Saturday, January 3, 2009

Predictions for 2009 (Part 1)

The Anchoress asks for predictions for 2009. So here are some of mine.

  • Israel's offensive against Hamas will end in a week or so. Hamas will be severely wounded, but rocket attacks will continue. When all is said and done, Hamas will claim victory.
  • Soon after the inauguration, the Obama administration will announce that Iran is close to building a nuclear weapon. Within 6 months of the inauguration (and without Congressional authorization), President Obama will order missile strikes on Iran.
  • The Iraq War will continue to wind down to the point that no US troops are in combat. There will be the occasional al-Qeada suicide attack and al Sadr will make occasional threats, but the Iraqi government will strengthen its hold on the country.
  • Some of President Obama's earliest supporters will become disillusioned by President Obama's centrist governing style.
  • The bailouts of the economy will have seemingly little effect, but the economy will self correct. The Dow will be in the high 9000s by December.
  • In New York, Mayor Bloomberg will defeat court challenges to the repeal of term limits. He will win reelection with less than 50% of the vote.

17 comments:

Rodak said...

Anthony--
With regard to the economy, what does your crystal ball mean by "the economy will self-correct?"
Does this mean that the millions of unemployed workers will have found jobs, or does it just mean that the investor class will have cut some of its losses and started to make real money again?

William R. Barker said...

Rob,

PAY ATTENTION, SON...!!!

(*FRIENDLY SMIRK*)

Note:

Anthony followed up his "self-correct" economic prediction with...

"The Dow will be in the high 9000s by December."

You've gotta understand... much like our mutual cyberbud Ed, Anthony is market-focused.

(*SHRUG*)

To Anthony, the market going up - regardless of WHY it's going up - is good news. (*SHRUG*)

Think about our earliest economic discussions on RT. Recall Ed and Moose pointing to the inflation of the housing bubble - bigger, bigger, bigger - as GOOD news... "bigger is better" news?

(*SNORT*)

To a guy like Anthony, workers are simply pawns in the "game" of economics.

Oh... don't get me wrong... I'm not saying that Anthony WANTS to see unemployment. He doesn't. But at the same time, his "win vs. loss" measure is the stock market, not the human capital market.

BILL

Rodak said...

Bill--
I am merely pointing out that if the stock market "self-corrects" that does not mean that the economy has self-corrected. Investors can get rich while the rest of us are eating roots and berries (in season) and living in a van down by the river.
I know where Anthony's coming from (it ain't the hoi polloi), but he needs to be more precise with his language. He is a friggin' lawyer, after all.

Anthony said...

Hi guys -- this is what I said in the original response:

I think that credit will eventually loosen up and that things will get working again. Unemployment will still be higher than its recent lows, but will drop. It will still be a difficult year for everyone.

I think that the "bailouts" have been ill advised. With respect to subprime, I think that if the government stayed in the background, the holders of the debt (probably secondary holders) would have worked out the issue. I think you would have seen a split into "bad" bad debt and "good" bad debt. The bad bad debt would have simply been foreclosed up, but the good bad debt (where the debtor was in difficulty, but should be able to pay eventually) would have been reworked. With respect to the auto companies, they should have declared bankruptcy so they could restructure and come out of it in a few years (bankruptcy does not mean the end).

Instead, we have given this bailout money -- where is it going? Are the CEOs of these companies taking pay cuts?


I do not actually think th estock market IS the economy. Rather, I think it is a visual representation of how people perceive the economy. And right now, people do not perceive it to well. Hence the massive drop. I do think that people will get over the initial panic, but we will not see Dow above 10,000 for a while.

As for "self correct" I mean that I think the credit markets would eventually open up (I am seeing happen now). Unemployment will still be higher than it was, but not as high as it is feared. I just think that the bailouts are not helping those who are getting hurt by this panic.

I am sorry if I am not making myself clear, but I mean (and thought I explained, though I see it was not well stated) that without government bailouts, the poison would have been purged out of the economy.

Am I still not making myself clear?

Rodak said...
This comment has been removed by the author.
Rodak said...

[I deleted the above to fix a typo.]

Yes, Anthony, that's clear enough. Thanks. If physicians and public health officials just stood back and let an epidemic rage, the contagion would purge itself out of the population eventually, too. But all that would have been accomplished by that is shifting the costs from vaccines to coffins. There's no free lunch.

