Wednesday, December 30, 2009

GammaBoy's 10 Outrageous Predictions for 2010 - PART 2

Sayonara 2009! Considering the financial turmoil that accompanied your arrival, you were a comparatively gentle and unremarkable year. You gave a frenzied welcome to our first black president and a frenzied goodbye to our first sort-of-black, sort-of-white, sort-of-alien pop star, but between those high and low moments, you kept Americans convinced that, despite their woes, everything was just about to get better. Alas, in the view of future generations, you will be little more than a footnote, a year of quiet, stubborn hopefulness than unleashed a torrent of outrageous and mostly unhappy events in 2010.

As I mentioned in my 2009 report card, I think some of those predictions were not wrong, but early, so I won't bother to reiterate them. Fortunately, that gives me the freedom to crow about any successes come December 2010 without having to explicitly admit the failure, or rather, continued delay, of the rest.

Now then, 2010 in an outrageous nutshell....

U.S. stock markets put in new lows

You heard it here. The stock market will give back all the gains of 2009 and more, as a second and more sinister wave of the still continuing financial crisis comes ashore. My guess is that when the decline gets going, it will be faster and scarier than anything we saw in late 2008 or early 2009. The essential problem is that none of the issues that led to the decline in 2008 have been fixed. They have been papered over with government largesse and the loosest federal credit in history, but these salves will actually make things worse as the U.S. Ponzi economy begins to unwind. Many other markets, such as most commodites, will join in the selling, and we may see new multi-year lows in crude and even gold. Mid-level luxury goods will get wiped out, as the few extraordinarily rich benefactors of administration policies reach new heights of consumption even as the other 98% of the population gives up any hopes of ever leasing a Beemer and is simply thankful they can afford a single family car at all.

Saudi Arabia catches fire

The Saudis finally get their due. Pinched between the Iran/Israel conflict, which will likely go hot, and accompanied by more general Shia/Sunni violence, Saudi will get bombed by somebody. U.S. protectorate or not, the Saudi will discover that the love for the sheikhs from its many poor serfs does not run deep, and when the going gets tough for Saudi, the people will stand down and watch things collapse. The event might lead to a short-term pop in energy prices, until people realize that cheap energy is a necessity for the world economy, and the world economy tumbles down a staircase with energy prices sliding along in its wake. The worst case scenario is that the events that unfold in the Middle East in 2010 lead to World War III. Hopefully, saner minds will someow prevail, but the dominos are certainly set up to make 2010 a more likely candidate for world war than any of the previous twenty.

U.S. Bond Market Failure

The U.S. bond market is completely out of control and will come to a head in 2010. There is simply not enough money in world to fund the deficits that are envisioned, and one of two things will happen. Either interest rates will rise precipitiously, destroying any hope of a short-term U.S. recovery, or the Federal Reserve will be forced to print money to buy bonds from the Treasury to extend the Ponzi scheme, thereby setting off very real fears of hyperinflation. I've given up trying to understand the machinations of the Treasury and the Fed, so let's just say that any way it plays out, it will be bad.

Real unemployment touches 25%

The current official unemployment rate is hovering around 10%, but if you use the calculations that were in use in the U.S. up until a series of beautification adjustments were made by the Reagan and later administrations, the comparable unemployment rate is already closer to 20%. The unemployment rate will get worse, and the effect will get more noticeable as more people are no longer eligible for unemployment insurance. The federal government has been working to extend this insurance, but the bond issue listed above will stymie their efforts. Moreover, many state unemployment funds have been emptied. Unemployment is much less of a social problem when you are able to keep people on some sort of income, but there is no money left in the kitty, and we are about to see how people behave when the government is no longer writing them emergency checks.

Many cities and several states either default on bonds or declare bankruptcy

Municipal budgets are in the worst shape in recent history, and for many municipal entities there is no way to make the math work. Potentially, the federal government will sweep in with its unlimited checkbook and bailout these states and cities, but short of that, there will be a wave of defaults and bankruptcies. The biggest issue for most of these places is spiraling health care costs and the absurdly generous deals that were inked with public unions in better times. Most of these deals, laden with sizable salaries, free health insurance, and ridiculously sweet pensions, are simply untenable, and there will be increasing conflict between these unions and the taxpayers being asked to pony up. The defaults will force the issue into the public, and it will get very rancorous.

