Horoscope 25 for companies and managers

At the end of the year, the corporate world is flooded with books and reports presenting the future or, the less ambitious, the year to come. Those who, like familyandtrends, are old enough to have spent a few Christmases reading these exercises tend to ignore them (only 'The Word in' by The Economist still remains among the 'suggested' readings) as, after a few years, one does with astrology predictions. After all, Galbraith was not wrong when he recalled: 'The only function of economic forecasting is to make astrology look respectable'.

Given the futility and vainness of these attempts, for the 25th familyandtrends has decided to make a horoscope for businesses and managers that is really (?!) reliable. It might be wrong, but with five minutes of reading you will know what will happen, and you can devote the rest of your holidays to your loved ones and having fun.

In horoscope 23 familyandtrends vaticinised: 'geopolitical rearrangements will continue; the Teacher-Reagn era is over and a new one has opened which, if it goes well, will be characterised by multipolarity and strong, wealthy states, if it goes badly, by confusion and brawls'. In 24: 'geopolitical rearrangements will reach a turning point, more than four billion people will vote'. It is quite an achievement that such a large number of people have been able to contribute to the future of their countries by voting, the 25th will be the year in which those elected will have to move from promises to deeds: given the promises, there may well be confusion and brawls. In this context, it remains a moral duty for companies, their owners and leaders to keep channels of communication, understanding and exchange open with those on the other side, whatever that other side may be. The slowdown of globalisation, the crisis of supranational political institutions, and tariffs will be elements that can change but not annihilate business relations and international trade.

Turning from geopolitics to macro economics, in the 23rd familyandtrends predicted recession (wrong), in the 24th the descent of inflation and possibly recession (wrong again); by the 25th predicting recession would mean perseverance. The debt of governments has grown a lot in this quarter century and in an accelerated way after Covid; the debt/GDP ratio is 84% in Europe (we are the second with about 135% after Greece 162%, Germany is well below 70%), 104% in Great Britain, 123% in the USA, 255% in Japan. The European rules will force many governments (ours has already committed) to return plans that should have an impact on growth. For the US, the immediate future is rosier: they will continue to exercise their seigniorage rights, print dollars, and have a negative trade balance. Trump declared in September that 'losing the dollar as the world's currency would be the equivalent of losing a war', in December he threatened 100% tariffs to a group of emerging countries that was considering an alternative currency. Seigniorage law is based on trust in the currency and the authority that issues it: threats are not a good start. It is to be hoped that geopolitical instability will not create a short-circuit with financial tension by undermining the world system based on an exchange currency, the dollar, which has no connection with a physical asset. After all, between the dollar and the bitcoin, in terms of intrinsic value, there is not much difference except for the power of the owner of the printing press that produces them.

Having closed the macro panorama, some food for thought for the 25th.