PREDICTIONS

The global economy will be deeply divided on the emerging markets, which will experience a period of tremendous growth and the developed countries, which will fall into the deep recession.

In North America, the US Government will continue to be committed to the execution of unwise governmental strategies on the global scale as a result the forthcoming crisis in the car loans, credit cards and financial services sectors will have place. The end of 2008 will bring devastation to the US economy. It will take up to the two-three years to introduce the necessary reforms and gain the fruits of novel governmental strategies to be introduced by the newly elected US President. Hilary Clinton will be a new US President. However, the time of reforms and changes will be a difficult period for American people.

The oil price will increase sharply bringing plenty of wealth to the emerging markets: Russian Federation, Saudi Arabia, Venezuela, Iran and other oil rich countries like Norway. The innovation will come from the emerging markets mainly.

In Europe, the GDP will grow at 2-3% and the average inflation level will stay at 4-6%, hence the overall European economy decline rate will be set at 3-4% annually.

P. R. China will not revalue its currency and continue to be a champion in the innovation, production and services. The nation will benefit strongly from the ongoing outsourcing of the US manufacturing industry to the PR China. At the same time, India will be more concentrated on building the world biggest global services economy.[Photo]21 Dec 2007 05:05 PM 1) Clinton to win the US Presidential race.

2) Bill Clinton to join Tony Blair as an Envoy for the Middle East peace process and potentially even as a chief negotiator with Iran (albeit in 2009). I do not foresee even air strikes against Iran as a realistic option for the US with stern opposition from China and Russia. Little or no progress in Iraq.

3) US economy to remain resilient despite the sub-prime crisis broadening. Consumer spending to remain relatively high and about 2% growth in overall economy.

4) Dollar and Oil prices to remain steady at current levels (+ or - 5%).

4) Spectacular implosion of Chrysler.

5) China to launch a strategic initiative to expand its service industry. Year of the Bear!!
by Arif Suwaidi [Photo]21 Dec 2007 12:30 AM The general sentiment as we approach 2008 is distinctively bearish. I am in favour of this view particularly towards the US and the major European markets. However there is still Alpha to be had in other Geographical markets, but I will keep my predictions to the US.

Financials will continue to report negative news throughout the first half of 2008, we are only starting to see the true magnitude of sub-prime write-offs and the scenario is only going to get drastically worse. Although the recent clambering for Sovereign wealth by blue-chip names such as UBS and Morgan Stanley gives the impression that they maybe in dire trouble, the truth of the matter is they can actually self-finance their own losses!! Under closer inspection they seem to have negotiated early with parties that have finite capital to free the use of their own reserves. Like a game of musical chairs, moving into 2008, which bank will be left with huge losses and no bail-out financing??

The US collapsing into recession is a possibility in 2008 and is ultimately the real issue, As the phrase goes, if the US catches a cold…. etc etc. A recession has been averted temporarily due to a resilient consumer and strong fundamentals in some sectors. However if house prices continue to decline and home foreclosures continue at the rate we have seen of late, then we are only delaying the evitable. Why so bearish? The US consumer is king!! US homebuyer's favour fixed rate mortgages. When US Fed rates were at 1% and house prices were inflating, a large proportion of average American's jumped on the bandwagon and purchased property for investment purposes, with the view that property can only go up. Loose credit standards allowed even those with poor credit histories to borrow as high as 125% of their property value or many multiples of their salary. Naturally to curb this erratic house inflation the Fed raised rates, but at a rate of 17 times over a period of 2 years to 5.25%. During this period of rising interest rates, most borrowers benefited from lower fixed "teaser rates" and the impact of the high rates was not yet felt. Fast forward to 2008 and approximately 60% of mortgage borrowers that fixed during that period are coming off their "teaser" rates. Impact? A severe increase in home foreclosures, further downward pressure on the housing market (that will also impact prime borrowers) and a drastic reduction in consumer spending. The recent Fed rate cuts of 75bps from the high is too little too late. Especially as mortgage interest will still be some 4 times higher than most borrowers fixed their original mortgages. Also consider that they now have negative equity and banks are unwilling to remortgage to anyone other than an upper prime borrower. The average US sub-prime borrower will either have to pay a punishing mortgage rate or sell their asset at a loss.

