China

My friend Andrew asks me this:
"What do you think will happen with China? Think their central authority will be able to reignite the growth engine there? If not, the political/unrest fallout would be ugly."

I think China is actually in a good position, and I think they'll do relatively fine. Their currency is stable (unlike e.g. Russia), they can easily cover external debt with their reserves, they have really aggressively loosened monetary policy (cutting rates aggresively and lowering reserve requirements multiple times) and have that room b/c inflation is under control (and it doesn't only depend on oil like in other countries), oil plays massively in their favor (as opposed to e.g. Brazil or Russia), they have announced that huge stimulus package in October already so they were ahead of the curve on that, and they are a country that actually really needs infrastructure. Furthermore, they are experienced with planning and doing lots of work through the gov't so the risk of that infrastructure being "roads to nowhere" is much lower than here or in Japan in the 90s. Then they have also put in place a slew of other administrative measures to support various sectors of the economy: the land reform earlier in the year that will lead to more efficient production of agricultural products for example or the shortening of the requisite holding period for a property to be tax exempt from 5 to 2 years to support the real estate market. Plus, the central authorities are experienced in doing what they want to do. If Beijing wants to make something happen they typically will, and their economic policy is an extremely pragmatic one.
China is one of my top picks for 2009.