Domestic terrorism re-emerges

Keeping with my failed riot call for 2009, let me double down with a prediction that there will be one or more serious domestic "terrorist" events this year. These will be completely unrelated to the Islamic terror threat and more in line with the Timothy McVeigh kind of threat. An assassination of a major politician would also fit into this prediction.

Republicans have a very good mid-term election

This isn't particularly outrageous, as the out-of-power party historically always does well in mid-term elections. But I think this cycle will be particularly dramatic, as the above events will crystallize a lot of anger and lead Republicans to make significant inroads on the Democratic majorities.

Many major retailers fold

A few retailers folded after the crappy Xmas season of 2008, but I think the numbers will be much worse in the first half of this year. Headline numbers for Xmas 2009 have been touted in the media as pretty solid, but I think beneath the headlines, the numbers were actually quite weak. Look for a lot more open storefronts in your local mall. In fact, some malls will close down altogether, and you will see stories by the end of the year suggesting using some large, previously commercial, space such as malls as emergency housing for many of the emergent poor.

Severe violence in the UK, Italy, and China

As the global economic crisis progresses, you will see severe domestic violence emerge in a number of nations. The UK is ready to blow at any moment, as the economy there is a full-blown disaster and the Islamic population is restive and a convenient target for native anger. Look for the BNP to strengthen. In fact, as Europe goes down the tubes over the next couple of years, the BNP might emerge as the most reactionary group in Western Europe. Italy has similar disfunctionality, but unlike a resurgence in the UK, Italian disfunction has a long history. Nonetheless, 2010 seems like a good year for some of the tension in that country to explode. China is the most interesting and dangerous of the three. China's economy is in an amazing bubble at the moment, with virtually every company and many individuals involved in real estate development. When the bubble explodes, which I am guessing will happen in 2010, there will be a lot of angry people in the cities to get violent alongside the already various rioting rural populations. Since the Chinese government is much more ruthless than its Western counterparts, it's difficult to guess how things will play out, but some sort of violence seems assured.

The United States wins the World Cup

With all the deeply pessimistic predictions above, I figured I throw in one outrageously optimistic prediction. The U.S. squeaks out of the first round, shows sparks of brilliance in victories in the rounds of 16 and 8 and then shocks Brazil in the semis before soundly trouncing a stunned Spanish team in the finals. Seriously, though, isn't the World Cup a prime potential target for terrorism? I mean, how good can the security really be in South Africa? I was thinking that if I was an ambitious Al-Qaeda group, and I was scanning the global calendar looking for targets, the World Cup would look like a jackpot. Western celebrities, global audience, and a deeply third-world civic administration. So as a pessimistic footnote, I'll add the potential for a Munich style terrorist act against a Western squad.

GammaBoy's 10 Outrageous Predictions for 2010 - PART 1

2009 is coming to a close, so I thought it was time to give a report card on my predictions from 2009, and notwithstanding the mediocre grades, forge ahead and make some more predictions for 2010.

First, in this post, the report card....

A major riot in a U.S. city
The populace was chastened by Obama's election, government goodies, and a levitating stock market. There was some turmoil surrounding various state government cuts, like education in California, but even prime candidate Detroit has been relatively quiet. I underestimated the government ability to appease its citizens over the short-run, but I am not giving up on this prediction in 2010.

Shortages of Goods/Supply Chain Breakdowns
The credit turmoil of late 2008 and early 2009 subsided and everything held together. The only shortage I know of was Xmas superstar Zhu Zhu pets and that was certainly not what I had in mind when I wrote the prediction. I take some solace in the failure of this prediction in the massive revocation of credit cards facing many Americans, but it is still an epic fail.

Pensions are the #1 financial crisis story
Mortgages and foreclosures still seem to have the limelight as financial crisis story #1, probably followed closely by unemployment. Nonetheless, the visibility of the coming pension debacle has been raised during the year, and if you were one of the many Delphi retirees who awakened to see your pension benefits slashed by the PBGC, you are feeling it directly. This manner of failure of this prediction seems to be shared by many others in that I assumed the effects of the continuing financial crisis would become obvious much more quickly than they have. That does not change my underlying belief that this will happen. I prefer to consider myself early, rather than wrong. Dangerous for a trader, but no so much for an wannabe oracle with nothing more than pride on the line.

