Executive Summary

• The wisdom and value of scenario planning
• Scenario #1: A Slow Burn
• Scenario #2: Fragmentation
• Scenario #3: A Hard Landing
• The prudence of taking individual action now, vs depending upon "the system" to react to future events

If you have not yet read Part 1: Ready Or Not… available free to all readers, please click here to read it first.

It all begins with the clear-eyed recognition that the old way of doing business is clearly unsustainable. And yet knowing that the various governmental and institutional powerbrokers are doing everything they can to perpetuate the status quo way of doing business.

Business-as-usual is literally going to end in some flavor of disaster, and yet we collectively adhere to it, even when the end-point is as obvious as calculating the linear rate of withdrawal of water from a non-renewing aquifer.

But there's nothing linear about the nested and/or intertwined complex systems we call the Economy, the Environment and Energy.  Each of these is independently complex, meaning they often easily defy the attempts to manage them. And they are utterly unpredictable for anything longer than the immediate term.

For example, of the three, Energy seems the simplest, and it is.  But even there, we note that the amount of energy that can and will be extracted is a function of the price of energy, available technology and skills, capital available for investment, and what's actually down there in the earth to be pulled up.  In that list, several factors are courtesy of the Economy, which is itself dependent on Energy. A glitch in one can feedback rapidly to create a glitch in the other.

Given all of this complexity, one good way to get a handle on things is to identify the scenarios we deem to be most likely given all available evidence, and then assign probabilities to each. Asking ourselves, What can we today to prepare for Scenario X? then allows us to begin constructing action plans to mitigate our vulnerability, and even better in cases, position ourselves to prosper as the future unfolds. 

Scenario #1:  A Slow Burn

In 2008, the practice of borrowing too much caught up with the developed world and a serious financial crisis threatened to take down the entire financial system.  Indeed, according to after-action reports from Hank Paulson (then Treasury Secretary) and Mervyn King (then BoE chairman), the world came within mere hours of a full-blown global banking system meltdown.