Wednesday, December 31, 2008

My Predictions for 2009

Jim Kunster posted his “Forecast for 2009” on his blog Monday morning. What follows is based on a comment I left in response, with my own predictions. I’ve done some rearranging and expansion on that original comment.

January → March

The year will likely begin with a quiet period, relative to the rest of the year, after the inauguration euphoria. Retailers are declaring bankruptcy (Circuit City, KB Toys) now, so it would be inaccurate to say the implosion starts early next year. But it will start picking up steam. The Obama administration, even with a high initial approval rating, will dribble out bad news slowly to prevent panic.

Most everyone will admit that the auto manufacturers, currently on life support, won’t recover. GM will break up, maybe voluntarily, into three companies: budget/consumer/sport (Chevy/Pontiac), luxury (Buick/Cadillac), trucks/industrial. Auto workers will own a significant portion of the companies, which will help with wage concessions (the best way to bust a union, after all, is to turn the workers into owners). Ford will swallow some of Chrysler, the rest will wither and die. The Japanese companies will scale back their operations. The job losses will ripple through the supply and dealership chains, and outward from there. Herculean rescue efforts will slow but not stop the hemorrhaging.

Some thousands of people will be caught out without converter boxes when the analog broadcast TV signals are turned off in February. There will be much noise made, and much pressure put on the FCC to push out the date. Eventually, the networks and local stations will dish out freebie converter boxes. But some people will find out they really don’t miss TV at all.

April → June

Fox Spew will begin referring to the “Obama depression.”

While mortgage resets continue declining to a summer 2009 minimum, job losses in retail and (later on) auto sectors will lead to increased defaults. The Obama administration will likely enact a law requiring the actual owner of the mortgage to initiate foreclosure, so there will be a mad scramble to figure out just who the heck owns the paper on all those houses.

Republicans will obstruct, spin, and do anything they can to tear own Obama (and the country be damned). Obama and a mob of angry constituents will begin forcibly implanting a spine in congressional Democrats.

July → September

The first steps toward universal healthcare will be taken. We won’t get there immediately, or even quickly.

Rolling blackouts may begin in isolated regions, but they won’t be seen nationwide until around 2012 (see FAR Future #1). A lot of people will leave their A/C off as much as possible to save on electric bills. There may be some spot gasoline/diesel shortages in various regions, like the upper Plains saw last summer (and the Southeast in the fall), based more on refinery or pipeline issues than any kind of crude shortage.

Through the summer, some dozens of unemployed bloggers will take cross-country road trips, talking to people and photographing the economic devastation. They will travel by various means, including hitchhiking or just hiking, and eat from government-supplied food pantries (below). One of them will break through to a book deal, and be hailed as “the 21st century Kerouac.”

Mortgage resets bottom out and begin the next wave in late summer. A foreclosure moratorium will be imposed, probably 60 or 90 days, followed by tax incentives for surviving banks who voluntarily refrain from foreclosing (with partial success). Squatting in abandoned houses will be widespread, but most squatters will keep up the properties they occupy and nobody will worry much about it. There will naturally be a few druggies and bangers taking over abandoned houses, and they’ll get all the media attention.

The government will either buy or seize food stocks in response to reports of small pockets of hunger/starvation. Agribusiness will take a big hit, and perhaps be nationalized to prevent an ongoing food crisis. The “victory garden” concept will make a comeback, under a new name like “food security garden,” and people will be attending classes and gathering information and tools for spring planting.

October → December

Argentines will begin consulting with unemployed American laborers, explaining how they took over shuttered factories and began producing things of value. It will mostly stay under the media radar in 2009, though.

There will be a mad scramble to ensure people have enough heat to survive the winter. Some low-income northerners may be relocated south and installed in otherwise abandoned dwellings for the winter, triggering howls of outrage from right wing locals.

General Economic trends

Inflation? Fuhgeddabotit. Whatever money is printed to keep the economy afloat will follow the old money right down the rathole. There’s just too much money evaporating in the finance sector to worry about inflation. The only way inflation will be an issue in 2009 is if Obama declares it a Jubilee Year and wipes out all debts, public and private, with the stroke of a pen. That would free up all the money going to service debts for buying stuff — and is about as likely as commercial fusion power being deployed next year.

Part & parcel with (lack of) inflation will be a more stable oil price regime, compared to 2008. OPEC will continue to chase demand down the price curve; whether they actually catch up is the question. Cash-strapped producer nations might tell OPEC to go pound sand (not oil sand though) and keep pumping. Leaving out so-called Black Swan events, as the 800-pound consumer gorilla (the US) continues to lose weight, oil prices might fluctuate between $40 & $80/bbl (you may remember me saying we’d probably never see oil under $100/bbl though, so add salt as needed). Spot shortages will have external causes such as refinery fires.