Inflation/Deflation mix
My Maslow theory seems to be holding up, although with so many different markets flashing different signals, it is difficult to assess this prediction precisely. Prices on many high-end goods have been slashed dramatically even as prices for more basic things like energy and food seem to have flatlined or increased. This will continue. It will be very visible in the real estate market, where homes above $1 million are basically unsellable right now, even as bidding wars have erupted for low-end foreclosures. Further, there is a core cultural change taking place in Americans' willingness to buy shit they don't need.

Russia goes nuts
To be honest, I threw this prediction in here, so I would have a necessary tenth prediction, although in retrospect, 9 predictions for 2009 would have had a nice ring to it. Anyway, it failed. Russia has been active undermining Ukraine and Georgia and throwing their heft around in the Middle East, but they have done it quite calmly and methodically. Going forward, I expect Russia to be more visible in efforts to capitalize on American weakness.

The Euro crumbles
The Euro ran roughshod over the dollar this year, but I still stand by my statement that "2009 will be the beginning of the end of the Euro as a functional currency". The very beginning admittedly, but the Euro is starting to slide, and I expect it to keep sliding throughout 2010. The debt situation, especially in East Europe, will start to pull pieces apart. And whispers have started of the possibility of countries leaving the Euro, although to be fair, Greece was not on my radar as an initial possibility.

Crude trades above $100 again
FAIL, but not EPIC
$100 did not happen, so strictly speaking I was wrong, but my basic sentiment was right: "my sense is that the recent fall in crude prices is a short-term anomaly and prices will rise again. Along with all other commodities actually." I am now leaning the other way and think commodity prices will test or blow through their recent lows. The world economy is in that bad a shape.

War and more war
Plenty of war as always, but no more than usual, with the tension in Mexico and Obama's expansion of Afghanistan potentially saving me from the "EPIC" modifier. Again, I think I was early here, rather than wrong. Actually, since these were predictions were for 2009, I was wrong, but you get what I'm saying.
Bonus prediction: Crime levels explode in the United States.
Crime has apparently decreased, not increased, despite our economic woes. I find that a bit of head-scratcher, but I completely underestimated the ability of the government to appease people with goodies.

Ron Paul movement strengthens
Finally, I can claim unabashed success. RP went from a fringey also-ran to a frequent guest all over television news, and the Tea Parties and their resulting controversy made it clear that Ron Paul ignited a more substantial political movement. It still remains to be seen if the GOP rejects this movement, embraces it, or is overwhelmed by it. Two interesting Congressional candidates that will help decide this question are Rand Paul, Ron Paul's son, who is leading in Kentucky's primary as a rank party outsider, and financier and fellow doomer Peter Schiff in Connecticut, who is trying to steal the party's nomination as they collectively assault scumbag Chris Dodd.
The party hierarchy loathes both candidates, and it will be curious to see if strong grassroots support for these candidates will be able to upend the party machine.

Secession discussions
Another success, even if I would have bet against it compared to some of my failed predictions. Texas was the first to gain notoriety for such blasphemous ideas, but in the wake of the health care legislation, "autonomy" movements have blossomed in a couple of dozen states. It's still all very fringy, but the talk will become louder as debacles in 2010 unfold.

All in all, a mixed bag. The prediction I was most certain about, a riot, was an abysmal failure, while the biggest reach, talk of secession, actually happened. Not that even complete failure would stop me from setting myself up for more failure in 2010.

Sunday, August 2, 2009

The Hypocrite-in-Chief

I could go on for days about the hypocrisy of the messiah, the chosen one - Barack Hussein Obama. Just for starters, see the transcript below from Randi Rhodes' radio broadcast on Air America. The program aired on November 22, 2004. It featured an interview with then Senator-elect Obama.

BARACK OBAMA: ...When you rush these budgets that are a foot high and nobody has any idea what's in them and nobody has read them.

RANDI RHODES: 14 pounds it was!

BARACK OBAMA: Yeah. And it gets rushed through without any clear deliberation or debate then these kinds of things happen. And I think that this is in some ways what happened to the Patriot Act. I mean you remember that there was no real debate about that. It was so quick after 9/11 that it was introduced that people felt very intimidated by the administration.

