The predictions for 2011 are in no particular order and are a mixture of both British and world events. For the last two years, governments all over the world have been doing no more that playing a wait-and-hope game; the political equivalent of whistling in the dark.
Here in the UK, the Coalition government has introduced its so-called “austerity measures”. The rhetoric may well be very impressive to the IMF or the European Bank but what is really happening is that the day-of-reckoning is being postponed by being nudged along by successive disjointed government policies. Everyone is confused.
For instance, in spite of the very negative economic prognosis for the coming year, Stock Markets have been climbing. That demonstrates is that there has been a final dislocation between economies and world markets. Stock markets have become no more than a large sandpit in which speculators and bankers play their money games and continue to throw sand not-only in each others eyes but have also somehow managed to blind whole governments.
Bankers have progressed from custodians and redistributors of money to self-important untouchable deities who are feared by all.
The most bizarre aspect of Global Economics is the inconsistency with which politicians address it.
The blame for the collapse (yes!) of Western economies is often ascribed to a “downturn in the world economy”. However, governments continue to tinker with their own economies without considering any global impact of their policies. In reality, there is no Global Economy. It is a nonsense phrase. All that we really have is a large number of increasingly interdependent local economies. It is a jigsaw of economies, the pieces of which can never fit together properly. The only solution will be a world currency (that would stop the speculators!) and a real globally conceived, calculated and controlled economy.
So what is holding us back? That’s an easy one – politics and man’s natural parochially tribal nature.
One of the most ignored aspects of modern economics has been the rise of the bureaucrat. In that group, I include not-only large slices of the public sector but all non-productive professions such as accountancy, the legal profession, consultancy and those who “analyse”. They do not produce anything new or tradable and there are too many of them. Large slices of the banking profession also fall into that group.
These groups are a massive a drain on an economy. They do not add value – on the contrary, they take. These “professions” are all due for rationalisation because their only contribution is to take and redistribute money which has been earned by others.
It is highly probable that 2011 may be remembered as the year when the waiting and procrastination had to stop so here are the predictions:
1. The era of BIG Government is dying and all governments will be forced to cut public expenditure.
2. This will be a year of strikes, general public unrest and riots. Students and pensioners will stand together.
3. The Euro will finally stop twitching and die. Germany has already realised that it can no longer remain in the Eurozone when it it surrounded by so many lame-duck economies.
4. Most western countries will experience cuts in police, the fire service and rubbish collection. Paradoxically, times of austerity produce more crime and a substantial increase in the incidence of insurance-inspired fires.
5. China is beginning to experience inflation. This will result in an upward revaluation of the Yuan – which effectively will be a devaluation of the dollar.
6. Banks will be punished for holding too much cash and for continuing to withhold funds from commerce and industry.
7. There will be a downward correction in world stock-markets. That is very likely to happen very early in the year.
8. Gold and Silver prices will decrease early in 2011 but rally massively during the rest of the year.
9. Commodity prices ( wheat, soyabeans etc) will rise very substantially during the year.
10. Oil will cross the $100 per barrel barrier.
11. In the United Kingdom, the Coalition government will collapse and there will be a general election in October 2011.
12. Nick Clegg will be challenged for the leadership of the Liberal Party and is likely to “cross the floor”.
13. The Labour anti-Ed Miliband movement will become more and more vocal as the year progresses and as Labour realises that they elected the wrong man.
14. After the next government reshuffle, Vince Cable will become Minister-without-Portfolio and will quietly be put out to grass.
15. The concept of Man-Made Global Warming will be further eroded as a scientific theory.
16. We are overdue a nuclear or chemical accident. Look out for one in either China or India.
17. An earthquake in California is also overdue.
18. There has been some tittle-tattle about the state of the Beckhams’ marriage. Do not be surprised if there is a sudden announcement of an impending divorce.
19. As a result of fewer students, public sector redundancies and over-optimistic projections in the manufacturing industries, UK unemployment will officially breach the 3 million barrier.
20. The 279 Council elections in May 2011 will signal the beginning of the end of the Liberal Party. They are already an endangered species and will now progress to near-extinction.
21. The referendum on the alternative vote will see the “first past the post” system retained. That will signal a long-overdue questioning of the Liberal leadership.
22. There will be an anti Coalition revolt with Labour and the Conservative right-wing standing shoulder-to-shoulder with disaffected Liberals.
23. The January visit to the United States by Chinese President Hu Jintao will not produce a cosy new relationship between the two superpowers. On the contrary, the visit may well produce “sabre-rattling” for the rest of the year.
24. Israel will carry-out a pre-emptive strike on Iran – as a result of the latter’s nuclear programme. Needless to say, the United States will wade-in with all guns blazing.
25. Sudan will implode. That will produce an ethnically-driven Yugoslavia-like civil war. Needless to say, the United States will wade in with all guns blazing -only this time they will be wearing United Nations hats.
The most difficult and surreal world political question – and potentially, the most explosive (literally) is whether the American nation has the appetite to elect Sarah Palin as the next President of the United States. Because, as sure as eggs is eggs, she will be a candidate. That all depends on how far to the right America is willing to lurch as a result of the inevitable failure of Obamanomics.