Tag Archives: crash

Little Boxes

This economic prediction is from Rawles on SurvivalBlog this morning:

I’ve recently been asked by several blog readers and consulting clients about my predictions for the economy for the next few years. Here they are, in a nutshell: The US economy will remain weak for for at least five years. Both the commercial and residential real estate markets are unlikely to recover before 2018, especially as interest rates begin to increase. Noticeable inflation should begin around the Spring of 2011 and will become uncomfortably high by 2012. If the announced Federal income tax and capital gains tax increases do indeed go into effect, they will stifle the economy for the foreseeable future. Continued financial instability in the periphery of the EU will continue to keep the Euro weak versus the Dollar, but in the end, both currencies are doomed. Global credit market chaos will probably continue for several more years, as will the Mother of All Bailouts (MOAB) here in the United States. I’d say that there is a 25% chance of a Dollar Panic and devaluation in the next four years, and a 5% chance of a hyperinflationary Dollar Collapse. But regardless, some inflation is coming. Its severity is difficult to predict. The bull market in precious metals is nowhere near its end. I still predict that spot price of silver will eventually exceed $50 per ounce.

I think it’s pretty close to what I would predict. When he says “…in the end, both currencies are doomed”, while probably true, could be a decades away. I think it’s interesting he’s picking 2018 as the earliest real estate recovery date when I picked close to the same thing last night (I was a little more optimistic, thinking 2015). The inflation prediction is his earliest prediction, so I’ll be watching for his accuracy.

Here’s another “I’m not an idiot” moment. Richard Fernandez wrote this yesterday:

But Barone implies that for all the apparent flux one thing remains constant: it’s a brake and throttle world. The liberals hit the throttle and the Republicans sometimes step on the brakes. Republicans haven’t noticed the steering wheel.

Yeah, that’s just about right, IMO. This ties in with the above prediction. That pessimism is born out of not believing that either party will do anything more than delay the inevitable. People tend to operate in their own self-interest, and a vast majority of politicians’ self-interest is diametrically opposed to the country’s self-interest. And as a rule, the longer they are “serving”, the more that’s true. Later he makes a comment that’s rather apropos to a conversation I had with my wife last night:

It may take more than hard times to make a political paradigm shift thinkable.

Or planting fruit trees, for that matter. How many people just can’t imagine growing their own food? All people create their own boxes of their minds that can be very difficult to break out of. Some worse that others, of course. Limits in thinking equal limits in action, so when an action is required that requires you to think outside your little box, you freeze.

What Greece Means in the Bigger Picture

I haven’t had much time for long post lately, and today’s not an exception. Blogging is something that definitely comes in waves in my life. Anyway, today’s post at the Belmont Club was too good to pass up linking to and doing a quick cut-and-paste. He’s talking about what the Greek melt down means to Western social democracies. I’m 100% on board with his analysis. The best case scenario right now is a painful — but controlled — realignment of government priorities that will make a lot of people upset. The worse case scenario swerves into a conversation that most people don’t want to have.

But Portugal and Spain are suspect — as well as many of the larger EU economies too. Their problems can be fixed to be sure. But they cannot be fixed by any kind of bridging loan, “put” or ’shock and awe’ intervention. None of that will work in the long run. However things are stabilized in the short term, eventually a scaling down of the welfare state — and indeed the size of the Western state itself — will be necessary. There’s simply not enough money to sustain it. A wave of change, but not the kind of change that President Obama imagined, is following right behind the financial tsunamis. All of his ill-timed “investments”, like bloated Federal Health care, immigration “reform”, and cap-and-trade have come at a time when they simply can’t be borne. Institutions like featherbedded unions, monopolies and obsolete gatekeepers should view recent events in the same way that dinosaurs who looked up at an enormous descending meteor should. The enormous tower of quangos, EU commissions, massive agencies, vast entitlements is trembling beneath that most quotidian of assaults: lack of supply, “like a cut flower in a vase; fair to see yet doomed to die.”

So far our leaders — including most on the conservative side of the aisle — have shown absolutely no desire to address these issues. I don’t think they will unless they’re forced, either. There’s no way around it: in the end, it means them giving up a huge chunk of power. We haven’t had a politician like that in high office since George Washington.

Don’t Give Up

Time to get political again. That’s really why I have this blog, after all; this is where I feel free to speak my mind and if it annoys someone out there, bummer. For those with blood pressure issues, I have my family blog that’s entirely safe from such things. Today though, on this blog, I’m linking to this spectacular entry by Dr. Zero over at Hot Air Blog. It’s called “A Word to the Weary“, and it basically says, yeah, things are bad, but don’t give up. Keep fighting. It’s a scary, wonderful, and inspiring post. It’s not a rah-rah Republican piece, but centered upon freedom. The start:

I get a lot of email from people who ask if the final degeneration from capitalism to collectivism is now inevitable. Entitlements are never repealed, after all, and we just got saddled with a back-breaking entitlement, piled atop a national debt that was already crushing us. It seems like it would take a miracle just to undo the damage Barack Obama has done in a single year… and that would just get us back to where George Bush left us. Dependency, unemployment, economic contraction, and socialist politics are a perpetual-motion engine of national decline.

A couple points I’d like to make. First, don’t ever mistake this: neither party can be absolutely trusted with your life, happiness, and freedom. Keep them honest and be willing to turn on them in a heartbeat if you catch them betraying their promises. Second, I have no idea how bad or chaotic these political and financial upheavals are going to be, but I am fairly certain that the past few years represents just the tip of the iceberg. Anyone with a lick of sense sees our national debt and projected deficits over the next decade and can see that.

When that systemic crash does come — and it will — how bad and painful it will be is being affected by our actions today in a very real way. It can be looked at as a sliding scale. The more dependent the citizenry are upon the machine of government, the more painful the crash will be. The more independent they are, the softer the transition will be.