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A Timely Prediction For All To Ponder

Fear and greed. These are the two forces that drive human investment. Investors lurch from one to the other emotion as the herd instinct dictates. A few 'contrarian bravehearts' invest in the opposite direction to the herd hoping to have better guessed the rise and fall. It's all a game. Life's a game. And there's always a reason to wale when there are more losers than winners because the players don't like those outcomes. They prefer a game where it appears the odds of winning exceed the odds of losing.

Well here's a prediction. On Monday, October 6th, 2008 at around 8am GMT when the London Stock Exchange opens the Footsie will rise rapidly - at the close it will up 7% in the day. By Friday close the index will have risen 10%+ on Monday's opening. Then, for the next 12 months it will bounce along within a 100 point range either side. It will all feel normal, a little more predictable, and we'll all feel safe again. At last more players of the game will make money rather than lose it. Join in if you feel either fear or greed; there's a profit somewhere to be had.

By then, at the end of that normal year, data from the world economies will start to show either recession, no growth or slow growth for several quarters and we'll finally begin to realise that a new era of 'stand still' economics is with us. And it will be with us for a very long time. That's when the size and cost of the public sector will suddenly loom into view like some sort of meteor crashing toward Earth. Politicians will suddenly see that the public sector is out of control, sclerotic, unaffordable and unjustifiable. They will see that their expectation that it should continue to grow in size and cost cannot be maintained; and many cuts will need to be made to avoid deep and lasting recession.

This will be the landscape of the next general election in Britain.

Have a guess which political party will see that risk in all its gory detail and promise to erase the threat if only you'll elect them? That's right. None of them. Still fancy a punt?