Furthermore retail figures are starting to reflect the strain felt by the average US consumer. Expectations from the retail sector in Q1 2008 should be lower than last year. If we don't witness a slowing of consumer spending that will spell even more bad news!! Simply because consumers will be further stretched as conditions deteriorate.

US Interest rates will need to come down further for the above reason, but it will be a fine balancing act as inflation may start becoming a worry. The greenback ($) cannot maintain its current weak stance forever. A flight to USD backed assets will continue if uncertainty keeps plaguing markets. I predict cable will probably trade between 1.81-84 in 12 months.

Oil will sustain its current levels, but may dip slightly for a short timescale. This will be fuelled inevitably by Geo-political tension in Iraq and increasingly in Iran and maybe even Russia coupled with the uncertainty in estimations of oil reserves by some Middle and Far East countries and simply the demand exerted by emerging markets.

Iraq has become a never ending story!! To explain my view, it is worth shedding some light on the country’s history. Under the control off Saddam Hussein the minority Sunni’s had most of the wealth and power in Iraq, this dates back to the beginning of the twentieth century. The majority and poorer Shiaat’s resented this. The US led invasion opened a can of worms and the Shiaat’s saw this as an opportunity to cease power after many years of being disregarded by Saddam. This is further complicated by alliances from foreign countries, Iran favours Shiaat’s and Saudi Arabia and most other Arab states back the Sunni’s. The US has an impossible task!!! It is trying to control a feud that dates back over 1400 years and neither party will back down. It is highly unlikely that Iraq will be segregated into three or that either sect will dominate control. Nevertheless, a bigger concern to the world economy is Iran, My view is in 2008 the US will become increasing more involved in its nuclear affairs and this will further create a strain on global markets.

Stagflation. World War III

World War III is inevitable. With the US losing its ground power will redistributed from the West to the emerging economies of the East. China will become the new superpower. Unfortunately, as proven by history, a major shift like this has never occurred without war.

1) A weakening USA

The USA dictates much of what’s happening in the West. Here are the main drivers behind its decline:

- a weakened dollar due printing money to fund the war in the Middle East
- excess liquidity has led to the reckless over-investments made by Western Banks and Money Managers which then led the credit bubble. Triggered by the sub-prime mortgage crisis, the bubble has burst, creating a huge hole in their balance sheets which they cant even measure
- this will further weaken the dollar as the US will be unable to raise interest rates for fear of plunging the economy in recession. 2008 will be the year when the dollar loses its clout as the global currency. Central Banks are already shifting their reserves to other currencies.
- If China and Saudi Arabia break their pegs to the dollar – which they will be compelled to do as the dollar is weakening and bringing their currency down with it, there will be a revaluation of their currencies and a rise of real interest rates which will retract the huge outflow of cash we’ve been seeing from those economies into the western world. This will weaken Western currencies and equities further.

2) The inevitability of War

Like any empire that’s going down the Americans will be compelled to flex muscle whilst they still can. When problems at home are growing, the obvious thing to do is to try to capture foreign territory that’s rich in resources. Added to this is the influence of the Jewish lobby which will push the US to take action against Iran to protect Israel in the Middle East. Action against Iran is almost inevitable.


3) The Emergence of the East

If the above happens, there is a good chance that the other growing powers will be compelled to join the war. The US has enjoyed too long a period of meddling in unwanted territory without being challenged by anyone. This time a number of drivers will escalate the war

- Growing nationalism as the balance of power is shifting. We have escalating tension between Russia and the West. Nationalist tension has been a key driver to all great wars.
- China is expanding rapidly and desperately needs resources. Unlike Russia they do not have their own energy, so the oil-rich Middle East will be lucrative ground for them also
- Extremism: the continued ignorance of the Americans is fuelling extremism. Isn’t “extremism” relative? To the Islamist fundamentalists the US is extreme and unjust in its interventionist approach. Like Hitler did with the Jews the Americans are pegging the world’s problems on Islamists.
- A weakening US economy will mean they will find it very difficult to fund another war. Printing money will drop the dollar further and further destabilize their economy

Alas, here we have it: the ingredients of World War III. Our present climate is frighteningly reminiscent of pre-World War II times, when growing nationalist tensions, intensifying ethnic conflict and a shifting balance of power escalated to a major war. No superpower has ever seceded power quietly and the US doesn’t look likely to be the first. If this happens, history will be, once again, repeating itself with a major conflict bringing down the incumbent super-power and emerging the new world leader – China.

