Ten Economic Predictions for 2009 31 comments
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I don’t have a crystal ball, but my forecasts have been fairly accurate and quite profitable over the past few years. While 2008 has been a tough year, all signs point to 2009 being much worse. Here is what I see on the horizon for the upcoming year.
- The stock market decline will accelerate in 2009, with the Dow Jones Industrial Average dipping below 6,000. Extreme volatility will engulf the markets with plenty of counter-trend rallies that will be fueled by speculators “calling the bottom,” only to find a new bottom the following month.
- Unemployment will rise dramatically as “official” statistics reach towards 10% and true unemployment rises closer to 20%.
- Real estate prices will continue to drop as rates reset and foreclosures increase across the country. Commercial real estate will finally follow residential, as price declines accelerate due to foreclosures on shopping malls, retail outlets, office buildings, etc.
- Bailouts will continue, with more industries lining up for government rescue packages and both the financial and auto industries returning to the trough for more of their fix. This will lead to prediction #5.
- Deflation will subdue and the first signs of hyperinflation will appear in the back half of 2009 as the trillions in bailout dollars begin to flow into the economy. The price declines that are a result of liquidation and de-leveraging, will give way to skyrocketing prices as politicians continue trying to print and borrow our way out of bad times. This will lead to prediction #6.
- The dollar will resume its downtrend and make new lows during the first half of 2009. This will continue throughout the year with the dollar reaching into the low 60’s as the world loses confidence in the U.S. currency and the U.S. government’s ability to repay its debt.
- Oil will rise from current lows and find a “fair price” somewhere in the $75 - $100 range, where it will float for much of the year. This will benefit alternative energy companies, although any gains will be muted by credit contraction and the overall market decline.
- Agriculture prices will return to an uptrend as declining investment and unpredictable weather patterns lead to supply shortages amidst an ever-expanding population and increase in inflation.
- Gold will make a new all-time (nominal) high reaching a price of $1,400 or more during 2009. A panicked flight to safety could push gold towards $2,000, although the central banks will dump gold on the market or make other attempts at suppressing the price advance.
- All of the above will lead to increased crime and civil unrest with protests in the streets, bank runs and an increased police and military presence trying to bring stability to cities.
I wish that my predictions were a bit more uplifting, but we are truly in dire straits with conditions only continuing to worsen. The United States is essentially bankrupt and running on borrowed money and borrowed time. Many Americans will be facing severe financial hardship for the first time in their lives.
The silver lining is that these conditions are necessary to shake our apathy, demand better from our government, our community and ourselves. It is tough medicine, but is a necessary prescription that will force the change that is needed in this country and the world. We have to hit rock bottom, feel hardship, liquidate excesses and rampant corruption from the system, restructure our government, economy and entire social system. It is not going to be a pleasant undertaking but I am optimistic that we will emerge with a much better world and way of life.
In the meantime, you should be doing everything you can to stay informed, protect your assets and prepare for the transition ahead. I caution my readers not to be suckered into so called “buying opportunities” as we are nowhere near the bottom and I don’t anticipate conditions will improve for at least another 3-5 years.
Those with metaphysical inclinations may also be interested to know that the 3-5 year time horizon forecasts that we reach a bottom somewhere around the year 2012. Dec 21st of 2012 is the end of the long count of the Mayan calendar which started 5,125 years ago and coincides with the first time in approximately 26,000 years that the Sun will rise to conjunct the intersection of the Milky Way (eye, heart, center) and the ecliptic plane. According to the ancient Maya, this date will mark the end of one world as we know it and the beginning of another. No matter your beliefs, we are in for a period of significant change that will require reflection, adjustment and adaptation to a very different world that awaits.
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This article has 31 comments:
He quoted a "Nostradamus" calendar date above....
Are you aware that well-known scholars still debate whether the Mayan astronomical predictions were heliocentric or geocentric?
The MILKY WAY - What is going on here? Do you even know when and by whom the Milky Way was discovered? Its up for debate whether the Mayans even knew the "Milky Way" existed.
Dude... Just shut up about what you don't know.
The author is a complete loon.
