LOOKING AHEAD

...and a Happy New Year to you all.

I was going to make a slew of New Year Resolutions, like not pointing out so often what a dope Paul Krugman can be but I decided that because we all break every resolution we make with 72 hours of their adoption so there's no point. Instead, I'm going to take the dangerous road and try to predict the five biggest issues that will arise in the coming year and hope that if the Big Trader allows, we will all rally in 365 days to see how correct I was. So, in no particular order, here goes.

1. EUROPE AND IT'S CURRENCY. I really think this is going to be a decisive year and one in which we will learn if the great experiment is going to be a success, a dismal failure or a God-awful muddle with no clear conclusion is sight for years. Will a resurgence of nationalism carry the day or will a realization that without continental cooperation the future of individual countries in the Euro Zone is bleak? Will markets continue to support the concept of a united Europe or simply refuse to help without the direct involvment of Germany and to a lesser degree, France? And finally, will the fiscal discipline of Germany prevail or has the concept of the "Nanny State" been ingrained too deeply in the European pyschy?

2. QUO VADIS AMERICA? It would be unfair to say we face the same problems as Europe as the debate still rages, but make no mistake, this year will be the critical "tell" as to the future of this nation. The Leader will try to drive the psychy of this country towards that of a Social Democrat tradition of the European left while the Republicans will try to win the hearts and minds of the voters with a call to return to "traditional" American values. A lot, to put it mildly, is riding on this debate

3. CHINA RISING. For no other reason other than the sheer incompetence of the fiscal authorities in this country, aided perhaps by the shift in the membership of the Federal Reserve Board, 2011 may mark the final decline of the dollar as the world's reserve currency. While a shift to the Yuan will not take place, I expect to see regional acceptance of the Yuan as a payment mechanism, certainly in Asia if not in other parts of the world. The effect of this new reality--if indeed it comes about--will be incalculable, not the least of which will be the ability of the United States to finance itself in world markets in the future. If Asia goes can the Middle East be far behind and then...

4. THE NEXT GREAT DEBT CRISIS. You know my views as to state and municipal debt. "If tis now, tis not to come; if not to come, tis now; if it be not now, yet it will come"...and more and more people now realize it.

5. FINANCIAL REFORM. Somebody is going to have to figure out how this monstrosity of a piece of legislation is going to be implemented. It will not be easy and as a result the availability of credit and the openess of the capital markets to finance growth will be put into real question. We must have substantial growth; 2.00% will not do it. Without substantial growth this year a double dip is a real possibility.


There is always another issue that is always present no matter how long is one's list. That of course is what does Mr. Murphy have in mind for us? We shall see, but we shall deal with these major issues throughout the course of the year and those of Mr. Murphy beginning tomorrow. Stay tuned.