So you want to know what's going to happen in 2012?

As a public service, here are my predictions for the new year:

• There will be a lot more talk about the likelihood of the Euro failure. It will either fail or it won’t fail. The Eurozone will still be in crisis at the end of the year.


• The London Olympics will take place. Everyone responsible for organising them will describe them as an outstanding success. Everyone caught up in the jams in London will describe them as a major pain in the backside.


• Obama will be re-elected to the White House in November. Or he will be beaten by Mitt Romney. The US will still be in crisis at the end of the year.


• The ratings agencies will make a whole series of baseless judgements about different national economies. Because the people who make the markets will slavishly follow the ratings, they will all be proved accurate. Governments will continue to allow the agencies to dictate their policies.


• The Chinese will discover the hard way that ‘overheating’ really is a phenomenon and you can’t sustain unsustainable growth indefinitely. Or they will have another boom year and that painful but salutary lesson will be postponed again.


• Germany will win the European football championships. Or they won’t in which case one of the other teams will. It might be Spain but then again it might not.


• In other football-related news, a leading star, faced with his 25-year old supermodel showing her age, will make a fool of himself with a seventeen year old mesmerised by his figure - the athletic one he shows on field and bedroom or the one in his bank account. He will try and fail to block publication of the story. Eventually he’ll find it cheaper to pay off the teenager, who will make the easiest 300 grand of her life, and the wife will stand Tammy Wynette-like, by her man’s earning potential.


• The Queen will celebrate her diamond jubilee. It will all be jolly wonderful. People in countries round the world who take joy in poking fun at the British monarchy will be glued to their TV screens to enjoy the pageantry. 


• David Cameron will do all he can to take credit for the jubilee as he’ll have no other achievements to his name. He’ll get a three-point bounce in the polls.


• The pope will piss off the followers of one of the World’s great religions. It might be the Catholics.


• The Tea Party in the States will continue to delight us by achieving that ideal and elusive balance, sought by our best dramatist in some of their finest plays, between side-splitting caricature and and naked menace.


• Sticking with the States, the day of rapture will be announced, will be prepared for by believers and will pass without their leaders offering a word of apology or learning an ounce of humility.


• And on the ounce of humility front, starting in mid-December forecasters will tell us what’s going to happen in 2013 without the slightest mention of what they previously told us was going to happen in 2012.

Happy New Year!

Submerged by the Brazilian surge

There was some shock in Britain this week at the discovery that the UK had been knocked off its position as sixth largest economy in the world to be overtaken – oh, indignity – by modest little Brazil. Modest and little because it has a population of only 190 million compared to our mighty 62 million, making Brazil barely three times bigger.

Well, OK, just over three times bigger.

I’m not quite sure what losing sixth slot means. We don’t make the cut? We don’t get to play in the final? That can’t be right. If you listen to the doom and gloom merchants, the final is already under way, and not the final match but the final act, and we’re all in it.

What I don’t understand is why it was such a big deal that most of the papers carried the story, as did the BBC. Surely if it's interesting at all, it’s a matter for congratulation, isn’t it? For far too long Brazil was struggling with poverty, crime and vile military regimes. They’ve apparently successfully put the military back into its box. Crime seems pretty much as endemic as ever. If they’ve started to make some inroads on poverty, well that has to be good news on two fronts out of three, and not something we should be getting upset about.

If anything, a bit more of the same would be good. Leaving to one side the issue of how much growth a resource-constrained world can stand, a bit more GDP per head would be good: in Brazil, it’s still about a third of Britain’s. So great that they’re doing better than they were, but a bit more of the same might be no bad thing.

As it happens, the people who brought us the news about Brazil’s move into sixth place do reckon they will keep doing better. Here’s the league table they produced:

  Source: ECBR

Now that table is just brilliant, in so many ways. Look at Germany dropping like a stone, leaving it hovering only just ahead of the UK; France even falls behind us.

And look at Russia and India just powering up the rankings. Heady stuff.

But that’s not what I mean about the table being brilliant. The brilliant bit is the stuff around it. Let’s start with the word ‘forecast’, on the column for 2020. Did they imagine that without it we would believe that they’d built a time machine, travelled to some time after 2020 to take a look at the state of the world, and then had the goodness to travel back and tell us what they had found out, not as a forecast but as a matter of historical record? 

Even more important is the source of the information. The ‘CEBR’ is the Centre for Economic and Business Research. That casts the notion of ‘forecast’ in a completely new light.

A Centre for Research of any kind just demands your respect, doesn’t it? 
If I pop down to the pub with four or five mates and we talk about the dire state of the world, that’s just whinging over a drink. But if we raise some money and take an office in a prestigious location and stick a brass plaque on the door with ‘Centre for Research’ on it, we become a reputable authority deserving to be taken seriously. Even if round the meeting table it’s the same five guys, with the same beer and the same brand of crisps.

Things are pretty much the same in those great centres of contemporary power, such as rating agencies. As I’ve said before, they’re seen as forces of nature expressing the will of God, or perhaps the will of the Market, insofar as they make any distinction between God and the Market, but in fact they’re just twelve guys sat around a table condemning Greece or Italy or anyone else that attracts their ire, to several more years misery.

Of course, you can't really compare these people with my five mates. These are experts in economics or business. Which makes them special. And I really mean special: economics and business experts are the only people who prevent weather forecasters being at the bottom of the mockery pile. Which presumably making them fundamental to the forecasting profession. If only in the sense that the fundament is the bit we all sit on.

Here’s a little illustration.This is the Guardian on 27 December talking about the Italian plan to sell more bonds in an auction over the following two days: ‘In an indication that traders fear the auction could prove expensive for Italy, the indebted country saw its 10-year cost of borrowing rise by about 11 basis points to 7.13%, before settling back below the psychologically important 7%.’

The following day, when things turned out rather better than expected in the first phase of the bond sale, the Guardian blog ran with the headline ‘Successful Italian bond sale cuts its borrowing costs’.

Then on the 29th, after the second auction didn’t raise quite as much as the maximum hoped for, the paper gave us ‘full details of today's Italian debt sale’ and commented ‘analysts aren't impressed.’

Yeah, right. Would these be the same analysts who were so concerned about Italian debt on Tuesday, reassured on Wednesday, now reverting to pessimistic type on Thursday?

Personally, I’ll reserve my admiration for economists until they get that time machine built.

In the meantime, all I can say is – ‘good on you, Brazilians. Doing well. Keep it up.’