Saxo Bank's 'outrageous' predictions: World economy to face wild crises in 2013
The Danish investment bank has published its unofficial predictions for the next year that are unlikely, but will send shock waves through the global markets if they happen. Bank experts say a financial catastrophe and war like consequences are closer than it seems.
According to Chief Economist Steen Jacobsen the bank’s main concern is the unprecedented combination of smug serenity and high risks in macroeconomic policies as the rapid growth of social tension threatens political and financial stability.
“We expect the crisis to be like a forest fire – fast and furious – it will set the conditions for moving forward, as it always was: the real changes will be made only in exceptional circumstances after the war,” Jacobsen says.
He says, from the economic point of view, the world is close to wartime conditions as the burden of debt and fiscal deficits in western countries have reached levels similar to the end of World War II.
The authors of the report predict, next year society will move toward radical movements as both the ultra-right and ultra-left find supporters appealing to feelings of desperate voters who have nothing to lose.
“Current major political tendencies are empty”, Jakobsen says. He adds that "Occupy Wall Street” movement was just the beginning of the process.
Saxo Bank predicts, Germany’s leading index the DAX could fall by 33% – to 5000 points – because of the economic slowdown in China, which will stop industrial growth in Germany.
The price of oil could plummet to $50 per barrel on growth of fuel production in the US. The bank sees gold losing its defensive nature and falling to $1,200 per ounce.
Though many prefer to be skeptical about the report, some of Saxo’s predictions did come true in the past, Ekaterina Kondrashova from Investcafe says.
“Saxo Bank outrageous forecasts usually remain forecasts only. In 2011 for example, 9 out of 10 predictions didn’t come true. However, one of their predictions that yields on 30-year US T-bills would fall to 3% was correct. Anyway since it has become a tradition, Saxo Bank continues to post it annually, drawing additional publicity of the investment society and media,” Kondrashova told RT.
The Saxo Bank predictions also see Spain nearing default as the Spanish economy is already in very poor condition: disposable income of more than 1.8 million people is less than 400 euros per month, and of the 47 million living in the country only 17 million are employed.
According to the report, next year the ratings agencies could downgrade Spain to "junk" status pushing government bonds yields up to 10%.
Saxo Bank also forecasts that price of soy beans could skyrocket 50% and Japan may nationalize its electronic producers.