Economic Predictions

I'm going to start a post here which I will update from time to time to make my economic predictions a matter of public record.  Some of these are summarized from the past.  The rest are current, predicting the future.

01-01-12 - The US Treasury still believes US banks have $9.9 trillion in home loans.  That's down only 7% ($10.6 trillion) from it's high in 2006.  Such denial!  A quarter will have to be written down sooner or later.  Another quarter will be paid by underwater home owners who simply don't want to move or accept the real value of their house.  So between the banks and home owners, there's still plenty of denial to go around.  I've said house prices won't bottom for another year, but this real estate toilet won't completely flush for another five to ten years (lost decade?).  With new construction minimal for at least another three years, US growth will continue it's long slow pull off the bottom with real growth rates staying under 4% and averaging only 2% for the next five years.  Still, real estate will remain the best long-term investment for anyone who has cash.

01-01-12 - The Euro will survive since Germany has already involuntarily funded the weak sisters through the central Buba bank claims of half a trillion Euros.  Now they only need formally loan that much so the weak sisters can own up to their claims in their central bank and hand the money back to them. In for a penny, in for a pound.

01-01-12 - China is building 36 million new apartments to distract investors from the 64 million condos already completed, but still standing empty. That's exactly 100 million new units total, which makes our 7 million empty houses look like a minor disturbance. 


The real question is, where will these 230 million people work when they come in from the farm?  And how much will they be paid?  The growth honeymoon is over in China.  Now they'll have to do it the hard way. Ironically, organized labor will be their next major political force on the street.  Stand by for volatile times in China.



01-31-11 - Collectibles will be the next financial bubble, will have a long expansion and selective contractions over years before final collapse.

The U.S. will gently return to a slow growth "new normal" as we complete our transformation to the information age, and continue to lead in tech design. 06-22-10

China will become the world's manufacture, but have the greatest volatility as they grow too quickly in political fits and starts.  Russia will provide grain and energy, but struggle to achieve true democracy.  India will evolve more slowly around customer service. Brazil will be the emerging star of the next decade.  Still not much hope for Africa. 06-22-10


Because of last year's $150 per barrel oil, in less than five years we will be awash in energy from multiple sources such that energy will be available at the equivalent of $1.99 a gallon in today's dollars - 01-01-10.

We will have modest deflation for at least the next three years. 04-17-10

China's construction and real estate bubble will exceed the scale and impact of our own and will pop within 24 months, with dramatic effect. 04-17-10