A Look Behind, a Look Ahead

Since Don Meadows writes the third Thursday editorial, this is my last chance to comment in this space in 2007. What an interesting year it has been. Compared to other sectors of the economy, pulp and paper has been down right boring. Looking back, it is fairly easy to see what we should have spotted that might have gone wrong (home mortgages, for instance), and, as usual, the challenge is to see the pitfalls of the future.

Here in the United States, I think there are a couple of things easy to predict. The U.S. Presidential Race is going to dominate the year. Heck, it dominated 2007. This will affect the ability to get things done in business, especially if the outcome remains as dim and foggy as it is right now. The other big issue for everyone will be the weakness of the U.S. dollar. This is turning international trade upside down. In the paper industry, it is already affecting the flow of raw materials and goods; it may soon start affecting the capital equipment sector.

I just finished a major review of energy and have come to a conclusion, although I don’t know if it will be manifest in 2008 or beyond. This is it: the energy sector worldwide is probably the purveyor of the biggest gold rush mentality since, well, the California Gold Rush. It will dwarf the dot-com bubble when it bursts. The problem is a worldwide plethora of good ideas, outrageous ideas, and just plain charlatans. There are so many and they so radical that it is going to be a while (and a lot of investment money from now) before we see what will really happen. I predict some moderate-sized winners and some very big losers when it all is sorted out.