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Game On!: Debt, Global Competition
and America's Future
John N. Doggett, JD, MBA, Senior Lecturer
Global Management, Entrepreneurship & Sustainable Energy
McCombs School of Business @ The University of Texas at Austin [email protected] www.jndoggett.com
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Strategic Inflection Points Are Scary
“A strategic inflection point is a time in
the life of a business [or a country]
when its fundamentals are about to
change. That change can mean an
opportunity to rise to new heights. But
it may just as likely signal the
beginning of the end.”
Andy Grove, Only the Paranoid Survive
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Two Massive S.I.P.s
New Global Realities
Europe is tottering on the brink of bankruptcy
America is sinking under a mountain of debt
China, Brazil and India are emerging as the
strongest economies in the world
The location and nature of energy
supply and demand is changing.
Shale Natural Gas
Shale Oil
Geothermal
Ocean
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Is The World Going Crazy?
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PIIGS GET SLAUGHTERED
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On the Brink of Bankruptcy
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TOO BIG TO FAIL OR BAIL!
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EU Banks Sovereign-Debt Protection
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Deficits Forever . . . ?
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This is a Serious S.I.P.
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US Deficit Is At Civil War Levels
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The Scariest Job Chart Every
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America is Addicted to Debt
2000 = $ 5.67 Trillion
2004 = $ 7.54 Trillion
2008 = $10.57 Trillion
Today = $15.06 Trillion
2015 = $23.69 Trillion (Current Spend)
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A Warning From The Future?
http://www.youtube.com/watch?v=OTSQ
ozWP-rM
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Just The Facts, Jack (Billion US$)
May 2008
China = $506.8
Japan= $575.3
Caribbean Banking
Centers = $104.5
Oil Exporters = $164.2
UK = $271.2
Brazil = $151.4
Russia = $63.7
Luxembourg = $75.2
Hong Kong = $61.4
Taiwan = $38.9
September 2011
China = $1,148.3
Japan = $956.8
UK = $421.6
Oil Exporters = $229.9
Brazil = $206.2
Caribbean Banking
Centers = $173.0
Taiwan = $149.3
Switzerland= $146.1
Hong Kong = $109.0
Russia = $94.6 http://www.treas.gov/tic/mfh.txt
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Is A New Economic Tsunami Coming?
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How Do We Pay Down The Debt?
We must grow our way out of this
crisis.
If the US economy grew by 6%, many of our
problems would start to self heal.
If we grew at 9%, “Whoa Nelly!”
So, how do we turn America into North Dakota?
We must sell “assets” owned by the
federal government and apply to
proceeds to reduce the federal debt.
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We Have Assets We Can Sell
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LET’S LOOK AT OUR COMPETITION
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Was Goldman Sachs Crazy?
6,100% Annual Inflation (1994)
Collapse of the Ruble (1998)
Two Weeks of Foreign Reserves (1991)
The Cultural Revolution (1966-1976)
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National GDP in 2010 (purchasing power parity)
Country GDP Real Growth %
1. United States $ 14,660,000,000,000 2.8%
2. China $10,090,000,000,000 10.3%
3. Japan $ 4,310,000,000,000 3.9%
4. India $ 4,060,000,000,000 10.4%
5. Germany $ 2,940,000,000,000 3.5%
6. Russia $ 2,223,000,000,000 4.0%
7. United Kingdom $ 2,173,000,000,000 1.3%
8. Brazil $ 2,172,000,000,000 7.5%
9. France $ 2,145,000,000,000 1.5%
10. Italy $ 1,774,000,000,000 1.3%
11. Mexico $ 1,567,000,000,000 5.5%
12. South Korea $ 1,459,000,000,000 6.1%
13. Spain $ 1,369,000,000,000 - 0.1%
14. Canada $ 1,330,000,000,000 3.1%
CIA World Factbook – September 5, 2011
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Elephants Emerging from the Mist Total World Population = 6,928,198,253
BRIC Population = 2,868,060,586 (41.4%)
Total World Land Area = 174,814,000 sq. km. (- oceans)
BRIC Land Area = 38,471,715 (22%)
Total World Gross Domestic Product = $63.17 Trillion
(Official Exchange Rate)
Total World Gross Domestic Product = $74.54 Trillion
(Purchasing Power Parity) (p.p.p.)
