Category Archives: Predictions

The Beatings Will Continue Until Morale Improves

Man, the Eurozone is a complete mess.  Yep, it’s still trying to hash things out with Greece.  Twice this week, there have almost been deals to basically kick the can down the road and proceed with the same completely not sufficient solution of bleeding Greece dry.  Today, Germany quashed that agreement because…something something.

The actions of Germany during this whole fiasco both make some sense and make no sense at all.  They make sense because concessions to Greece will likely mildly hurt Germany’s economy.  Germany likes being on top.  That’s understandable.  But what they’re trying to force Greece to do is barbaric.  Greece has already had its economy shrink by 25% because of the austerity forced upon them by the European Central Bank and its people are suffering horribly as a result.  This is Weimar republic post World War I levels of shrinking that was forced upon Germany by the Allies.  Germany and many other countries want to squeeze more blood out of that rock.

The sad thing is all of this could easily go away with just a little debt forgiveness.  Greece is already making enough money cover its day to day costs.  They just need to borrow money to service the interest on their debts.  Keep the status quo and offer up some debt forgiveness and Greece would be in ok shape to grow back to a nominally functioning economy.  But debt forgiveness is verboten in any discussion because how will they learn their lesson if they don’t suffer.

There’s also some weird politics going on here as well.  Greece recently elected a solidly left government whereas the rest of the Eurozone is fairly center-right.  Gotta keep the right happy or your government collapses and you lose power.  And much like here in the U.S., staying in power is the first rule of business.  So the right wants to stick it to the only left leaning government to show that a left government can’t function and the center goes along with it because they are somewhat of a same mind and want to keep control.  And damn the consequences.

What are the consequences?  Well, Greece would be stupid to accept more austerity.  That doesn’t mean they won’t, but I don’t get the feeling the current government wants to go down that path both because they campaigned on less austerity and because it’s fairly obvious from the performance of other nations that austerity doesn’t work.  It looks as if the Eurozone is not willing to budge either which means Greece leaves the Euro and defaults on its loans.

And now we come to completely uncharted territory.  Greece leaving the Euro is likely to be devastating to Greece, but also pretty harmful to the rest of the Eurozone as well, leading to another European recession.  Greece, its economy in shambles, will be unable to repay its debts by itself at a time when the Eurozone will demand it.  This means a third party has an opportunity to step in and lend Greece assistance.  Who can do this?  Well, certainly not the Eurozone.  The U.S. could and should do it, but I doubt we have the political will to do so.  So that leaves China, which hasn’t shown much interest in meddling with European political affairs and Russia.  Russia is currently fighting a proxy war in eastern Ukraine, has control of the Crimean Peninsula, and shows all outwards indicators of wanting to expand that influence.  In exchange for money, Greece allows Russia to build naval bases thus giving Russia a base of operations in the Mediterranean Sea and locking its dominance of the Black Sea.  If a far-right ultra-nationalist party comes to power in Greece as a result of these maneuvers, we have all the makings of a recipe for disaster.  Greece could then decide to solve its border disputes with Turkey and Albania with a healthy backing of arms from Russia and the world has a second proxy war.  Things can only escalate from there.

All because no one will agree to a little debt forgiveness.

Ignore Me At Your Own Peril!

Two years ago, after Obama’s election to his second term, I decided to make some predictions about how his second term would go.  With the midterm elections now behind us, it seems like a good time to review how well my prognostication skills held up.

  • Jumping off the fiscal cliff – Nailed it.  Really, a no-brainer given the political climate at the time.
  • Grand Bargain budget – Meh, I’ll give myself partial credit for this one.  It’s mostly been continuing resolution after continuing resolution, but Obama did get a lot of the stuff he set out to get.  There’s still time for this one to come true, but I predicted it for 2013.
  • Immigration reform – This one has yet to come true, but I actually predicted that it wouldn’t come true until after the midterms.  I have confidence that it still will happen.
  • Status quo midterm elections – Again, I’ll give myself partial credit.  Republicans picked up more House seats that I expected, but I was right with the Senate.  The makeup doesn’t really change anything from the last two years though.
  • Economy markedly improve – Two years to go and we’re already there.  This is the unsung hero of Obama’s second term so far.  Never has the economy grown so much and the sitting President not garnered rave reviews for it.
  • Housing industry grows quickly – This has already happened too.  So much so that people are saying we may be in another housing bubble.  That’s nonsense, though.  Despite the growth, we’re still not keeping up with housing needs.
  • Stellar stock market – The Dow started around 13,000 for Obama’s second term, it’s now past 17,000.  A 30%+ increase?  Yep, that’s stellar.
  • Obamacare fully implemented – We’re just waiting on the small business requirement which is gearing up right now.  People loves them some Obamacare…as long as it’s not called Obamacare.

That’s some Nostradamus-level prediction ability right there.  If people would only listen to me, all our world’s problems would be solved.  But I’m like Cassandra over here.  Or maybe Rodney Dangerfield.

What to expect from Obama’s second term

As the dust settles from the election, events are taking shape that give us a glimpse into what to expect for the next four years.  I believe these will include the following:

  • Detonation of the Austerity Bomb (aka the Fiscal Cliff) – The lame duck session is almost guaranteed to not get terribly much done and Boehner will have a tough time selling anything Obama has to offer before the new year.  The good news is that, despite the scary names, January won’t see us suddenly in a giant hole that we can’t get out of.  What we will probably see is a severe downturn in the stock market that will be a great buying opportunity for people with money because we will have…
  • A “Grand Bargain” budget deal in January – Grand Bargain is in quotes because Obama will get most of what he has been asking for for over two years.  Tax rates for the very rich will go up, tax rates for the rest of us will stay the same or go down.  Corporate tax rates will go down.  Various loopholes will be closed.  Lots of wasteful programs will be cut or eliminated.
  • Comprehensive immigration reform – This will be to his second term what Obamacare was to his first term.  In a word, HUGE!  Major Republicans are already talking about the willingness to compromise on an immigration bill.  This is mostly because this election has taught them that they can no longer rely on white people to win elections and that demonizing brown people and attempting to suppress minority turnout is antithetical to winning the Presidency.  I don’t think this legislation will pass until after the midterms, though, because there will be a…
  • Status quo midterm elections – Republicans will probably keep their numbers in the House and gain a few seats in the Senate.  This is mostly because Republicans have done an awe inspiring job of redistricting at the state level to preserve House seats and the inordinate amount of Democratic Senate seats that will be up for grabs.  There is also the fact that this election will be the last hurrah for the angry white contingent of voters.  The midterms are usually more about anger than about policies and Republicans excel at fomenting anger in their constituency and Democrats can’t be bothered to turn out in large numbers.
  • The economy will markedly improve – The signs are all there that the economy will continue to improve.  I expect it to pick up after a year or so and the Great Recession to be in our rear view mirror by the end of Obama’s second term.
  • The housing industry will grow quickly – Since the housing bust, construction of new homes has fallen way behind population growth.  As the economy improves, we can expect a mini housing boom to get us back to the level we need to be to house our growing population.  This looks like it may have started already.
  • More of the same stellar performance from the stock market – The first four years have been very good for people in the stock market.  I expect the next four to be the same with the economy continuing to grow.
  • Obamacare fully implemented – This is a no-brainer, but deserves to be mentioned.  The world will not end.  The United States will be just as socialist as it has been since Roosevelt.

All in all, not a bad eight years for a Kenyan anti-colonialist socialist.