Tuesday, June 14, 2011


Given that the trouble and strife is busy and I am sitting sipping wine, I am thinking its time for some predictions:
1. Barack Obama will lose the 2012 elections - Yes, the Republicans lack any sort of leadership or direction. Yes, Obama is a smart guy who actually understands and can solve problems. Yes, Obama is the one who got that guy in Pakistan (what was his name again?). Yes, the Republicans are talking about Palin as a semi-serious candidate. But...
Its the economy stupid. There is nothing that Obama can do to make the economy look any better than it is today, its just basic physics. We have been blowing bubble after bubble after bubble for 20 or so years. Whenever the bubble was about to burst we just took the air and moved it to a bigger balloon. In the last round the Irish and American governments basically shifted the burden of debt onto its citizens. Ireland will figure out that it will not be able to (or actually want to) make good onits loans and will default (or negotiate a new deal with Europe). The Germans will make it look ok but the amount to be repaid will be much less. The Americans wont have that luxury, the Chinese wont bail them out and there are no more lenders of last resort.
American will fight and fight about debt limits but will not get anything done to make it any better. People will get frustrated and vote BO out.
2. Once Barack is gone the economy will go off a cliff.
There is nothing Barak can do but the Republicans will show that there is nothing anyone can do. What goes up must come down, we need to get the debt out of the system and people will realize this after the Republicans win. The economy will grind to a hault with massive deflation. Gold, Oil, Silver, Rhodium and any other commodity you can think of will half in price. Yes, Gold will be less than $800 an ounce.
3. After the deflation we will have inflation
Once the economy starts to stabilize (stops free fall) then the value of the dollar will fall. We have been printing money so fast that we are afraid that it will go out of fashion (and it will). The only way we can pay off the $14 trillion or so in debt and make good on Social Security and Medicare and Medicaid and Military Spending and well you get the point. The only way to make good is to print more money which will make that money worth even less. Commodities will gain back what they lost and then some.
4. Nobody will have seen any of this coming
Its so insane that nobody will have seen this coming, or at least nobody sane and sober. Time for another glass of wine...

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