Monday, January 25, 2010

Denmark's Saxo bank makes outrageous predictions every year to challenge markets' wisdom and assumptions in the year ahead. By putting together bits and pieces of information, especially Mousavi's and Karoubi's latest statements and the crisis in the banking system, some similarly outrageous predictions could be made about the direction of events in Iran. Ahmadinejad has apparently dissolved Iran's equivalent of federal reserve board of governors in recent days, which even in normal countries would send tsunami waves throughout the system. This is just the beginning: as the sanctions go in full gear and the subsidies end, people may end up paying many orders of magnitude for basic products and services. All this combined with the inability of the regime to crush dissent and defection among its own ranks has made many within the regime skeptical as to the ability of the Ahmadinejad administration to carry on (aka buyer remorse). But since Ahmadinejad has the backing of Khamanei, sacrificing him has to be done in such a way that Khamenei doesn't lose face. One way is for Majlis to impeach Ahmadinejad and/or his ministers over the economic crisis forcing him to resign which after thankful acceptance by Khamanei will pave the way for new elections. Reading between the lines of Karoubi statements today and Mousavi's statements a few weeks ago, one could sense some outcome like this might be in the works/promised to these gentlemen. A lot will depend on the events in the next 3-4 weeks, especially 22 Bahman and unfolding of the banking crisis. This is just an outrageous prediction but one with a pretty good chance of coming true. At a minimum it makes us think "outside the box" in the same way that Saxo banks predictions are designed to.