BRIC Gross Domestic Product (p.p.p.) = $ 18.55
Trillion (24.88%)
Source: CIA World Factbook – September 5, 2011
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The BRIC Middle Class Is Exploding
McKinsey says 48 million Chinese will
join the middle class every year until
2020.
Goldman says 30 million Indians,
Brazilians and Russians will join the
middle class every year until 2020.
Only 312.5 million people live in the US.
By 2020, the BRIC’s could have 1 billion
middle class citizens.
This is the greatest time to be an
American entrepreneur!
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Chinese Banks and The World
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Source: The Conference Board Report issued on November 10, 2010 using
Purchasing Power Parity (PPP)
The Conference Board Says . . .
China Could pass The United States BY
2012!
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Per Capita Income trumps Size
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WHILE WE WERE SLEEPING,
THEY WERE RUNNING
Remember, WE Won the Cold War
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This is a Brazilian Super Tanker
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An Orange Juice Super Tanker
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Competing With Innovation
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Add A Large Dash of Oil . . .
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This Is the New India
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Tata Motors People’s Car
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Tata Motors’ Newest Ride
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Tata Motors’ Newest Ride
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Welcome to the New China
copyright - John N. Doggett, 2008
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Growth at Warp Speed
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China has 6 of the 15 Tallest Buildings
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Building Skyscrapers Like Crazy
China is building 24 of the 50
skyscrapers to be completed worldwide
in the next six years.
This will double the number of Chinese
skyscrapers.
McKinsey say that China could build
enough new skyscrapers to equal one
new Chicago every year until 2030.
More than 1,500 new buildings over 30 stories
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The People’s Republic of Communist China?
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www.lenbracken.com/images/china31
Shenzhen in 1979
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30,000 people lived here in 1983
Source: http://en.wikipedia.org/wiki/Image:57440.jpg
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Progress Comes at a Steep Price
Source: New York Times, 8/25/2007
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The Chinese People Hate Dirty Air
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The Clock is Ticking
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From China with Love
Thermal Power Research Institute is
China’s world-leading laboratory on
cleaner coal, has just licensed its latest
design to Future Fuels in the US.
Future Fuels will pay about $100 million to import
from China a 130-foot-high maze of equipment
that turns coal into a gas before burning it. This
method reduces toxic pollution and makes it
easier to capture and sequester gases like
carbon dioxide under ground.
Future Fuels will ship the equipment to
Pennsylvania and have Chinese engineers teach
American workers how to assemble and operate it.
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Canada formally pulls out of Kyoto
The world’s largest two emitters, China
and the US, never ratified Kyoto.
“To meet the targets under Kyoto for
2012 would be the equivalent of either
removing every car, truck, ATV, tractor,
ambulance, police car and vehicle of
every kind from Canadian roads or
closing down the entire farming and
agriculture sector and cutting heat to
every home, office, hospital, factory
and building in Canada,”
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INVENT, INNOVATE, OWN
Yes We Can!
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American Farmers Will Thrive
China and India are covering farm land
with factories.
Global warming is increasing flooding
from the Himalayas.
Farm commodity and land prices can
only trend in one direction.
By the end of this decade, finding farm
workers will be a major challenge.
Farm equipment manufacturers will be
running two shifts, seven days a week.
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A Great Time To Be a Farmer!
The world’s appetite for farm products
will soar.
The world will have more than enough
cash to buy what we grow
Farm support payments will no longer
be necessary
Quotas, tariffs and other market
protections will no longer be necessary
We will be able to sell everything that
we can grow and process.
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Impact of MIT Alumni Entrepreneurs MIT Alumni founded 25,800 currently active
companies in 2009.
The firms employed 3,300,000 people.
These firms generated annual world
revenues of $2,000,000,000,000.
If currently active firms founded by MIT
graduates were a country in 2009 they would
have been the 11th largest economy in the
world.