Predictions 2008
by Dudley Holley
It is impossible to predict the future, but one can make educated guesses and these are mine;

Sterling is a one way bet, down - put your savings in $ or Euro accounts.

Because of this, our balance of trade will get even worse and inflation rise strongly.

Unemployment, particularly of the unskilled, will grow affecting young people mostly, and leading to a backlash against immigration.

Interest rates will be lowered to 3.75% to keep the economy 'ticking over' but leading to an exodus of hot money putting further pressure on sterling.

Due to HIPS and the state of the economy, the housing market will drop 20%.

There will be more scandals regarding government ineptitude in all departments and the departure of many of todays ministers.

The two aircraft carriers will not be built. predictions
by patentnerd

1. Clinton
2. US indices steady to down about 5%
3. Negative profit growth.
4. Corp. cash flow % of GNP from about 10% to 9.5%
5. Fed interest rates steady.
6. Dollar steady to down 10%
7. US economy at 2.5% with upside.
8. Fed deficit spending narrows with a possible reversal.
9. Corporate profits down across the board in autos, houses, manufacturers, up in high tech, and utilities.
10. Either a missile strike or internal leadership change in Iran. No mass war.
11. Increase in upper income tax bracket is more acceptable.
12. Housing prices continue decline.
13. Increased foreclosures with steady state reached in Q3.
14. Bankruptcy filings increase with reform in bankruptcy laws modified for foreclosure 'victims.'
15. Increasing scrutiny by various 'transparency' organizations of government and corporate organizations.

Overall theme is movement from centralized management of capital to more distributive models. Accelerated adoption of open source software that supports this.

Employment in US is steady with slight rise in certain sectors. No recession.

Everyone is confused because there is going to be a divergence in what wall street shows and what the GNP shows. This is due to the distribution of capital management. Cash will flow less through corporations and more through smaller organizations as IT benefits are realized in non vertical structures.

Quantitive analysis becomes more accepted. Generally, people are going to look behind the numbers more with a common sense approach. Risk becomes more difficult to evaluate thereby increasing friction in centralized capital management (where deception is more prevalent). This will play a role in fluidity of the capital... thus leading to the rise of decentralized capital management.

Long term trends:

1. Globalization of available skill sets.
2. Increasing formal education via the internet.
3. Increadingly international workforce.
4. Decrease to slight increase in foreign students applying to US universities. But sharp increase to MIT, CIT, etc.
5. Return of humanities over professional degrees in undergraduate.
6. Economic analysis of moral and ethical decision making improves.
7. Pardons granted to upper level Bush administrative officials for war crimes.
8. War crime prosecution pursued for mid to uppper level administrative officials.
9. ICJ asserts jurisdiction over Blackwater officials.
10. Iran moderates.
11. Bases remain in Iraq.
12. US troops remain in Iraq.
13. Violence decreasee in Iraq.
14. Pakistan goes through periods of instability.
15. Al Qaeda reforms in Pakistan and redirects efforts to European targets... probably Germany, and Italy.
16. Rise of the virtual states with sets of laws and contained virtual currencies (e.g., second life)
17. Transition to nuclear power in short term to solar power mid term. First true commercial fusion reactor in about 30 years.
18. Global warming continues with politics deciding if a geoengineered cooldown takes place. It doesnt.
19. Gradual legalization of various drugs with tight regulatory schemes.
20. Societies become more internally violent.
21. Decrease in country to country wealth stratification.
22. Slight decline in class stratification.
23. Jetson's leisurely life style begins to take hold in about 50 years.
24. The market based economy morphs into a socially responsible market economy.
25. Decentralized education.
26. Decentralized power in the near term with centralization via fusion uptake.
27. Decentralized air transportation systems implemented.
28. Internation protection of human rights in relation to economics (wages, individual to individual contract claims).
29. Increase in individual financial transparency with decrease in personal life transparency.

