2010 Predictions: Political

In the past I've not ventured into political arena predictions. The events of 2009 make it too tempting to stay out. So here are a rookie's predictions on some political themes-

1. US Government Gridlock in Dec 2010: "Yes,we can" voters increasingly acknowledge that this slogan only applies to lobby groups and withdraw from the electoral process. Nov 2010 will leave the US government in deadlock -- the preferred outcome of an electorate that increasingly cannot distinguish one party from the other. Even as the use of web2.0 tools for campaigning and fundraising will reach unprecedented levels, real engagement will remain limited.

2. Early 2010 will result in political pork of unprecedented proportions: Current appointed and elected officials can already predict the outcome of Nov 2010. They have limited time to cash-in their votes for future gain. Appointed officials (particularly Fed, Treasury) will make "brave, even if unpopular" choices to prop up systemic failures.  Expect more FUD (Fear, uncertainty, doubt) regarding the housing market, terrorism, and credit.
3. China, India, Brazil, and South Africa (World Cup 2010 host) -- will opportunistically seize the global bully pulpit. Realizing that "Victors, not the vanquished, write history" is a reflexive thought, they will engage in establishing a winning narrative for 2020.
4. China will face increasing rebellion, especially in the interior. A combination of carrots and sticks will allow the central government to delay change for another year.

5. India will be forced to deal with domestic separatist challenges in 2010. The dangerous policy of creating new states within the union will fuel further movements for splintering. The positive momentum of the economy will largely roll forward.
6. China will risk trade war with the US, India will wait it out.  The battle for economic supremacy is entering an interesting stretch. China is (or soon will overtake Japan to be) the second largest economy in the world with a much faster growth rate than the largest economy (the US).  The currency battles of recent month and trade skirmishes will threaten to escalate into a full trade war. 2010 will see sharper saber-rattling than ever before, but we likely have to wait till 2011 and beyond to actually see full trade war.  India will meantime -- for once -- sit out this round not force the issue.