|"The fool that eats till he is sick must fast till he is well"|
Looking ahead to 2013, a foreboding year in the twentieth century which marked the end of La Belle Époque, I will give a brief summary of the winners (+) and losers (-) of the coming year:
G2 leaders (+)
With Xi Jingping in power for the next ten years of the People's Congress, consolidating the fifth generation of Chinese autocratic leadership, and Barack Obama, securing himself as the rare breed that is the Democratic two-term President, we will see the positive growth in the relationship between the two most influential nations of the 21st Century. Greater economic security and trade liberalisation for many decades to come rests on a predicted positive start in 2013 for these two administrations.
The three leading emerging economies, plus Russia, are naturally seeing faltering growth as their export markets fledge, but also through self-induced malpractices: overinvestment, in the case of China, fractious institutions, see Brazil, and political quagmires, to wit India, obstruct further progress and development in the BICs.
South Korea (+)
The rise of Gangnam Style has rehighlighted the South Korean economy as a bright spark in the global supply chains not just as a manufacturing behemoth but a soft knowledge economy. In stark contract to the poverty of its brethrens up north, South Koreans are prosperous due to the magnetism of their Chaebols, the classic copycat perfectionists.
The Arts Council in Britain is retrenching its cuts to the provisions of theatre, opera, music, and other elements that are the hallmarks of a vibrant society. These government-led chops should be the last in line for the Arts provide some comfort to stagnated rich economies and the underemployed proletariat.
Infrastructure Assets (+)
With stricter capital rules on bank lending, increased investment into infrastructure assets through fund routes and direct will be the increasing norm. In particular when corresponding alternatives in fixed income and equities are yielding net zero returns. The world's largest investor, the Government Pension Fund of Norway, is already increasing its investments into real estate infrastructure to a target allocation of 5% by 2013.
Grand Old Party (-)
The disastrous election night of 2012 and the stranglehold of the party by anti-tax merchants like Grover Norquist is spelling the beginning of the end for the Republican party. A party so partisan that it is alienating the growing demographics in the Hispanic population and increasingly urban and educated masses. It is not the question of if Texas will turn blue, but when.
Misleading conclusions on macroeconomics and economic history are leading to experiments in debt management led by dropping fiscal policy altogether in Britain and soon in the US, as well. This will come at a time when the Fed, ECB, and the BoE are being pushed to the limits with their money printing facilities, and extra liquidity in the economy would have marginal effects without a supportive expansionary fiscal policy.
Global Economy (-)
All in all the IMF had been over-optimistic with recovery forecasts in 2012 and they will have similar sentiments for 2013. With much of the world slowing, for a lack of better policy coordination between the five major economic blocs: U.S., China, EU, Japan, and Britain, this drop in aggregate demand and growth would be much more perceivable next year.