2011 begins properly tomorrow. What might tomorrow bring?

Just over twenty years ago, the Berlin Wall disappeared – and two predictions were confidently offered by almost all media commentators: the world would be a safer place, and the USA would dominate it.

Two years ago, Wall Street’s unassailable role as the epicentre of global capitalism was seriously questioned. As 2011 opens, observers up to speed with the facts as we know them broadly agree that power is heading East, and the superpower of the future will be China. Further, a sizeable minority would accept that the world is now a lot more unsafe than it was during the Cold War….largely thanks to the rise of Islam.

But the future steadfastly refuses to stick to the script. A golden rule emerging from the study of history is that just as people and trends seem to be at a stage of unassailable dominance, they fall apart.

Occasionally, we get things right. My own experience since 2004 is that it has been almost always my more contrarian predictions that have been partially or wholly fulfilled.

In 2005 I wrote a long piece for Market Leader observing that Lehmans had a suicidal business plan.

In 2006, I argued that not only would the banking system collapse sooner rather than later, UK house prices couldn’t possibly hold up. This placed notbornyesterday.org firmly at the outer limits of the lunatic fringe. I know this because one of my closest friends – a banker – told me so.

When myself and a French chum argued in Summer 2007 (over a supper party lasting half the night) that the EU as we knew it wouldn’t exist by 2012, we were outnumbered 10-2.

In 2008 I researched the gold market, coming to the conclusion that it was being illegally manipulated, and gold was secretly being sold to China – primarily by the US. ‘Conspiracy fantasy’ was how one eminent FT journalist described the resultant piece. Early last year, China announced a doubling of its gold reserves….without explanation.

However, I also got lots of things wrong….and much of this thought was far more widely shared than the wacky stuff.

2008 was not the big crisis I had thought would act as the catalyst for qualitative reform to socio-economic thinking. I underestimated the banker-politician axis’s ability to push the problem further down the road. (I still think the cataclysm is coming).

UK Premiership soccer (although something I know a lot about) proved me totally wrong when, in 2009, I said that at least one and probably three Premiership clubs would go bust before the end of that new 2009-10 season. In this case, I understimated the number of insane sugar-daddies there are on the planet. (Portsmouth are effectively bust, as are Liverpool and Blackburn).

Gold would be at $1500 by the end of 2010: that was another one that went awry….as I write it’s at $1420. The underestimate here was just how much money the US would spend trying to make the paper gold-tracker investments look steady. Wouldn’t you just love to know what really is in Fort Knox today?

I confidently foretold a Russian property collapse – the result of underestimating the capacity of Medvedev and Putin tolook calm and keep a straight face. More honestly, it was the result of writing about something I don’t fully understand – the worst mistake a columnist can make. Hubris makes fools of all of us, especially when we’re on a roll.

Finally, I said the FTSE wouldn’t see 5000 again after it wobbled in early summer. Big mistake – a huge underestimate of the power of people to keep investing in something on a relativist basis – ie, “I’ll invest in this because there’s a better return than from bonds and bank deposits”. That is still the wrong reason to be in the Stock Market, but whatever – I got it wrong.

The Slog’s overwhelming tendency, when you look back, is to call things early. J P Morgan once remarked to a colleague “I got rich by getting out early” – his point being ‘better early than late’. Sharper-eyed readers may have spotted that I am now much more cautious about putting a time-span on how long the juggernaut will take to arrive. The folks who know not just that there’s a juggernaut down the road, but what speed it’s doing, are much richer than me.

This begs the question as to why anyone should read The Slog in 2011. And hopefully, I can tell you why very simply: because I think people and their responses are more fascinating (and relevant) as a subject of study than models, formulae, historical data and previous crash-graphs. In fact when I make mistakes, it is usually through forgetting the human being’s capacity for denial, action at all costs, greed, short-term gratification, arrogance, unmerited trust in others, and childish distractions.

Broadly speaking, there are three types of players and commentators working in economics and society: anthropologists, political theorists and mathematicians. The second of these ignore all the evidence, and the third believe theirs is the only valid evidence. Although the bankers were guilty of exploiting mathematics without brain or morality, it was the numbers guys – the ‘quants’ as they’re known in the trade – who truly delivered us unto evil.

Only commonsense anthropologists familiar with financial products are worth listening to: they may be born or made, amateur or professional, but their backsides know more about what will happen than the other two. The chief examples of this in the UK at the moment are Gillian Tett at the FT, and Ambrose Evans-Pritchard at the Telegraph. At Reuters, Felix Salmon is pretty sharp and grounded. And the FT’s Wolfgang Munchau has read the eurozone crisis right at every tedious stage of the unravelling process.

Anyway, this year I’m playing safe. All the following will come to pass. I’m just not saying when.

* There will be a Crash2. It will be much worse than Crash1. We will learn more from it, but probably not enough. Bankers will continue to believe that they know better.

* Every month, all Western governments will be surprised by business statistics, and describe them as ‘unexpected’.

* Barack Obama will not retain the Presidency.

* The UK Coalition will run out of time in the light of unemployment, declining services, and debt servicing. Above all, it will fail because far too many people don’t want it to succeed….but also because it is about as inspiring as flat lager.

* The EU will cease to exist in its current form. The key catalyst in the short term will be the removal of Merkel and Sarkozy from power. Greece will default.

* In the West, financial power is heading out of government and into banks, and that trend will continue until some kind of messianic politician emerges  to stop it.

*  Globalism is not the future. It will prove to be a chimera, and protectionism will be the dominant factor in world trade for some time to come.

* Russia has a limited time-frame in which to cash in on its oil wealth. This will make it reckless geopolitically – perhaps even militarily.

* European and American leaders will finally wake up to the real importance of Israel, and the pernicious nature of Islamic fellow-travelling. Whether it will take Israel’s destruction to effect the eye-opening remains to be seen.

* Over time, China’s overheating economy will prove far more difficult to manage than the Beijing Politburo imagines. In particular, inflation’s drag-factor and knock-on effects will surprise them. Wen’s probable successor will go for domestic growth as a way of keeping the military in its box. He will also allow for more ‘real’ Yuan flotation. China will continue to seek self-sufficiency via raw material/technician-driven imperialism, but will increasingly export added-value quality products based on genuine innovation. The FCO will not see this coming.

* The UK housing market will be corrected by 35% in the medium term. It will take at least five years to return to its 2006 levels.

* The main conflict flash-points in the medium term will be related to the clash between secular cultures and Islam. China will be the main combatant, both in Africa, and the former near-Eastern Soviet States.

* The US annual deficit will overtake the UK National Debt. Short of a miracle, that will happen before the end of 2012.

* The Rothschild banking dynasty will continue to be the most fabulously wealthy commercial entity in the world. At the last count, it was thought to be worth 300 trillion US dollars.

* JP Morgan will continue to be the best-run banking firm in the world, because it has never forget the first rule of lending: it’s all about calculating risk without deluding yourself.