Update: 3 Apr 2009: I have been getting more positive about the possibility of a cyclical upturn before 2009 is over (what I like to call a fake recovery). Meanwhile, the punderati are seeing black when they should be seeing shades of grey. As a result, I wanted to re-post this article as a reminder to all of you and to myself of the perils of becoming wedded to a certain ideological bias.



Also see the following article on the site Overcoming Bias.



Here’s the original post:



For a long time Byron Wien of Morgan Stanley used to have his “Ten Surprises for” whatever year we were about to enter. The predictions were sometimes head-scratchers and they were definitely ‘out there.’ Most of the time, these predictions ended up being wrong. Now, Saxobank has taken over from Morgan Stanley in this department. Their list is outlandish — and I’ll get to it in a moment. But, first, I want to say these predictions serve a very useful purpose. It’s called thinking outside the box.

On February 6th, I started a poll asking whether the global economy was experiencing a recession or a depression. In the interim, I have tried to stay neutral on the issue.

Now it is time to close out the poll. Below you can add your vote. I will release the final results tomorrow.

With a name like “Credit Writedowns,” this site is obviously not preternaturally given to the wildly optimistic scenario. In fact, my operating assumption is to hope for the best, but plan for the worst and expect something in between. Indeed, in an economic downturn, one needs to be more fixated on planning for the worst than hoping for the best. Nevertheless, as with the last post on China, I want to present the ‘bullish’ scenario to paint a fuller picture of the potential outcomes for the global economy.

The question on everyone’s mind in the emerging markets is who will blow up next. Arnab Das of Dresdner Kleinwort Benson takes a stab at answering that question. He targets the Baltics as the problem children and sees current account surplus nations in Asia as lest vulnerable. He also discusses his views on Russia.

Below is the video with him on CNBC giving forth his view.

You probably know that I am gearing up for some serious writedowns in Eastern Europe because I see these countries as having external imbalances which will have to be corrected as the economy softens. In previous posts, I had mentioned that there was considerable exposure to Eastern Europe in Austria, Sweden, Denmark ad Germany in particular. Austria is the worst of the lot. Today, I happened upon an article and a quote which puts the Austrian exposure into context.

As the New Year unfolds, it is time for predictions. I have done my part, giving a full account of where I see things headed in 2009 in my post “Top ten predictions for the 2009 global economy” and where I want to see them headed in 2009 in my post “Top ten economic wishes for 2009.” I have also mentioned Byron Wien in passing several times because he has done this sort of thing ever year for the past 24 years, first at Morgan Stanley at now at Pequot Capital. Well, his list for 2009 is now out and I want to show it to you – along with my usual commentary (in parenthesis) of course!

Enjoy.

Happy New Year. As the new year begins, I find myself in a fairly optimistic frame of mind. Perhaps, we can wipe the slate clean and start anew this year. In that vein, let me share with you what I think needs to be done in order to right a global economy that is suffering its worse recession since the 1930s. If we accomplish these ten steps, the global economy may well recover much sooner from recession than any of us expect. Feel free to add your own assessment in the comments section.

I caught a good article in today’s Guardian about the British Pound. The question is: how weak will Sterling get? My answer is below 1-to-1 with the Euro. But before I tell you why, let me interject a blurb from the article.

In my most recent post, I gave a fairly comprehensive retrospective of the year that was. Near the end of that post, I listed a number of posts I wrote in Octobr and November which point to how I see 2009 shaping up. Let me give you a more direct assessment here. I will finish it off with my top ten predictions for 2009.

This is the time of year when everyone tends to look back and sum up the year in one way or another. I have been doing much of the same.

In keeping with that theme, I have taken a good look through my nearly 1400 posts to get a better sense of what I got right and what I got wrong and how knowing that can help me going forward. Call it an exercise in intellectual honesty. This exercise has given me a good understanding of where things went wrong in the past year and why.

It may also give me some thoughts as to where we need to go in 2009. Let me share a little of what I learned with you. This is a long but thoughtful post, so take a few minutes. It should be worth it.

On the whole my predictive powers were working pretty well this year. But, I made a few lousy calls and some controversial ones along the way. Below is my view of how the year went, on some of those calls and links to the relevant posts. At the end, I’ll wrap it up with a few thoughts about where that leaves my thinking for 2009.