Ten Potential Surprises for 2007

Ten Potential Surprises for 2007:

1. Stock prices soar
Against many expectations, the global economy does not lose momentum. China grows even faster than in 2006. The same is true for India, Latin America and Russia. The economies of Europe and Japan keep picking up growth — which also helps the United States. The financial markets are caught off guard by this development. Stock prices soar once again.

2. Putin’s downfall
Russian President Putin becomes ill — and he is forced to let Prime Minister Fradkov run the government. The country plunges into deep crisis. In Moscow, Putin's potential successors fight each other in a fierce struggle for power. Vast sectors of the economy are ruled by chaos. Capital flight becomes a major problem. Russia's GDP takes a nosedive.

3. China loses interest in the United States
A U.S. spy plane is shot down over China. Beijing decides to abandon the purchase of U.S. treasuries. At the same time, the Chinese government calls off its currency market interventions and establishes strict regulations on capital flows. The renminbi remains stable. China's enormous currency reserves stop growing — and may even decrease. Worldwide liquidity is eroding. Interest rates rise and stock prices fall.

4. A unified Middle East
The warring parties in the Middle East realize that — in light of the end of Israeli dominance of security affairs in the region — there can be no winner in the long conflict. Dubai and other rich nations lead new efforts to establish a peace zone. With Dubai's money, Israel's technology and Palestinian, Syrian and Lebanese labor and consumer markets, the scenario of a booming Middle East takes root.

5. Fissures in the EU
Turkish Prime Minister Erdogan resigns. In response to public outrage over the difficult negotiations towards EU accession, the new government cancels all talks with the European Union. As Turkey's focus turns away from Europe, political tensions inside the EU rise. The United Kingdom accuses France and Germany of wantonly destroying a great opportunity for Europe.

6. A French-German alliance
After its presidential election in April, France realizes that the "Grande Nation" can only flourish in a strong European Union. The French government joins Germany in a special effort to commemorate the 50th anniversary (on March 25) of the EU's founding treaty, the Treaty of Rome, by putting the European Constitution back on the table. It is decided that the constitution will only come into force in countries that ratify the draft within 18 months after it has passed the European Council. Britain fails to do so — and is left on the outside once again.

7. The end of corporate governance
In Germany, a U.S. private equity group tries to take over Deutsche Bank, the country's largest bank. German politicians express outrage and start a heated debate about "the grand sale of Germany." German policymakers, encouraged by their G8 presidency, call an emergency meeting of the G8 to prevent undesired cross-border capital flows. This marks the end of all efforts to open up the financial markets and establish true corporate governance.

8. Bush — a popular hero
In a remarkable act of courage, U.S. President Bush abandons his failed Iraq strategy. He withdraws all U.S. troops and hands over the power to the Iraqi Shiites. The American people breathe a sigh of relief. In a more favorable political climate, the U.S. economy picks up growth. Bush's approval rating recovers. He serves his remaining two years in office as a "uniter, not a divider" — and is a surprisingly popular president. The dollar rises as oil-rich countries start investing in U.S. assets again.

9. End of the India boom
India experiences an uprising of 500 million people who live on less than one dollar a day. As the government is overthrown, the military is forced to assume power. Virtually overnight, foreign investors withdraw from India. The Indian economy descends into chaos. Growth completely stalls, which has a negative impact on the entire region.

10. Alternatives to the Internet
Al Qaeda manages to infect the New York Stock Exchange with a computer virus. Trading is stalled for several weeks. Lots of supposedly saved data are gone. While stock brokers go back to floor-trading, the public discusses alternatives to the Internet that would reduce the dependence of business, politics and society on this electronic medium.