So set up a hedge fund designed specifically to time the market. You could make a real fortune if you're right. Of course, no one has ever done this consistently.. but that doesn't matter, does it? Talk's cheap after all.
BTW - Can you rip Peter Schiff any more?
Were you the kid in the lectures that would goto Google.com, download the first word document, and change the author's name to your own?
Actually never mind. I don't exactly want to bet on these things after all.
Rubbish.
jegan
Other nations may do this too. If every nation devalued its currency by half (i.e., it took twice as many currency units to buy anything as before), the relative relationships among currencies (exchange rates) would theoretically be unchanged. What would be affected is the relationship between debt and asset values. If houses double in price (in half-price currency), the entire increase goes into owner equity, while the percent of income devoted to mortgage payments is cut in half. Hard assets double in price (at least) to compensate for the currency dilutions and keep supply and demand in balance, so asset owners and producers benefit. Anyone on a fixed income is in deep trouble. Lenders/creditors are hurt, while borrowers/debtors get to pay back in cheaper dollars (or whatever).
One of the simplest ways to wipe out debt and increase asset values is to devalue the currency.
On Dec 23 03:20 AM pitaking wrote:
> I'm in your camp on most of these, but I just don't see hyper inflation
> when unemployment is rampant and real estate is falling. Won't the
> Fed's printing press simply work to at best counter act these declines
> and worst case scenario fail to halt deflation? Also will other central
> banks simply let the dollar fall and not take action to devalue their
> currency if they hold a serious amount of US debt?
For what it is worth I was predicting the DOW at 6000 at the beginning of the year. OK, I was a bit premature, maybe even slightly wrong, but still a damn site closer than the consensus at that time.
Initially, I had the same pessimistic outlook on 2009, as was apparent when I wrote this song:
Everything is Fallin’ Apart
Dr BLT
words and music by Dr BLT copyright 2008
www.drblt.net/music/Ev...
But then I listened to the altered cover of Blue Oyster Cult classic that I recorded in 2007, and decided to practice what I preached about in the song.
www.drblt.net/music/Do...
and as I said in my totally original Dr. BLTune, I decided that, instead of fear I would...
Spread Some New Year Cheer
Dr BLT
copyright 2007 Frosty Rock Records
www.drblt.net/music/Sp...
BTW, great predictions for a...
Future 2 Behold
Dr BLT
words and music by Dr BLT copyright 2008
www.drblt.net/music/fu...
-- Recognize that you are a human with a soul, not a "consumer' whose only purpose on this planet is to keep other humans fat by over-consuming yourself. This IS the American way of life today, and it has to stop.
-- Spend ONLY when you can afford to buy.
-- Avoid credit at all costs.
-- Learn to do with less or do without. Do you really need that new phone gadget?? Or those 200 TV channels?? Or another new pair of shoes to add to your collection of 20 pairs??
-- Don't buy crap you really don't need.
-- Fix, repair, re-use.
-- Don't watch TV news. It's twisted truth, meant to keep you glued to the screen long enough to sucker you into buying crap you don't need. It spreads fear and unrest, which makes consumers vulnerable to just about any scheme being sold.
Recall, the last oil bubble was created when Merrill Lynch was bailed out the first time and took all the money and put it in futures and that is what created the spike in oil and food prices.
This time around, things will be a bit different. As the dollar collapses, the US will become insolvent and massive dumping of the dollar will devaluate the currency so much foreigners will no longer accept it for payment of their goods.
When this happens, oil will become scarce in the US furthering the speculation in price. With less oil for trucking food prices will once again soar but the dollar in the dumps will cause immediate hyperinflation on all fronts. At this point food shortages will result and we will have our civil unrest as municipalities won't be able to cover pensions, food stamps and welfare amongst other social services.
On Dec 23 03:20 AM pitaking wrote:
> I'm in your camp on most of these, but I just don't see hyper inflation
> when unemployment is rampant and real estate is falling. Won't the
> Fed's printing press simply work to at best counter act these declines
> and worst case scenario fail to halt deflation? Also will other central
> banks simply let the dollar fall and not take action to devalue their
> currency if they hold a serious amount of US debt?
thanks
reddy
On Dec 28 10:59 AM phineas_mudsucker wrote:
> It doesn't take a psychic or a genius to predict that our American
> "way of life" has been self-limiting for many, many years and is
> on the verge of cataclysmic reform. You can't continue to take more
> than you give for so many years and expect nothing bad to happen.