Missed opportunity

by Sick'nTired of Labour If Great Britain falls into recession during 2008 and onwards then we can all clearly blame New Labour, Tony Blair, Gordon Brown and all. They have lead GB up a one way street while wasting billions of pounds. This has been during a period of worldwide low interest rates and freely available funding. As I have written many times on these FT pages, what do we have as a result but housing, housing, housing and mass immigration which is and has been fuelling the housing demands. Recall bungling Blunkett's comments of no limit on the amount of immigration which is in keeping with one of Marx's basic rules: no nationality nor international boundaries - we are all one big happy communist family.
(Stop watching the Labour magician's come spin doctor's right hand instead keep an eye on his far more devious left hand.)

The result after 10-11 years of a Labour Government in GB is just a period of wasted opportunity! A period of wasted opportunity where the kitty is now bare.

Therefore my predictions: -

1. UK house prices will fall by 25% on average.

2. GBP will fall to US$1.7

3. Gordon Brown will retire with his tail between his legs.

4. Taxes will rise and UK debt will increase significantly.

5. The gap between imports and exports will increase with exports declining.

6. Councils will have increased difficulty funding services.

7. Public sector pensions will virtually bankrupt many councils. (Currently roughly £1,0000, 0000, 000 is needed to fund Public Sector pensions.)

8. Unemployment numbers, economically inactive along with all PC categories which combine to provide the current 10 million people out of work will increase.

9. Labour Government will go cap in hand to the World Bank for funding.

Thank you for voting Labour and, have a Merry Xmas! 2008
by puttenham Bear market - yes caused by bird flu pandemic in Asia prior to Olympics and pork food safety issue in USA. Food inflation will be highest in US history.

WTI Oil price on 12/31/08: $US 55/per barrel caused by strengthening of US dollar in "flight to safety".

China revalue currency - no

Credit market squeeze - yes, squeeze on people who need credit and yes squeeze on people to use credit (by incentives) who do not need credit.

Next US President: Bill Richardson elected by men and women voters over 50 years old who are highly disenchanted with Republican Party performance over last 7 years and who are looking for non-wealthy, leader and manager with experiences just like them.

Iraq: agree Iraq will be split into three autonomous states along religious lines
but they will share the same currency since they are incapable of organizing themselves differently.

Predictions

by John Doe US - tough first half of year, oil to move back to fundamental level based on demand and supply, c. $60bbl. Inflation eases as economy slows and price and wage cutting take effect. Fed takes more aggressive action to cut interest rates. Second half sees effects of cheaper money coming to bear, with speculators coming out of hiding to buy undervalued assets at cheap (base) funding costs. Cheap funding stays for longer than needed, creating another, worse asset bubble with more troubling effects in 2009/2010.

UK: employment holds up, inflation remains in check. Prices spike in early 2008 then fall back as oil steadies and soft commodities react to pricing by booming supply. BoE remains aggressive on base rate cuts in fear of being on the front page again as 'the bank that failed'. Housing market continues to soften for the first half of 2008, then regains momentum as lower interest rates, higher rentals and more reasonable pricing take effect creating a second round bubble from 2005. Retail spending holds up, although down marginally but boosted by price discounting by retailers. All in all a tough first half, but coming out better in second half due to government/bank intervention.

Predictions...
by il Sardo

Making predictions is a nonsensical pastime, unless, the predictions are made in a sense of sarcasm or humor or you have unusual acumen such as Maestro
Bernard M. Baruch who had this to say:

“Approach each new problem not with a view of finding what you hope will be there, but to get the truth, the realities that must be grappled with. You may not like what you find. In that case you are entitled to try to change it. But do not deceive yourself as to what you do find to be the facts of the situation. “
Bernard M. Baruch


With this advice in mind…

1.Recession.

The facts about the world economy in 2008 are these:

1.) Due to a miscalculation by most Money Managers in the Western World, there is a vast amount of assets in the hands of Western Banks with unknown value. This compels all banks to halt their most important function in the economy: The lending of capital to business and consumer.

The result puts a brake on economic growth, hence there will be a recession.

