With half the year behind us, it is an opportune time to review the past six months and to look ahead to the rest of the year in the world of personal finance. I am pulling out my crystal ball and making some predictions so please feel free to call me out on it at the end of the year. This is also your opportunity to make some bold predictions too so feel free to chime in.

The big news makers. The real estate bubble collapse gathers steam, down goes bank stock prices, up goes oil and food prices. What’s the link in all three? In our collective hubris, we thought could maintain a consumption based economy forever and the market taught us there are limits to cheap credit and turning our entire economy to feed our consumption needs. What is governments reaction to all of this? Sending rebate cheques or proposing tax cuts in elections to fuel more consumption and dismissing any consumption-based taxes (see proposed carbon taxes- no matter how poorly designed the intention is the same: to limit consumption). Yes, it looks like  governments are taking out the playbook which states: “the only way to dig ourselves out of a hole is to keep digging deeper.” And here we thought Nixon and Trudeau-esque economic policies of running up massive deficits were gone. Silly me.

The most underplayed story of the year: Petrobras, the Brazilian oil company, announces the discovery of an deep sea oil-field which could be the third largest find in history. The media puts the story in the back-pages opting instead to focus on “sexy” stories like people who could only afford to buy a home with subprime mortgages now complaining they need to be bailed out. This story could go either way: (i) Brazil (the government is the largest single shareholder of Petrobras) becomes an economic power-house, changing the entire geo-political landscape globally since the reserve could put Brazil into a top 10 oil power; or (ii) this could be the biggest fraud in history since there has been scant detail on the discovery, leading many internet discussion boards to question the lack of full disclosure. Considering how much institutional money has flowed into Petrobras this year if, indeed, the skeptics are right, this could be a colossal wipe-out, leading to questions about the entire industry in general.

Here’s to the blogsphere: For picking up that the mutual fund industry is dying a slow and painful death but recognizing that the mutual fund industry is trying to turn the same trick in new clothes by offering exchange-traded funds with outrageous MER. Not all exchange traded funds are created the same. Check the MER’s carefully. Anything over 1% in MER is simply outrageous (actually anything over 0.75% makes me nervous). Canadian Capitalist is only one of many bloggers who have called out the industry on this issue (so sorry, I could not link to you all).

Most depressing research bit. I posted earlier this year that the Securities and Exchange Commission (the U.S. securities regulators) spent less than 0.5% of its budget on investor education. The rest was spent on important matters-regulation, policy-making, enforcement- but not budgetary items that would impact you and me on a day-to-day basis like a good education on personal finance. Sadly, the same seems to be happening in Canada as well as regulators regulate without asking its primary stakeholders, us, what we want. For administrations paid for and meant to serve us, they sure do miss the point. Expect more enforcement and high-profile cases but no focus on investor education for the rest of 2008 and beyond.

Things that make me worry for the rest of 2008: Softening commercial real estate market could be the final sign the real estate market has completely collapsed in the U.S., choking off of credit earlier this year by the banks will start being felt later this year, lame-duck President means no economic leadership and the continuing de-valuation of the American greenback fueling further inflation, lack of a true carbon emission policy will only create further business uncertainty meaning a slow-down in capital expenditures (businesses can work around bad policies but not policy uncertainty).

Predictions…BCE privatization is agreed at for $36.50/share (as I wrote earlier), a U.S. based mid-tier financial services firm goes under, U.S. banks start making massive dividend cuts (hello Bank of America…), a Canadian bank makes a big acquisition down south, governments finally realize its time to come up with an integrated environmental policy, and not a piecemeal one, after oil hits $160/barrel, steel makes a recovery (yes, steel), Apple finally hits a wall, Yahoo! is sold to MS after the Board and managemet is over-thrown, the stories on the death of the suburbs begin to increase, the T.V. show Lost has a confusing season (you notice it alternates good season, bad season?) and everyone remembers again that cash in the pocket is always nicer than a cheap line of credit.

Anyone care to make a predication?

No post tomorrow.  Have a great weekend.