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.

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.

I want to make a brief statement about analysis, prognostications and this global recession. When I began this site nine months ago, my focus was clearly on the downside scenario. Now, while I did believe policy makers were underestimating the threat of economic calamity, I must admit that I was optimistic about the potential outcomes. And I am still optimistic today that we can overcome the major hurdles we face. However, we must always prepare for the worst, even while we hope for the best. This is why I am still focused on the downside scenario — because I believe that complacency is still much too high regarding how quickly things could unravel.

Has Paul Krugman been reading my stuff? He is certainly thinking like me regarding emerging market risk. He has a post today talking about Latvia as the new Argentina.

Marshall Auerback here. This will be short, but I felt compelled to post with my views on China.

There was clearly a bubble in exports in the past four years, with exports serving to cover capital inflow (overinvoicing must have been a big part of that). So this is just part of the overall collapse of speculative capital flows, and not so much a decline in real effective demand. China can handle this, the population is not constrained by either income or debt.

The punderati has been especially kind to China. As the global recession takes hold, the conventional wisdom has moved from the largely debunked de-coupling of China to a story where China slows, but much less so than the west. But is that really how things will play out?

On a recent Bloomberg Radio with Tom Keene broadcast, Harvey Pitt and Arthur Levitt, two former SEC Chairman were guests. Levitt made the suggestion that hedge funds had once been given the choice of “regulation-light” or “regulation-heavy.” Now, in the wake of the Madoff scandal, “regulation-heavy” is all but assured. But, isn’t this just?

The yield on all U.S. Treasurys securities are at historic lows. The 3-year T-bill and the 1-year T-bill have both actually sported negative yields — meaning investors are paying the U.S. Governemnt to borrow money from them. This is the first time this has ever happened and suggests that the zero bound may not be a problem. What gives?

The conventional wisdom in the marketplace is two-fold. First, many believe that investors are fleeing to the safe haven of U.S. treasury bonds and away from risky assets as the financial crisis has created extreme volatility in riskier asset classes. It is also believed that treasury prices are being supported by future deflation expectations. With the price of oil and commodities collapsing and consumer demand weak, inflation has dropped precipitouly in most countries around the world, including the United States.

I have a different view. Treasurys are in a bubble.

The U.S. Dollar has been holding up quite nicely during this credit crisis. In fact, it rallied significantly from deeply oversold levels against the Euro and British Pound (remember Dollar-Euro at 1.60 and Dollar-Pound at 2.10?). However, America has a number of structural problems which will inhibit further appreciation. Moreover, former buyers of U.S. Treasuries in the Middle East and Asia are going to have domestic economic worries of their own very shortly and will not be supporting U.S. assets. This means that the Dollar will be a weak currency in the not too distant future.