The euro came close to unravelling. The developed world slipped back into recession. Greece defaulted on its debts and Italy came close to following it. Banks hovered on the edge of collapse and stockmarkets tanked. Last year turned out to be a worse one than anyone expected. Will 2012 be any better? No one knows. One thing can be forecast, however: it will be full of surprises. Here are 12 I’m watching out for.
• The tech boom crashes. Facebook will launch the most over-hyped initial public offering (IPO) since the dotcom bubble peaked more than a decade ago. But amid a terrible market, and with signs that it isn’t making the fortune once predicted, investors will stay away. That will herald a wider tech crash.
• WH Smith becomes the new HMV. Consumer spending is down. Rents are high, and staff expensive. It is not a good time for retailers. But WH Smith also has to face the rise of the e-book. In its last results, book sales were down 4%. The Kindle will really take off in 2012. Can WH Smith survive on selling chocolate and pencil cases? No. Just like HMV, it will try a hundred ‘re-inventions’, but none of them will work.
• Mass migration returns. The response of Europeans to economic catastrophe has always been the same: get up and go. America and Australia are exhibit A and B. With Greece and Portugal in deep, permanent recession, and with Italy and Spain about to join them, history is about to repeat itself.
It is just a question of which country wants to take Europe’s ‘poor, huddled masses’. The US will take plenty. But the surprise destination will be Russia – a big, empty country. It will start to turn into a proper Western democracy after Vladimir Putin is humiliated in the March presidential election, and resigns soon afterwards.
• Spurs gets taken over. The north London football club has a market value of just £83m. Manchester City cost a reported £200m when they were sold to Abu Dhabi. Liverpool went for £300m. Tottenham Hotspur have arguably the best (and certainly the best-value) squad in the Premier League. Gareth Bale alone is worth more than the club’s market capitalisation. With Spurs planning to de-list to raise funds for a new stadium, there will never be a better time for a foreign tycoon to grab the trophy asset of the mega-rich – a berth in the Champions League.
• Hungary goes bust. Amid all the tension in the eurozone, the markets have largely ignored eastern Europe. But Hungary is in a precarious position. European banks are calling in loans across the region. A collapse in the Hungarian economy will knock all the emerging European economies.
• Tim Cook resigns from Apple. There is no less enviable task than following a man widely acclaimed as the greatest industrial genius since Henry Ford. It doesn’t matter how smart you are, you are going to end up looking like a dunderhead by comparison. Apple is bound to have a few stumbles – tech leaders have to innovate constantly, and that means a few clunkers as well as hits. But Cook will get the blame for anything that goes wrong. He’ll be gone by the end of the year.
• The Nits replace the Brics. ‘Nits’ refers to Nigeria, Indonesia and Turkey. The Brics (Brazil, Russia, India, China) are slowing down, and investors are already moving onto the next round of emerging economies. Indonesia with 239 million people, Nigeria with 158 million, and Turkey with 72 million, are the big three.
• The Fed starts printing money again. The European Central Bank will have no choice but to turn on the printing presses in 2012 – there is no other way of staving off the collapse of the euro. With the US economy recovering, you might think the Federal Reserve has no need to do any more. But if the ECB prints, the US has to follow suit, or watch the dollar soar against the euro. Since that would choke off any US recovery, Fed chairman Ben Bernanke won’t hesitate with QE3.
• Corporate bonds take a hammering. Investors have been piling in because they get practically no yield on bank deposits. But corporations can’t escape the eurozone chaos unscathed. European high-yield default rates have jumped to 2.6% from 1% over the past two months. RBS predicts they’ll go to 5% in 2012. That suggests a widespread sell-off.
• The bund market collapses. German bonds have been the natural home for banks dumping Italian, Spanish and French debt. But who says bunds are safe? Germany’s debt-to-GDP ratio is 83%, higher than France’s. It will have to bail out its banking system if it gets stuck with huge losses on peripheral eurozone debt. And its population is about to fall off a cliff – lots of old people play havoc with government finances. It all adds up to trouble ahead.
• Finland quits the euro. Everyone keeps speculating that Germany will leave the euro. Or Greece. But what about Finland? With a strong economy, a healthy trade surplus, and little debt it would be better off bringing back the markka. Losing its triple-A rating because of the mounting cost of the bail-outs might be the final straw for the thrifty, eurosceptic Finns.
• The world ends. It says so in my Mayan calendar. On 21 December. That sounds too bearish to me. But who knows? Maybe leave the Christmas shopping until the 22nd this year. You don’t want to waste the last week on earth traipsing round John Lewis.