Sound familiar?
Intimidation by the administration?
Rushing huge bills through Congress without sufficient debate?
Where is the "Change we can believe in?"

Tuesday, July 28, 2009

This Settles It, Right?

When the editors of the National Review announce that Barry was born in the USA, that should be the end of the story.  Fortunately for all real Americans, the denizens of the Free Republic message board refuse to drink the kool-aid. 

  • No, it is not a distraction, it is something that the cult of personality seems to have swept into the trash bin … It is called the LAW. This is just another reason why I no longer subscribe to the National Review.
  • I actually don't care where he was born as he is not a "natural born citizen" since his father was Kenyan.
  • Gibbs said yesterday obama was a citizen; He did not say he was a 'natural born' citizen.
  • it is all part of the same web of lies that the POSOTUS is fabricating. This Kenyan buttwipe needs to realize he may or may not be legaly the president….but if he tries to touch the constitution with his criminal touch (he did promise to obey and protect and follow the constitution) he will be in a world of hurt….and wind up losing states to secession, and where that will follow.
  • Hey! We have all been screaming for the msm (controlled media) to get onboard on the BC story—so here it is! They all want a piece of the pie now—didja think they were going to take the Patriot side of the issue? Fat chance—they are just going to cloud the issue even further now. The state gubmint in Hawaii is going to glorify him now. At least Rush and Glenn Beck are spelling the truth out to the American people now (not We The People—the wee sheeple), on other issues that is. On the other hand, GB has not attacked the real issues lately—that I have heard anyway—y'know, the BC issue, of course, and those "camps", ML, etc. Who knowa? perhaps he too will wake up…???
  • The National Review is a periodical that I have done without for over 30 years. I began to fall out of love with the magazine about the time William F. Buckley joined Jimmie (the Geek) Carter in pushing for the giveaway of the Panama Canal which is currently operated by interests of Communist China.
  • Once again the National Review lets down the conservative movement. Lowrey is a naive boob. Goldberg is unreadable. And when will he apologize to Ann Coulter?
  • which is why I think he was primed for this position for over 20 years and those behind the scenes have been planning on taking the country since Ayers stopped his bombing. He knew it would never work and as Marx and Hitler said or realised. We cannot further our agenda by violence it has to be done by getting into positions of power and influence. What better position than the presidency. He has no clue but they have covered his background up, they set his background up by the two books instead. There are so many questions and yet the media sit there and say , nah he is an America he had something in the paper or he had a thing on a website. All he has to do is show the damn thing. All the media have to do is go to Kenya and ask why two of his family say they saw him born there and ask why they are charging tourists to see bozo's birth place in Kenya
  • It's easyh to believe this editorial was written by "The Editors". It appears that different editors wrote different paragraphs and they never got together to compare.
  • Yes, BS is an undocumented worker residing at 1600 Pennsylvania Ave. Certain groups can't govern themselves. Look at the Bahamas - Burned out ends of Grand Bahama Island are a testament to the fervor of certain groups when they feel empowerd.
  • National Review was sinking but they have hit rock bottom. It seems like it all fell apart after Bill died. Sad. We keep hearing the "let's move on" or "let's forcus on…" - it takes 5 minutes to provide the long form BC. It does not distract from anything.
  • If you send a Letter to the Editor of NR, you get an Out of Office reply from them. Hmmmm?
  • I think National Review is almost out of business. The print magazine may no longer exist. Rich ?? forget his name left and Lucianne's son was running it but he really is not up to the task. I guess they don't get the Saudi money like Huff Po or LGF. Maybe they decided to start taking it.
  • I National Review "Editors" smarter than you, come down from on high and ask you to "please move along" nothing to see here citizen. I will not reveal to you that we expended no money or resources, hired no investigative journalist to support the band wagon conclusion that BO is your new official and certified master.
  • Coulter is a disappointment. Where is HER plan? What is SHE advocating to save our country. Just shooting her mouth off on TV is entertaining but what has she done any different from us? We make noise. She makes noise and Democrats continue to destroy our America. Anne, run for the Senate. If Franken can win, so can you…..

Wednesday, July 22, 2009

23% Annualized Return for the American Taxpayer

Not too shabby.  Goldman buys some positive PR at a time it desperately needs it and W gets some post-White House credit.