Quite a few chickens are going to come home to roost in 2009. Many of these chickens have been stored up by the Republican administration in America as presents for the new administration, but some of them simply Are. Let’s do a quick review of the situation and look at some implications.

The Modeling Crisis
Firstly, when it all boils down to it, the problem with the global economy is very simple. Let me break it down.

1> I can sell my house for $500,000
2> There are 2 million houses just like it
3> Therefore the market is worth $500,000 * 2,000,000 = 1 trillion dollars.

However, there’s a simple problem with this arithmetic.

4> By the time we’ve sold one million of these two million houses they aren’t worth $500,000 any more.

The real value of a thing is what you can sell it for when you need to sell it. Never, ever forget this!

This is a gap between models and reality of enormous scale, and as reality begins to intrude into cosy financial arrangements based on this kind of modeling, there is an enormous evaporation of model-only wealth. All the derivatives and so on basically operated to let people who had model-only wealth exchange it for real money, which they then spent.

This modeling crisis is not confined only to the financial domain. A very great many of the problems around getting sensible environmental policy made also revolve around the perception of gaps between models and realities, and some fairly plain facts – like the enormous temperature fluctuations of the earth in the past two thousand years – are continually under-played by the modelers, and over-played by the denialists.

What we have is a series of collisions between models and reality, and disputes about the accuracy of models. Vast rafts of government policy, and therefore concerted human action, are floating adrift on this modeling abyss. So my first theme for 2009 is a crisis of confidence in all areas where models of reality are used as maps for tangible action and a corresponding desire to return to simple, direct governance of problem areas where possible. Don’t expect the precautionary principle to be applied but do expect major shakeups in any field which heavily relies on computer modeling for its credibility or day to day operations.

Biology and Genetics
We now have a clear critical mass of novelty in biology and genetics. Stem cells, genetic analysis of disease organisms, individual medicine based on our personal genetic makeup, continued lying and near-misses around genetically engineered food, continued exposure to ever-weirder deep sea organisms and many other factors all contribute to the simple fact that biology is cool again. If you want to get kids into science as a way of seeing the world, the big news right now isn’t space exploration, or particle physics, it’s “have you seen what these guys mucking around in the genome say is coming?”

Biology, unlike computer science, is real science and generally needs a lot of institutional support. It’s a team sport, too. Labs are institutions with complex histories and funding requirements. Getting the goop to grow is not easy and a lot of hands-on expertise is required. All of these factors tend to favor a radically different kind of people than those who lead the internet revolution: less nerdy, less male, less abstracted. Expect more and more visibility for female scientists in biology and genetics and a push behind biology as The Science Making Real Progress in most of the next decade.

But I think it’ll really kick in visibly in the public eye in 2009 as we start seeing people in wheelchairs walking around and similar miracles coming out of Asian countries simply throwing stem cells at whatever they can and seeing what happens. Lacking the complex legal and regulatory requirements around “just give it a shot on a person with nothing to lose” type science is going to turn out to be a huge differentiating factor in how fast science happens globally, for both good and ill. Expect “mad science” to become a visible trend as people begin to push on the limits of reason and good taste in the quest for news, dollars and progress.

The Virtual and the Real
Underlying both of these trends is a shift away from the virtual, and towards the real. Basic issues like food and fuel supply loom ever larger as the imaginary model-based wealth is revealed as an enormous pot of fool’s gold, and people of all lifestyles scramble for their own forms of shelter and security. Tangible questions like “to who’s advantage” replace more esoteric questions like “what is freedom?” as the physical infrastructure of western society begins to be clearly threatened by decades of neglect and new financial volatility.

Iraq, and the Middle East, and military affairs in general.
Israel’s blank cheque support from the Bush administration, coupled with military adventurism in Iraq and Afghanistan, have created an artificially-stabilized Middle East. This is not going to last. The US is going to get out of Iraq and the race against time is whether the US is out before or after the global economy seizes so tight you can’t buy new tank tracks. Afghanistan is inevitably going to return to being what Afghanistan is at a fundamental political, economic and religious level: a compromise between sides who hate each other to death on paper, but need each other to function in reality. The bottom line is that the artificial political stability imposed on the Middle East by the cold war and subsequent superpower support is about to implode, and it is going to be war to the knife, knife to the hilt as America returns to being primarily focussed on domestic affairs.

The only question is who, why, and when. My guess is that it will largely be skirmishing within fixed borders for a while yet, with the possible exception of massive changes in Iraq’s interior situation and possible de facto Iranian control of some areas as the US withdraws. But multi-generational political over-reach from the Israelis in terms of both world public opinion and basic military realities may yet give rise to significantly messier scenarios – although I really don’t expect that kind of trouble for a good few years yet. The evolution towards a Muslim NATO seems inevitable, but until it happens, Israel is likely to remain secure at least at a basic level. But Turkey, the Kurds, sectarian violence in Iraq, reopening of old wounds around Israel, Iranian political strategy shifting as the US gets off their doorstep… Expect a continued grind of wars, albeit small ones, terrorism and insurgency. We are a good distance from a fat fire but the stove is on the pot, smoking and spitting oil. Without an external Big Stick, affairs are going to get settled. It’s just a matter of time.

As far as India and Pakistan goes, I can’t even think about it.

Technology
Only two points.

1> Computers are now fast enough that people are now buying on price and portability. Netbooks also represent a desire to hedge against technological uncertainty – buy a machine expecting to replace it in a year or two, rather than three or four years.

2> Pressure on the internet will continue to grow. Illegal use of cryptography will increasingly be seen as a fundamental human rights issue as people use technology to take back their rights.

Overall prognosis
The world is about to get a ton more multi-focal and complicated. Interactions between problems (i.e. environment and economy) will begin to seem as important as the problems themselves, and the lack of faith in any single current agenda as a universal solution will drive large parts of the population into despair. There is going to be a lot of pressure on us to evolve whole new classes of solutions to the problems at hand now that the hope of simply buying out way out on the proceeds of an infinite economy boom has gone.

The going is going to get hard, and it’s time to get serious about priorities and goals, both at the national and international level. Winnowing down focus areas and concentrating fire is going to be one intelligent response to the more complex environment we are going into.

Finally, expect a lot of “new age” type thinking – spiritual and pseudo-spiritual values – as the dream of “heaven on earth through infinite money” falls apart. I don’t think these trends are going to go anywhere fast or be particularly visible, but a deep rethink about what kind of planet we are living in, and how our cultures function is inevitably underway as the existing model of the future (“dough for all!”) comes to pieces.

I’m slightly more optimistic than I expected to be at the end of this piece. Good 2009 to all of you!