1-Barring major events, the news of 2012 will most likely be all about the election, especially the presidential election.

But the real potential for election change will be in the Congress.

The most important determinant of how America will run after the 2012 election will be whether Congress remains split or if one party gains control of both houses--regardless of what happens in the presidential race.

This won't be the media focus, but those who understand American politics will keep their eye on the coming changes in Congress.

2-More Democrats are arguing for less government spending.[i]

This shift in thinking is getting very little press because the election story is so dominant in the current media.

Since few Democrats are using this frustration with government spending as a reason to vote for non-Democrat candidates, it receives sparse coverage.

But it is a significant change, regardless.

Many Republicans and most independents and moderates believe that Washington spends too much already.

If more Democrats continue to adopt the same view, it may become a major story in the years ahead.

3-The credit rating agencies that downgraded the U.S. credit rating in 2011 are still very closely watching the U.S. economy and some indications are that further downgrades could be ahead if the economy continues to struggle.

Along with this, for the first time in many decades, U.S. securities are less stable than some other investments,[ii] and money flow away from the U.S. is increasing--especially since the middle of 2011.

If these trends continue, U.S. economic challenges could drastically worsen in the next twenty months.

4-Some leaders in Saudi Arabia have voiced concerns about how the U.S. handled Egypt, especially President Mubarak, during the 2011 Arab Spring.[iii]

As the popular uprising grew, the Obama Administration eventually suggested that Mubarak step down.

Regardless of whether or not this was the right approach, the sentiment among some Saudi and other Middle Eastern leaders goes something like this: "If that's how the U.S. treats its allies, do we really want to trust Washington for anything?"

Ironically, many in Israel are feeling the same emotion.

Add to this the under-reported influence of Saudi investors in major European and U.S. businesses and banks, and this trend may be the most impactful in years to come.

Western economic dependency on Middle East oil is well known, but the bigger danger may come from direct investment in businesses and banks.

If massive sums of Petro Dollars were pulled from Western banks, for example, the term "too big to fail" would take on a whole new meaning.

5-We have been warned about cyber terrorism for some time now. Is 2012 the year?

6-Will Israel bomb an Iranian nuclear facility?[iv] If so, how will the Obama Administration react?

7-Ironically, a focus on jobs may finally become a focus in Washington during the election year of 2012. The bad news is that the parties are unlikely to work together to make real changes.

Hopefully, this turns out to be untrue, but if current trends continue little will actually occur.

The good news in all this is that a relatively few changes would bring a drastic positive change in momentum and infuse the nation with positive innovative energy.

For example, four changes could establish a massive change of direction and rebirth of American success (like the shift in American perspective which occurred when Reagan took over leadership from Carter).

The four include:

1) a rollback of all federal policies since 2000 that have hurt small business and dis-incentivized innovation, growth and hiring

2) an effective long-term policy to fix the problem with entitlements, balance the budget and get control of our national debt

3) a restructuring of American education funding to support technical training, community colleges and other non-traditional methods to increase the competitiveness of our workforce

4) a move away from international invasions and wars abroad while maintaining a strong national security presence

I am not predicting that these will occur, but they would be greatly beneficial to the nation if they did.

Finally, each year brings its share of surprises.

For example, who could have guessed in 2010 that the year ahead would bring the death of Osama bin Laden or the refusal of the White House to take leadership in a serious jobs plan?

Whatever comes in 2012, America needs to get its financial house in order and re-incentivize business growth and hiring.

These are vital priorities.

 

 

By Oliver DeMille