…and Beyond

Mortgage rate resets, according to a couple graphs I found online, will be less widespread in 2009 than in 2008. Last year was the year for major sub-prime resets; 2010 will see the Alt-A and Option ARM resets balloon though, and mostly keep climbing until autumn 2011, dropping off precipitously by summer 2012.

Given the current lower demand for oil, new sources won’t be developed and the more exotic sources (tar sands, deep water) will be too expensive to continue producing. Production cuts are currently aimed at a stable market; in the next couple of years it will shift to an economic base (i.e. uneconomical to increase production) then hit physical constraints (the whole point of peak oil). The initial parts of FAR Future are merely extrapolating current trends a few years ahead.

13 comments:

  1. Ah, Far Future as cautionary tale. I like your prediction about the unemployed bloggers/Kerouac. That would be a great public service. I agree most of your predictions and that we won't see much improvement in 2009. Hopefully the end result of this will be a leaner, less consumer-driven, more eco-friendly lifestyle for Americans.

    I wish everyone at Far Manor a happy and healthy new year!

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  2. Hey FAR, wishing you and yours peace and good health for the New Year.

    We have gotten news from our Governor that there will be more cuts to the state budget on top of the cuts announced this last October. A lot of the cuts are going to affect local aid sent to all the towns. You know what kind of snowball effect that will have.

    I do believe that our world does need to downsize and drop out of the "Rat Race" that so many people participate in. We have tried to live life too fast and have forgotten the enjoyment in the simple things.

    I am going to be working a layout for my garden soon. I need to do that as I only have so much room and I want to plant a LOT more than I did last year. I have to devise a shelving system for some to give me more room. Nudge will be joining me in some of it as she wants to learn about the storage part of gardening.

    All in all, it looks to be a very interesting year ahead!

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  3. Happy New Year, y'all!

    Boran, FAR Future has always been cautionary. To quote David Brin's Earth, "This is the best case."

    Mrs. M, you'll get no argument from me. Planetary Governor Bok-Bok, or one of his flunkies, has essentially de-funded the public canneries… which would have been like $9K per cannery to keep open. Stuuuuupiiiiid.

    Ah well… back to the low-key party....

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  4. Happy New Years! Far! Gee, I think your forecast is very likely..like it better than Kunstler's.(at least you didn't predict the market to half again by fall, who knows?)

    Really like your idea of the auto companies...I think Chrysler will eventually dry up and blow away. And what's left of GM might just be Chevy and Pontiac. Ford will severly down size their line also. Production to be halved arcoss the board. GMAC will have to be dissolved. Credit will tighten, even futher, contracting the economy. Demand Destruction at its finest.

    Sure there may be some squatters moving into abandoned places but without power or water, many will end up looking a lot like the photos I'll be soon showing. Burned out dumps with FOR SALE signs in the front yard.

    I like your or Sharon's Victory Garden idea, however until food products raised locally become cheaper, verses big agribusiness, I don't see gardening/livestock being practiced at home, much more than it is now. It's this reason that I continue to buy your chicken than raise my own...(even though, I have ample land and space in order to do so.) However many of my city counter parts that option may not be available to them, as it would be near impossible to raise hogs in suburbia or in an apartment in New York City. I do not envision even more govermental control of the argibusiness that already is impossed, unless they're ready to actually own the land..."Low" if that ever happens! I do suspect there will be more interest in gardening and such...

    Gee, I hope there isn't any rolling blackouts anywhere this next year!...

    Heh! I like idea of the bloggers on the road, spreading the "word", so to speak. I do think there will be much more awareness or maybe much more being evident.

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  5. Hey Yooper! Personally, I think predicting the Dow is a mug's game… I winced when Kunstler again said something about Dow 4000. Sure, it'll happen given enough time, but this year? Who knows?

    As for the squatters, I think it depends. In Detroit, you have plenty of empty houses without people. Elsewhere, it could play out any number of ways. I saw a blog entry from a guy who'd bought a bunch of different properties and was having trouble making the payments because he had no renters… he found that someone moved into one of the houses, mowed the lawn, fixed a broken fence gate, and was generally acting as an unauthorized house sitter. The owner was miffed and told the guy to leave, but the squatter was putting more effort into maintaining the place than he did.

