A year of great change

According to Saxo Bank, a specialist in online trading and investing, a perfect storm is brewing in the New Year, and will likely already break out in its first quarter as tensions are mounting unbearably. The key ingredients are already clear: the combination of the ongoing EU crisis, slowing aggregate global demand as the public debt bubble can no longer be grown, and rising social tensions. These factors will leave no nation untouched and could result in the most pivotal year by far since the global financial crisis of 2008.

As Steen Jacobsen, Chief Economist Saxo Bank, points out, we are reaching the end of the line for extend-and-pretend/kicking the can/printing money/ interventionism/call-it-what-you-will from the public sector puppeteers. After the recent beginning-of-the-end phase that we have dubbed Maximum In¬tervention, the marionettes in the economy are tiring and will soon no longer be able to respond to government and central bank manipulations. The EU is in the hottest water at the moment due to its awkward political and fiscal framework, but the rest of the developed world and possibly also China also face this critical inflection point - the point at which ever mounting intervention from the public sector only finds rapidly diminishing returns. The other name for this point is Crisis 2.0 – the needed destruction of the old order that allows the construction of the new. A crisis is almost always considered a bad thing and inevitably brings with it painful short-term disruptions, but the hope must be that 2012 ushers us quickly towards that turning point at which we begin planning for the future, rather than pretending that we can pay for all of our past mistakes. But 2012 will be a year for the optimists as we might finally see the world start to head in the right direction again – towards the future and away from the tired and misguided efforts of the interventionists.

More information: www.saxobank.com