6 DEVELOPMENTS THAT SHAPED 2022 AND BEYOND

1) FREE MARKETS WON’T PREVENT WAR

This long standing notion in economics was put to shambles when Russia invaded neighbour Ukraine for preempting an ostensible threat from NATO. Once again dictators proved to be dictators, even if they claim to wear democratic garments. Now, the world is set to witness this once more as an even less democratic China is planning to act on its long held ambition to invade neighbouring Taiwan. This may be an even greater threat for the world community, as China is not just emboldened by the Russian move, but learning in which all strategies Russia have botched up. And the world may witness this many more times in the coming years, as the democratic world continues to cheer on dictators by doing trade with them.

2) NOT EVEN THE STRONGEST STOCK GOES UP ETERNALLY

Even before the pandemic struck, technology giants like Apple, Microsoft, Google & Amazon were in peak form and all time highs. While the unprecedented global spread of Covid-19 in early 2020 destroyed almost all major companies’ stocks, for these tech titans it was like a steroid boost. Indeed, March 2020 looked like only a minor blip in their graphs. As the world adjusted to the new realities like remote work and instant ecommerce, it gave rise to a global aura around these companies and stocks, as though they could do nothing wrong. All that stands destroyed now, with Amazon alone losing more than a trillion dollars from its peak market cap. In percentage terms, the fall of Meta (parent of FB, Insta & Whatsapp) has been even steeper. The growth leaders have suddenly turned layoff leaders.

3) THE STARTUP PARTY IS ALL BUT OVER

Everyone knew the startup party was going to end the dotcom way, but it lasted longer than anticipated, partly due to the same reasons that kept tech stocks booming. Institutional investors kept pumping easy money into the tech and tech-enabled startups in the foolish hope of catching them young, before they grew into the next Google, Facebook or Amazon. But with money supply suddenly turning tight, thanks to the war against inflation unleashed by the US Fed and other central banks, investors have cut the supply lines to startups as they have not done in the last several years. There is no more money to be given away for winning customers and building a foolish moat at any cost, but only for pursuing profits. India too witnessed some spectacular drama in this regard as the hyper-inflated IPOs of Paytm, Zomato, Nykaa etc made huge losses for investors, while unlisted entities like Byju’s and Oyo face an even bleaker future.

4) CRYPTOS DESTROYED THEMSELVES

2022 will finally go down in history as the year in which cryptos destroyed themselves. From the advent of bitcoin in 2009, till early 2022, for 13 long years, almost everyone who attacked cryptos got snubbed, while bitcoin, ethereum and the newer coins went from strength to strength. The warnings from several central banks, renowned economists, and even the Chinese crackdown on bitcoin mining couldn’t dent its soaring value. It was said that nothing could destroy cryptos. It proved true in an eerie way, when cryptos destroyed themselves in 2022, with soaring excesses. From one coin in 2009, there were over 15,000 competing coins by 2022, most of them without any kind of fundamentals by way of use cases. The biggest joke was how cryptos were to usher in a new era of trustless transactions, which means there was no need for trust anymore in financial transactions, as the inviolability of the blockchain technology was said to ensure trust automatically. How it all ended up however was as the history’s biggest pump and dump Ponzi scheme!

5) EVEN SUPERPOWERS CAN BE DEFEATED

Underdog Kiev was supposed to fall in 10 days before superpower Russia. But it hasn’t, even by 10 months. Even worse for Russia, it looks like the defeated one by every count. The careful legacy that Putin nurtured for over two decades as the architect of post-Soviet Russia stands shredded to bits, as most of the democratic world looks upon him like a war criminal responsible for around 3 lakh military and civilian deaths on both sides, and he is likely to be prosecuted too as a war criminal. This vulnerability of superpowers is nothing new, as America had bitten dust in Vietnam before. But America’s & Russia’s latter day successes in Iraq & Syria had given them some invincibility which is all gone now.

6) EVEN THE RICHEST GUY HAS TO OBEY RULES

Elon Musk may be the richest guy who ever inhabited planet earth, but 2022 proved he is no way the smartest. His hostile and flamboyant plans to acquire Twitter first fell flat as the microblogging site controlled by some large institutional investors threatened to unleash the so-called poison pill provision against it. But when the Twitter Board realized that there were no competing offers, it decided to go with Musk’s offer. But by that time, Musk had realized his folly of offering an astronomical sum of $44 billion for Twitter, and tried to wriggle out of the deal. However, the Twitter Board threatened to sue him, and it was clear that under US securities laws, he can back off only by incurring huge costs. That is how from a hostile takeover it became a reluctant takeover for the world’s richest man. And even after taking over, Musk has become hugely unpopular in the company and the technology world for mercilessly laying off half to two-thirds of all staff according to various estimates. While some extreme reports that Twitter will have to go bankrupt may not prove to be true, it is a fact that no clear road plan has publicly come up from Musk for turning around the company, which was something he used to boast about before acquiring the firm.

John Antony