Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 1004 I. Introduction E very year since the Solari Report began publishing our Annual Wrap Up, our scenarios have said that the developed world economies would likely continue to “slow burn” through the next year. Not so in 2017. The year 2017 will bring profound change – the slow burn is accelerating into a pressure cooker as thousands of pension funds, insurance companies, and private businesses will not be able to continue policies or to meet their full legal and financial obligations. The result will be a wave of “controlled demolitions.” Many sovereign governments that can still increase taxes, issue debt, or print currencies with the assistance of their central banks may not be forced into controlled demolitions. They will, however, be obliged to re-engineer, often in ways that will have dramatic or at least unexpected consequences. During 2016, the Brexit referendum in the United Kingdom and the US election of President Donald Trump, along with clear Republican majorities in Congress and in state houses, stunned the world and rocked the global financial markets. Europe will hold a series of important national elections in 2017. Even the German vice-chancellor is conceding that the future of the European Union is uncertain. Centralization has often been uneconomic, except for the oligarchs enjoying the benefits. Now a productivity backlash is sweeping the globe inasmuch as the growth-by-debt model can no longer ease the pain with more financial methadone. Election results will bring significant geopolitical policy changes and a reordering of govern- ment budgets, laws, rules, and regulations. If these changes are sound, there could be good news on the horizon. If they are unsound, crises in many places will emerge, with increased chance of war and other violence. As developed countries draw resources back to their own centers, the impact on growth and stability in the emerging markets could trigger numerous unintended consequences, including further migration into the West. “You open up your mail. The first letter says your health insurance premium has been raised 30%. The phone rings – it’s your father. His pension benefits have been cut by 50%. Your parents are going to sell their house. They want to know if they can move in with you while they figure out what to do. Your company is downsizing and is offering you a buyout option, so maybe your parents can kick in with expenses and help around the house. Your neighbor stops by. There is a town hall meeting tomorrow night to discuss a plan to raise property taxes by 25% to meet increased municipal obligations and prevent a bond default. Your monthly grocery and utility bills are up by 5% so far this year. Government statistics insist that inflation is running at less than 2%… Welcome to the pressure cooker as the slow burn accelerates.” — From Solari Report 2016 Annual Wrap Up, “Who’s Who in the Transition?”