Copenhagen-based online investment bank Saxo has released its ‘outrageous predictions’ as part of its 2008 outlook. 

The predictions are an annual attempt to predict ‘black swan’ sightings in the global markets, and this year present an ominous view. Black swan events are high impact, rare occurrences that are beyond the realm of normal expectations.

Among the forecasts are Ron Paul being elected as US president, 3 of the largest 10 US home builders going bankrupt and grain prices doubling again.

Saxo’s black swan predictions also include a UK recession and the Chinese stock market falling by 40% by late summer. 

David Karsbøl, head of strategy at Saxo Bank, said:“There are already signs that some of the world’s biggest economies could be tipped for a recession in 2008. While it is unlikely to escalate to that point, there are early indicators of rising inflation and we have only just begun to see the unraveling of the credit market.”

But adding weight, and concern for the greater economy, is the historical accuracy of at least some of Saxo Bank’s annual ‘outrageous predictions.’

Karsbøl adds: “Some key predictions for 2007 were close to or 100% accurate. We forecasted that the Federal Fund Rate would reach 4% in 2007. By this last quarter it reached 4.25%, so our ‘outrageous prediction’ was in fact only 25 basis points off the mark – something not many market commentators foretold at the outset of 2007.

“Our outrageous predictions are not a science, but are meant to incite thought and debate in the market.”