Economic Impact of MIT Alumni Entrepreneurs - Entrepreneurial Impact: The Role of MIT,
Roberts and Eesley, MIT & Kauffman Foundation for Entrepreneurship, February, 2009
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“Recruit” The Right Immigrants Immigrants started 25% of U.S. public companies
that were venture-backed.
The market capitalization of publicly traded
immigrant-founded venture-backed companies in
the U. S. exceeds $500 billion.
40% of U.S. publicly traded venture-backed high-
technology manufacturing companies were
started by immigrants.
50%+ of the employment generated by U.S. public
venture-backed high-tech manufacturers has
come from immigrant-founded companies.
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APPLE REINVENTED CREATIVITY!
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The iPhone Didn’t Exist before 2007
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Apple = 4% Sales & 52% Profits
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If You Thought the iPhone Was Hot
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iPad = 96% Of All Tablet Web Traffic
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Apple Stores = 20% Retail Growth
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Apple Passes Microsoft
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WE CAN REINVENT MANUFACTURING
The Chevrolet Sonic is Transforming
the face of American Manufacturing
The plant is 50% smaller
Wielding Robots are clustered together instead o
being spaced along the line
The first coat of rust proofing is 1/100 as thick
Many employees make $14 an hour instead of
$28 an hour . . . With the UAW’s blessings.
All of this so the Sonic can be
manufactured in Detroit instead of
Mexico.
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RETHINKING ENERGY
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Exploding Energy Consumption
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China and Energy
In 2000, the US used twice as much
energy as China.
In 2010, China used 4% more energy
than the US.
Americans use 5x as much energy per capita.
In 2007, China became the largest
emitter of Greenhouse gases.
Today, 80% of China’s energy comes
from coal. The # for India is 70%.
China consumes more coal than the
US, Europe and Japan combined.
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Coal Is King in China
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China Dominates Fuel Demand
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Chinese Car Ownership Explodes
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Massive Energy Investments
The World Energy Outlook for 2011
says that $38 Trillion in new investment
is needed to expand the world’s energy
infrastructure between 2011-2035
Electric Power = $16.9 Trillion
Oil = $10.0 Trillion
Natural Gas = $9.5 Trillion
Coal = $1.1 Trillion
Biofuels = $0.3 Trillion
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Oil Fuels America’s Deficit
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Small Hydro Projects
Putting many small hydro dams on
rivers to generate 5 to 10 MW of power.
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Is This the Golden Age of Gas?
The International Energy Agency says
total recoverable resources equal over
250 years of current consumption.
From 2010, global natural gas use
could increase by more than 50% and
account for over 25% of world energy
demand in 2035.
Power generation will be the dominant
sector for natural gas demand and
Russia will have to increase by 3X.
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Shale Gas = 50% Supply in 2020
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Shale Gas Everywhere You Look
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Shale Gas Is Revolutionary
Shale Gas increased America’s gas
reserves by 40% in this decade.
Shale Gas reserves outside of North
America could increase the world’s gas
reserves by 50% to 160%.
That is equal to 211 to 690 years’ worth
of gas consumption in the United
States at current levels.
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THE OCEAN IS FILLED WITH
ELECTRICITY
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French Tidal Power Plant Online in 1967
http://en.wikipedia.org/wiki/Image:Rance_tidal_power_plant.JPG
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Tidal Power Growth
45 Wave and Tidal prototypes will be
tested in 2011 and 2012. Only 9 were
tested in 2009.
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Korean Tidal Power Plant Online in August
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Real Projects; Real Power
1,320 MW Incheon Tidal Power Station
built around islands west of Incheon.
Construction will start in 2017.
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Sea Dog Pump = 22% Conversion
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Ocean Powered Fresh Water
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Cheap, Available Fresh Water
What happens to global stability if
every country with access to the sea
can get all the fresh water it needs?
What happens to global agriculture and
hunger if every country with access to
the sea can get all the fresh water it
needs?
What happens to global economic
growth if every country with access to
the sea can get all the fresh water it
needs?
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Ocean Currents = Electric Power
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Ocean Thermal Power Potential
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Ocean Thermal Power
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This Is Not About A Car
http://www.youtube.com/watch?v=SKL25
4Y_jtc&feature=player_detailpage
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The Future Is In Our Hands