Highly Placed Professional's 2009 Predictions
So where does this lead me for 2009's predictions ?
Well, I don't share the view that stock markets will start anticipating growth next year. I think what happened in 2008 has not only changed the Western economic model forever, but it has also left a nasty legacy of mistrust. There is even a real concern that encouraging another bubble through close to zero interest rate policy will inevitably lead to another costly collapse. And, in any case, we have to get through rising unemployment and multiple business collapses before any confidence returns to the markets.
How about the Obama effect ? I was recently in the States, and, like here, the majority appear to feel a spiritual change is in the air. But there is no illusion. 'No drama Obama' inherited a dammed mess - and that was before the messy stuff started hitting the fan again in the Middle East. What I do know is that Stateside there is no appetite for another foreign war and people feel really let down by the so-called 'War on Terror' (a view that would have been heresy immediately after 9/11).
And people aren't going to shop 'til they drop any more. That great icon on American consumerism - the shopping the mall - was practically deserted. Everyone is questioning the whole concept of credit cards, debt, mortgage financing, etc.
Here's another prediction - people have had enough of financial scandals - and hedge funds. I met a guy who used to be a country club rep for Madoff funds. He made millions, but also made the great mistake of investing his own money with the alleged fraudster. Now he is broke - no job and no friends - as he unknowingly shafted them all by selling them on Madoff!
And how many others have suffered from the leverage and the questionable practises of the hedge fund industry (gates and the like) ? I can't do much except vent my frustration that there are not enough regulation and oversight. I predict the industry will become much more heavily regulated, and that most hedge funds will simply disappear in 2009.
Also, just watch Gordon Brown and Labour start to take the blame in 2009 for the current economic mess we're in. Gordon will learn that people don't care about 'global leadership' - but they do care very much about their jobs and their own dignity.
And a word about bank profits. Yes, some firms will make some money in 2009 - but not much. But not much is the shape of things to come. And M&A in 2009 ? Forget it. It will be the worst year this century so far.
Reader Comment
'The US economic model may be reaching its logical conclusion - 'spend and lend until the end' could have been the motto for the people and the nation that has raced its horse about as fast and as far as it will go'.
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