Anthony said...

There's no free lunch.

Rodak -- TANSTAAFL is the correct line.

I hope you can see the difference between an epidemic and a financial panic. The government is now in essence rewarding incompetence. The purpose of the TARP program was to inject liquidity into the credit markets, so banks could start making loans again. Instead, it is being used as an all purpose slush fund.

Rodak said...

"Financial panic?" You're of the school that the whole thing is just a psychological phenomenon?

No, I think that the analogy to an epidemic is a valid one. In both cases the system breaks down due to the presence of a contagion; and in both cases the system begins destroying its own cells, trying to rid itself of the pathogen--in this case, bad debt.

Anthony said...

>"Financial panic?" You're of the school that the whole thing is just a psychological phenomenon?

Really Rodak, you should be the lawyer, not me -- I am using the term "financial panic" in the classic sense (such as teh Panic of 1929, 1907, etc), which essentially means crisis.

As for the solution, if you want to get rid of bad debt, OK, then do with TARP what PARP was meant to do, namely buy up bad debt hoping to sell it at a better price later. Instead, TARP has become a slush fund allowing the Bush administration to essentially nationalize the banks and now the auto industry (and where is the authorization to use TARP funds for the auto bailout?)

Rodak said...

Sure. They're all crooks. I don't deny that. That still doesn't mean that the bail-out, if enacted properly, would not have been the best policy in what is basically a no-win situation. The best that can be hoped for is to somewhat cuts the losses, and spare the innocent and the weak to the extent that this is possible.
A plague on all their houses.

Rodak said...

As for those previous "panics." I think that they refer specifically to runs-on=banks, don't they? Those really were "panics." That much has been prevented in this day and age.

William R. Barker said...

Whoah! Eleven comments and this one makes twelve!

(*GRIN*) (*RUBBING MY HANDS TOGETHER AS I PONDER MY RESPONSE*)

Re: Rob; January 4, 2009 9:07 pm

Granted. People can make money in the worst of times... people can lose money in the best of times. (*SHRUG*)

Re: Anthony; January 4, 2009 9:10 pm

Credit WAS the problem. All the Fed is doing (all Bush and Obama and the Dempublicans and Republicrats) want to do is try to pump air into what they view as a patchable tire.

I on the other hand see the present/future situation untenable unless drastic steps are taken. (Which they won't be.)

We AGREE, Anthony, in large part, on where and how the government is going wrong.

Pithy...

REASONABLE extension of credit is vital to a dynamic growing economy. Extension to TOO MUCH CREDIT - loans not firmly tied to realistic expectations of wealth creation FROM the loanee from the loan (part of which is used to REPAY the loan WITH INTEREST) - is disaster built upon insanity.

Re: Rob; January 5, 2009 4:47 am

(*JUST SHAKING MY HEAD*)

Rob. As I often note... (*SIGH*)... the fact that COMPARATIVELY you're a bright guy PROVES beyond the shadow of a doubt that we're screwed. There's no hope. We're DOOMED!!! (*INSANE CACKLE*)

Re: January 5, 2009 9:32 am

I admire that you're so much more... err... diplomatic... than I, Anthony.

Me? I find myself often shifting between outrage and amusement when faced with... err... Rob. (*WINK*)

(No offense, Rob!!!) (*GRIN*)

BILL

Rodak said...

Re: Rob; January 5, 2009 4:47 am(*JUST SHAKING MY HEAD*)

Shaking your head is all you can do, since you clearly can't refute the logic of the analogy.
Both an epidemic and a financial collapse involve the break-down of a system in serial stages, due to a "contagion." If you can't see that it's my fault.

Rodak said...

Oh, and both will eventually "run their course," leaving large numbers of victims in their wakes.

Anthony said...

[This is Anthony -- Rodak posted the following}

And btw, with regard to

the fact that COMPARATIVELY you're a bright guy PROVES...

[deleted]

[This is Anthony again. Rodak, yes, Bill was giving you a slam and you are right to slam back. But let's try and keep it PG-13 here. Now as my mom's cousin the former boxing ref would have said, touch gloves, head for your corners, and come out again]

Rodak said...

You should have made that "expletive deleted."

Rodak said...

Btw, Anthony, re: PG-13--if you think that 13-year-olds don't routinely use the phrase you deleted, then you don't know any 13-year-olds. ;-)