    Detroit seems to be unique in a lot of ways… there's plenty of space for gardens, and the residents produce a fair amount of their own food. Look up "grown in Detroit" for an example. Nobody's worrying much about zoning violations or other such silliness, so having a few layer hens around isn't going to raise much ruckus (take over one of those houses in the urban prairies, and nobody would be there to raise a ruckus anyway). 'Course, most other cities will be more like Detroit anyway…

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  6. Happy New Year, FAR and Fetched crowd!

    Interesting post/predictions Mr. FARstradamus, and you could well be right on many of those, if they haven't occurred already.

    I'll let you do the musing now, as I'm afraid I'd go too far into the dark end right now, and I'm trying to spin this positively right now! :-) Thank YOU for doing the heavy lifting...

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  7. IVG, the fun part will be looking back & evaluating these predictions at the end of the year....

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  8. Hey Far, well, I started the Detroit series today. Right now, I'm going through the vast detroitblog stories and picking which ones that will accompany the posts. Whew! This is a piece of cake after reading Spengler for a month!

    Gee, I read one story where this women bought several homes near hers, thinking in time the children would have to move back and at least they would have a roof over their heads!

    Without a doubt, there's space in the inner city now and has been for quite awhile now for gardens and such, however, that would require water and in many such areas the water infratructure has long since been broken or turned off.. Rats and other rodents (as well as roaming wild cats and dogs) present another problem. ha! ha! "Stray" bullets might also present a problem.. It's just heartbreaking learning that the people on almost every other story worry about this problem...And for good reason!

    It's been twenty years since I lived there, worked downtown and even back then it was not unusual for co-workers to be "pack'en". It got so bad, that one day, I "woke up" and realized I had to leave the "madness" and came back "home" before I was shot. I don't know if the "mean streets" are any meaner today as back then, but, I can assure you that there are more of them now...

    At any point, there are very, very few photos (depicting places) that I've seen on this site that you would feel comfortable being at (let alone with Mrs. Far!!)or for that matter be "welcomed" at. My friend, you'd be about as welcomed, as a turd in a swimming pool in most of these neighborhoods.... you gotta believe me on that one...

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  9. Hey Yooper, I saw that story too (about the woman buying up the houses for her kids). I don't doubt that I'd be unwelcome in a lot of those areas… that seems to be a characteristic of a place that has seen hard times for over a generation. They don't take to outsiders.

    This rural area I live in now used to be like that; replace meth labs with moonshine stills and pushers with "trippers" (the guys who ran the booze to Atlanta) and you're pretty much there. Skin color aside, you're talking about suspicious people with guns. Arson was a fairly common means of escalating disputes up to about 10 years before I moved here. There are places in this county I wouldn't feel comfortable being in. It's like that pretty much anywhere.

    One of the Detroitblog stories suggested that the worst areas aren't has dangerous as they were 15 years ago… the crackheads and other problem children have mostly killed themselves & each other. Here, the 'shiners moved on to growing pot; I guess that's why people mellowed out here, hey?

    BTW, I just left a comment on your "part 1" post…

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  10. Hey Far! Yes, I read that one too! About it being, not as bad and I think they were talking about the State Fair area. I know this area well. This is the "base line" or eight mile road (on the edge of town). There is a night and day difference on both sides of the road there. Bad (being on the south side) without a doubt, especially during the "crack years" of the 80's (incidently when I was there), but hardy anything compared to the "inner city" neighborhoods. At any point you would not walk Mrs. Far down any of the sidewalks near the State Fair Grounds, as she'd not likely get out of the vehicle....

    Wow! That sounds pretty wild about where you're living now! Guess you gots Mrs. Far, there to protect ya! ha! Guess, us, dumb hillbillies here in da U.P. don't have it too bad, eh? ha!ha! Too poor to do anything! ha!

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  11. Hey FAR .. Gulland has his blog up:
    http://broadforkblog.blogspot.com/

    :)

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  12. Gee Far, check this out...

    https://www.blogger.com/comment.g?blogID=28495039&postID=490746970261547071&page=1

    and


    http://online.wsj.com/article/SB123051100709638419.html


    gee, gonna have to watch my p's and q's!! That map above looks somewhat like what you described in FarFuture....

    I'm getting somewhat of a queezy feeling in my stomach, what do you think?

    Thanks, yooper

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  13. Nudge, thanks for the pointer. I've got it in another tab & will put it on "follow" shortly.

    Yooper, it might happen, but 2010 is way too early & I have serious disagreements with the way he draws his map… let alone this country or that country having direct control or heavy influence over some of the regions. The midwest/upper plains joining Canada, yeah I can see that. Not much of the others.

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