The year that's passed and the year to come

Well, it was quite a year. Aung San Suu Kyi was freed; Liu Xiabao won the Nobel Peace Prize but was not allowed to collect it; Ivory Coast is descending towards civil war.

But the world’s main preoccupation was economic, as we learned how different nations handled the international crisis. On 1st January 2010 I wrote ‘I thought last year that the economic spotlight would fall on Europe and it hasn’t. But I believe it will in 2010.’ I was right this time. By February it was clear Greece would need to be bailed out, and the markets began to ask themselves whether the peripheral countries were European risks or independent risks. This dilemma was made more acute when Ireland’s attempts to rescue its banks failed, and the Eurozone had to bail it out, too. The question remains unanswered.

I had forecast that the Conservatives would have a comfortable victory at the general election in May and of course this turned out to be wrong. I still can’t work out how they managed it: not so much missing an open goal, but an open goal with the other side’s defence trying to help the ball in. I had thought a decisive victory would push the pound up to 1.25 but it ends the year at a bit under 1.17, as the coalition still looks fragile.

Oil, as predicted, spent the year at $75-85 until the recent cold spell in the west pushed it up towards $95; I didn’t think gold would go much further than $1,250 but at the end of the year it was $1,400, the result of continuing uncertainty and poor economic management in Europe and America.

I think oil will edge back over $100 in 2011, but am not keen on gold: barring the occasional hiccup back down to $1,250. We shall see. London stocks put on 8 or 9% in 2010 and will I think have a better year: expect the FTSE to pass 6500.

Obama has had a bad 2010, losing the House. His 2011 will also be bad, as they try to unpick his health reforms.

But it wasn’t all bad: I mentioned that 2010 would see a transfer of wealth and importance to the Far East. Singapore grew at just under 15% last year and might expect double digit growth again in 2011.

All out war between North and South Korea will be avoided, but dreams that the South would take over the North will not materialise: they just can’t afford it, and the rest of the world can’t afford to chip in.

So, more trouble in America, more of the same in the East, and more of the same in Europe: the euro must be saved because it is a political project, but Germany is not prepared, with a string of local elections in 2011, to pay for it. More dithering and inaction is all I can forecast, with the markets questioning Portugal, perhaps Spain, perhaps Belgium. There will be further social unrest at the austerity measures, making life even more difficult.

The prospect of an Iranian nuclear weapon still hangs over us. It is at this moment hard to predict the effect on Middle East Politics of Israel’s projected self-sufficiency in energy and of its becoming a net exporter. It is important but it is too early to guess whether it is for better or for worse.

2011 will be difficult, but, I hope happy; and I wish you all the best.

Finally, I predict that the Prime Minister of Italy at the end of 2011 will be..... Silvio Berlusconi.