Political Risk Forecasting.

Peter Apps, the political risk correspondent for Thompson-Reuters wrote this article attempting to paint a portrait of what to expect in 2010. The werewolf, being a political risk junkie of sorts, enjoys such things and found several points worthy of mention.

"In Britain, Labour Prime Minister Gordon Brown looks likely to lose parliamentary elections, which must be called before June, to David Cameron's Conservative Party. But markets worry about the prospect of a hung parliament with no outright majority."

This is particularly interesting because unlike the European parliamentary governments, where coalitions are a way of life, the werewolf can't think of time, in recent memory at least, where the British government was ruled by an effective coalition government? Labour, under the tutelage of the eternally frumpy, tragically attired, and woefully bland Gordon Brown has dithered and atrophied. The largest beneficiary of this seems to have been the strange Liberal-Democrats, while the Conservatives have gained some traction as well. The Conservatives, the primary opposition party in the U.K, have a young turk like leader in David Cameron, whom, despite a slight disposition to the conservatives, the werewolf doesn't like. Anyhow, it would be fascinating and bizarre to see how the Brits manage forming a coalition government, given that the conservatives are likely to capture the largest share of the vote, yet, have no natural common-ground with the Liberal-Democrats or Labor. Also, the Liberal-Democrats, and Labor have stark contrasts as well, making them unlikely bed fellows. There are a raft of smaller third parties scattered throughout England, yet, their numbers barely register, and methinks they are unlikely to add to any coalition. This is all speculation, and despite some business and currency concerns, this risk is marginal, because the stakes aren't that high other than making our Anglo-cousins look silly and strange.

While the article is content rich, the werewolf thinks several items were overlooked. Here are a few.

Look for more civil violence in South Africa targeted at various immigrant ethnic groups (Zimbabweans, Congolese, Mozambicans, Nigerians), especially in light of the pending 2010 World Cup games. This is a chance for South Africa to shine, yet its internal dynamic had been getting shakier over the last few years. This will also be a major test for the Presidency of Jacob Zuma.

Zimbabwe will be entering its first full year of a "unity government." However, leopards never change their spots, and Mugabe will work to discredit the MDC and its parliamentarians. Look for petty spats aimed at the MDC, resignations by MDC officials, and low level violence. Also, South Africa will likely start applying some pressure on the Zimbos to control their boarders better.

Mexican instability. Things will get worse, before they get better in Mexico. The cartels will boldly try and re-assert themselves against Calderon. Spike in violence, shocking in scale, along with a raft of increased business risks to investors. Including K&R and business interruption.

Venezuela will pull a stunt. It may be lame at heart(like all things Chavez), but something grand, yet pathetic seems looming. Strongman Chavez has driven the oil industry, along with all other productive segments of the economy, into the ground. He is fast running out of things to nationalize and expropriate. I would expect him to either engage in border skirmish with the Colombians(extreme case), or perhaps just become more meddlesome in regional affairs. Still, since his domestic problems are mounting, I'd expect a move to focus attention elsewhere.

Dubai won't get the level of bail-out it is expecting from Abu-Dhabi. The wounds inflicted from its bad holdings are deeper than people think.

Ethnic violence in China. Watch the western parts for spikes in Uighur led violence and discontent. Plus, the slow-down in economic growth will further strain the divide between rural and urban China causing the Beijing several unexpected headaches.

The aforementioned are just speculations. Please be mindful that the werewolf's slogan is ""often wrong, but never in doubt."