> It doesn't work that way, folks. Someone has to replenish the pot.
> Someone has to pay at some point. Our "way of life" is based on some
> fantasy notion that we can all hit the jackpot and finally be ahead.
> Wall Street is nothing more than a huge, legitimized pyramid scheme
> that we've been suckered into playing for years; and very few of
> us are actually shrewd enough to steal enough to make it worthwhile.
> It's a ponzi scheme fueled by the industry itself. Average investors
> aren't supposed to win. Not everyone can win. Some simple tips on
> basic living and personal finances:
>
> -- Recognize that you are a human with a soul, not a "consumer' whose
> only purpose on this planet is to keep other humans fat by over-consuming
> yourself. This IS the American way of life today, and it has to stop.
>
> -- Spend ONLY when you can afford to buy.
> -- Avoid credit at all costs.
> -- Learn to do with less or do without. Do you really need that new
> phone gadget?? Or those 200 TV channels?? Or another new pair of
> shoes to add to your collection of 20 pairs??
> -- Don't buy crap you really don't need.
> -- Fix, repair, re-use.
> -- Don't watch TV news. It's twisted truth, meant to keep you glued
> to the screen long enough to sucker you into buying crap you don't
> need. It spreads fear and unrest, which makes consumers vulnerable
> to just about any scheme being sold.
On Dec 23 03:57 AM No Name Necessary wrote:
> Please post more. Your articles are hilarious and reek of mis-information.
>
>
> BTW - Can you rip Peter Schiff any more?
>
> Were you the kid in the lectures that would goto Google.com, download
> the first word document, and change the author's name to your own?
Phineus,
You are dead right, and the sooner that the masses realize this, the sooner we can begin the recovery to a very different and (hopefully) sustainable society. Unfortunately many people are driven by profits (greed).
Unless this idealogy is changed we will continue to repeat history, until we destroy ourselves, or the planet on which we live.
Jason,
I would have to agree with you on everything. Timelines are hard to predict, but if it were my 2C, I wouldn't change anything that you have said.
I am sure that you are also aware of the Bible and the Qur'an, which both speak of these times?
We are headed into a new era here, a higher realm , but we need to go through a bit of crap to get there. People really need to be afraid before they will get it, and
most, unfortunately, never will.
My predictions:
The result of our collective ignorance will be war. I believe this to be inevitable.
The biggest crises that we will face in the very near future in NA will be food and water. Many people in North America will starve. No different than a large percentage of the planet right now.
Our extremely dire global climate crisis will be put on the back burner. People will be focused on individual wealth, as opposed to the health of the only planet that we currently have.
Apparently it is more important to leave your children money, than it is to leave them a healthy environment. ie: .........one that is conducive to life.
Civil unrest will be the norm, and cities will become chaotic. Far more chaotic than they are right now.
Climate change will occur much faster than anticipated. Strange weather events will become more violent and more the norm.
My Suggestions:
If you are in the position to get out of a city right now, do so.
Learn how to hunt for meat, and grow a garden for vegetables.
Get to know your neighbours, form a social network.
Invest some of your assets into physical gold and silver.
Stop watching television, and take the time to learn about the real world in which you live!
Jesus is coming soon. Have you accept the gift of salvation ?
The downfall was a specific set of very rational factors that happened consecutively. It doesn't signal the end of the world or anything else. It simply points out that we all live on the same planet and that corporations, and our economy are not invincible as we once thought. It also sends a wake up call to the overuse and rather gluttunous lifestyle of many people in developed nations.
Fortunately, the prediction of the author has now proven to be entirely incorrect. I myself had predicted a Dow Jones of 10 000 by September 1, and it looks like with all of my years in business (0), my predictions are pretty accurate.
Only goes to prove one thing - nothing is written in stone, and don't always believe what you hear.