05-12-2006Pg 1

Dr. George FriedmanDr. George FriedmanCEO, STRATFORCEO, STRATFOR

Energy Executive Insight SessionEnergy Executive Insight SessionErnst & YoungErnst & Young

September 23, 2009September 23, 2009

1 512 744 – 4300 www.STRATFOR.com Info@STRATFOR.com

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Three Major Thrusts of the 21Three Major Thrusts of the 21stst Century Century

• Dramatic decline of birth rates

• Emergence of technologies to compensate

• Growing power of the United States

Global Decline of Birth RatesGlobal Decline of Birth Rates

• Urbanization makes children conspicuous consumption

• Industrialization expands period of education to mid-20s

• Expansion of life expectancy creates 15 year retirement

• 50 percent of life spent being non-productive

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Technological SolutionsTechnological Solutions

• Medical extension of productivity• Robotics• Dramatic increase in energy consumption driven by

robotics• Solutions

– Non hydrocarbon energy sources– Space-based solar power– Japan’s Mistubishi just created major consortium– NASA project

• DOD project– Geopolitical solution– Battlefield solution– Fits into U.S. model of R&D

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U.S. is the Dominant PowerU.S. is the Dominant Power

• 25-30 percent of global economic activity

• Net worth of about $339 trillion• Industrial output equals China and

Japan’s combined• Control of the world’s oceans• Control of space

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ChinaChina

• Third world country of 1.3 billion people– 600 million live in households less than $1000

a year income– 440 million $1-2,000– 200 million $2-20,000– 60 million over $20,000

• 40 percent of GDP NPL• Low rate of return on capital• Economy hostage of the west• Military trapped by geograpy

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Other CountriesOther Countries

• Russia temporarily emerging but unsustainable

• Europe fragmented • India fragmented bureacratically and

regionally

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Three Major PowersThree Major Powers

• Eurasia hollowing out, new powers on the periphery

• Japan—2nd largest economy• Turkey—17th largest economy• Poland—18th largest economy• Fourth power emerging later in the

century—Mexico, currently 13th largest economy

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Problem of the Moment: IranProblem of the Moment: Iran

• Long term threat as nuclear power• Israel promised crippling sanctions: gasoline

embargo• Russians have blocked it and are backing

Iran• Israel feels there won’t be a better time to

act• Iranian response will be to mine Straits of

Hormuz• Disastrous impact on economy

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