Since the laws of inertia apply to the activities of mankind as well as the physical world and since this paralysis of banking activity is so pervasive, it is logical that the
duration of the recession will be for many years and the scope of the recession will enlarge.

2.) The population of the planet in 2008 is seven billion people, most of
whom live in urban areas.

They no longer produce the essential commodities required for staying alive: water and food. These commodities, plus the commodities of
energy and metal required for maintenance of economic activity, are insufficient
to meet the world needs.

We can see the prices of commodities soaring as people
around the world bid for them.

This implies inflation due to the laws of inelastic demand.

With inflation and recession will come political insurrection and a widening of the recession.


2. War

There are four dominant areas on the globe in 2008: 1. The West (USA, UK, and the EU.) 2. Russia. 3. China. 4. India.

The only country with its own internal resources of energy and military
technology is Russia. The West has no energy. India has no military technology.
China is buying sources of energy and military technology across the globe.

Since the West is controlled by the Israeli Diaspora, and Israel requires
security in the Middle East, the West is compelled to continue its warfare in
the Middle East in order to control its energy source and please the Israeli Diaspora.

Hence, warfare in this area will continue.

3. Future Threats

The West realizes that Russia has the ability to throw the world
into a “Nuclear Winter.” However, the Western military optimistically believe that they can prevent this through some form of interceptive technology.

Like their colleagues, the Money Managers who made an erroneous calculation, they are determined to win adulation by emasculating
the Russian Military.

We see them building rocket bases in Poland and the Czech Republic and assisting Japan in the same process.

The Russian chess players are several moves ahead of the West and hopefully, another “cold war” will not ensue.

If a cold war ensues, this will exacerbate the economies of the entire
world as international trade declines and manufacturing and service
countries like China and India are left without customers.

Conclusion: 2008 appears to be the beginning of a decade of unhitherfore seen regression.

However, as Bernard Baruch so insightfully explains,
this presumption is probably wrong.

Prediction for 2008 n the US

by Bennett Quillen Guiliani will be the US President. Congress will revert to GOP control. Oil exploration in Alaska and off shore will finally begin to proceed. The effect will be to drive oil prices down by 10% even though additional oil is not forthcoming for at least 8 years. The market will fluctuate move between 13,000 and 14,000.

A GREAT INNOVATION YEAR 2008
by Viktor O. Ledenyov The global economy will be deeply divided on the emerging markets, which will experience a period of tremendous growth and the developed countries, which will fall into the deep recession.

In North America, the US Government will continue to be committed to the execution of unwise governmental strategies on the global scale as a result the forthcoming crisis in the car loans, credit cards and financial services sectors will have place. The end of 2008 will bring devastation to the US economy. It will take up to the two-three years to introduce the necessary reforms and gain the fruits of novel governmental strategies to be introduced by the newly elected US President. Hilary Clinton will be a new US President. However, the time of reforms and changes will be a difficult period for American people.

The oil price will increase sharply bringing plenty of wealth to the emerging markets: Russian Federation, Saudi Arabia, Venezuela, Iran and other oil rich countries like Norway. The innovation will come from the emerging markets mainly.

In Europe, the GDP will grow at 2-3% and the average inflation level will stay at 4-6%, hence the overall European economy decline rate will be set at 3-4% annually.

P. R. China will not revalue its currency and continue to be a champion in the innovation, production and services. The nation will benefit strongly from the ongoing outsourcing of the US manufacturing industry to the PR China. At the same time, India will be more concentrated on building the world biggest global services economy.

Bear Market
by M G Shimoga No.The 20-year cycle of dips
i.e.1947,1967,1987 did not repeat in 2007.There will be
no Bear Mkt

China & currency revaluation
China will not revalue its
currency in any appreciable manner

OIL PRICES
Oil prices will see fall.

Interest rates
Interest rates steady

Predictions for 2008
by munidas pereira . Bear market in 2008 -yes. The slowdown in the US will affect other countries to a lesser extent

2. Oil prices -down slightly due to drop in demand (due to economic slowdown) but sustained by political tension (breakdown in middle east peace talks ?)
Interest rates in the US down slightly. -economic slowdown