January 1, 2013

Predictions For The New Year

What are your predictions for the coming year? Here’s some from one year ago. “It will be another year spent trying to find out how much debt governments can rack up without causing economic collapse. Another year spent trying to protect flawed debt markets which make so much money for politicians via their big donors. Will this be the year of the Black Swan? Stay tuned.”

A reply, “Governments going deep into debt is the only thing that stopped the collapse of the private financial/consumer debt-based economy. Governments didn’t cause the collapse. The question now is, can governments stop going into debt before they themselves collapse, without causing the private economy to collapse?”

“If the answer is no, then governments should have allowed the private economy to collapse the first time and saved themselves, as in Iceland. That’s the perfect test: Iceland vs. Ireland. Same situation, radically different choices.”

One said, “If 2011 was Occupy then 2012 will be long hot summer…”

Another, “Predictions, your predictions are worthless, remember, 2012 is the end of the world according to the Aztec calendar.”

And another, “I predict Congressional gridlock will continue in 2012.”

A reply, “For one I am glad Congress is not productive. The framers intend it difficult to pass legislation to protect the governed.”

One said, “I predict a decent year for the economy, despite a continued slow decline of housing prices. Obama gets re-elected as a result. The sub-3.0% GDP growth, falling income relative to inflation (except for the rich and retired public employees), and small employment gains will become par for the course, but people will get used to it.”

“I don’t think the long term problems have been solved. These include an excess of consumption in the U.S., an increasingly unequal distribution of income here, and the reliance of producers across the world on U.S. workers who no longer have money or the ability to borrow. An aging population that didn’t save. And a poorer younger population which cannot pay as much for houses and other assets as those coming before. These problems will take decades to overcome as the country gradually de-leverages, asset prices fall, and Generation Greed passes on.”

“In the short run, however, the housing bubble and bust has done most of the economic damage it is going to do. Construction can only go up from rock bottom levels, generally in smaller units in locations that provide short commutes, and no one is borrowing against homes to finance short term consumption anymore.”

One had this, “There is still so much money sloshing around this state. Every time I turn around there is some announcement that Lockheed has won another contract or such and so has won a grant. These grant announcements seem to be made quite regularly w/higher education and medical being (I think) the usual beneficiaries. I have to say I am really surprised because I thought the stimulus money was supposed to be drying up right about now. I’d really like to follow the money back to it’s sources and also do a little digging as to who specifically is benefiting. Somehow I don’t expect to find out it’s the average Joe on the street.”

“The Lockheed contracts have been particularly interesting. I don’t want those people to lose jobs, believe me. It’s just there’s a sense of disconnect when you hear the government is broke and then every few months you hear of a new contract being awarded. Aren’t the federal and state governments supposed to be out of money? Where is all this funding coming from?”

A reply, “It’s only broke when it comes to our benefits. Remember there is an infinite supply of currency available to them. The variable being confidence in the Fiat.”

Another, “The economy will continue to divide Americans into two classes. 1) Americans with money and or good jobs. 2) Americans with crummy jobs or no jobs and no future. Home prices will go up in areas aligning with No1 above and continue down in the No 2 areas. Wild card: government debt how long can it continue without problems?”

Bits Bucket for January 1, 2013

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