KEY POINTS:
Investors should strap themselves in for a rocky ride in the next 12 months. Equities will collapse, property will be demolished and you won't be able to give away gold on the streets.
The only haven will be fixed income. That's right - 007 will be the year of the bond.
OK, now that we've got the worst joke of the year out of the way, here are a few things that may happen next year.
Farming will become great way to get rich
High oil prices are causing a surge of interest in alternative energy, with ethanol leading the way. But making fuel from corn or other grains means digging up a lot of fields.
It has been more than a century since farmland was the basis for a financial aristocracy, but every asset comes back into its own if you just wait long enough.
JPMorgan Chase & Co already rates corn among the best investments for 2007. Expect to hear the hedge-fund manager in the bar boasting about how he has just snapped up huge tracts of land in Ukraine.
Segolene Royal wins French Presidency
Unless there is a major economic crisis, most elections are won by hope and optimism, not darkness and grit.
In a close contest, the featherweight Socialist Party candidate Segolene Royal will become France's first female President.
The trouble is, with little experience and no policies of her own, she will be pushed to the left by the Socialist Party stalwarts around her. Her reign will be an economic disaster.
This could go two ways for France: A crisis might finally force the country to accept the serious changes it so desperately needs. Then again, Royal may find it easier to team up with Italy in breaking apart the euro so France can devalue its way out of trouble.
The European Central Bank sells euros
The ECB keeps telling us it isn't too concerned about the rising value of the euro. Who believes that? The ECB is headed by a Frenchman, Jean-Claude Trichet, and nobody rises to the top of the French Establishment by leaving the market to itself.
An overvalued euro will hammer French and Italian exporters, and produce intolerable strains within the euro area. At US$1.40 to the euro, the ECB will start selling the currency. Even if there is scepticism in financial markets, the move will be surprisingly successful - everyone will know by then the dollar is undervalued - and will be the turning point for the gradual revival of the dollar.
New York gets act together
In the last year, London has shown that it hasn't just caught up with New York as a global financial centre, it has overtaken it.
So the Americans are going to sit back and say, "Shucks, looks like those sneaky Brits have eaten our lunch"? Well, not exactly. New York is the most competitive place in the world's most competitive country. Once they realise there is something wrong, they will fix it.
Expect the Sarbanes-Oxley law, which has deterred international listings, to be watered down amid a wholesale clear-out of regulations. Don't be surprised to see some tax incentives to attract the world's rich. London will have to fight if it wants to hang on to its No 1 slot.
Britain's AstraZeneca succumbs to takeover
The pressure on the drugs industry remains intense. Big, cash-rich companies are struggling to develop new products. There is no quicker way out of trouble than an acquisition. AstraZeneca is the industry's Goldilocks: big enough to make a difference, but not so big as to be indigestible. The London company has had problems with its own pipeline. It's a perfect time for a large competitor to strike - and its shareholders won't be in the mood to reject a generous offer.
Hedge-fund manager buys Aston Martin
Ford has already put its world-beating luxury-car unit Aston Martin up for sale. The hedge funds are awash with money and have been snapping up all sorts of interesting companies - London's RAB Capital, for example, just took control of the A1 Grand Prix motor-racing business.
London's loaded hedgehogs love to drive around in their shiny new Astons. What better synergies could there be than owning the company that makes them? You can sell it to the investors as a great deal and have fun messing around in the factory at the same time.
Gordon Brown faces a leadership crisis as PM
Predicting that Chancellor Gordon Brown will take over as Prime Minister is too easy. Tony Blair has already said he will leave office next year, and Brown has seen off all contenders.
Yet the charmless, wooden Brown will be a calamity. By the close of the year, he will be presiding over a faltering, debt-ridden economy and poorly planned wars in Iraq and Afghanistan, and his native Scotland will be clamouring to leave the United Kingdom. Backbench Blair clones will be mutinous and the Labour Party will realise Brown is leading it to defeat. Nobody likes losing, so Brown will face a leadership challenge.
London Stock Exchange lives to fight another day
The LSE is a prize asset and will keep attracting bids, just like the US$5.3 billion offer on the table right now from Nasdaq Stock Market. For precisely that reason, the bids keep failing. Shareholders can see the value in the business and figure they may as well keep it for themselves. There is more chance of snow falling on Trafalgar Square next Christmas than the LSE ever being sold.
- BLOOMBERG
