world. Another bubble popping could easily torpedize an economic recovery.

Should the U.S. Federal Reserve fail to withdraw the excess money from the banking system in a timely manner, inflation rates could increase rapidly and have severe negative effects on the sustainability of the recovery. However, this would be all too tempting for the U.S. government, given the historic deficit, as this could reduce the real level of debt.

The bright side is that if central banks manage the money supply properly, governments refrain from setting up populist trade barriers, and banks start lending again, a strong global recovery may be underway. Therefore I’d also call 2010 the year of opportunity. Next year this time, we’ll know more…

This entry was posted on Friday, January 1st, 2010 at 8:27 PM and is filed under Economy, Globalization. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.