I will go out on a limb: Economic prediction

[Winehole23]

[RandomGuy]

My gut has been right throughout the last couple of years in a lot of things, but I am normally hesitant to make longer range predictions, but, what the :

Banks, despite the most recent profits, will continue to bleed money as commercial real estate becomes the other shoe to drop. Many larger banks will require more bailouts mid to late 2009, despite the strings, and smaller banks will continue to bite the dust at a fast clip. There is a good chance that the bailouts will be turned into equity shares, and eventually sold for a profit for the taxpayer. The financial sector will be more regulated, stabilize, and come back in about 2 years.

The Fed, to fight deflation, will continue to pursue some inflationary policies, keeping the cost of oil (held in dollars) high.

The overall US economy will shrink this year, probably at a pace faster than most economists will expect. The Economist predicts -3.2%. My gut says more around -4.5%, because I don't think enough of them are factoring in the coming retail and commercial real estate contraction.

Gold will stay high for many of the reasons that oil will, but will drop like a lead ballon in about 2 years. I will find this highly amusing.

Stocks will likely end the year lower than they are now, probably by another, say 750 points.

At some time in the next couple of years, we will have to back off goverment deficit spending.

Republicans will wander around in the wilderness, re-discover fiscal conservatism, and pick up a few seats in congress. They will continue to drive moderates out of the party, harming their long-term viability. I see the GOP marginalized over time, unless they learn to embrace moderates more than they are doing now.

If the US stimulus includes a massive chunk of investment in energy infrastructure, both in transmission and renewables, we will do better than most think over the next 10 years.

Our debt will start catching up with us though. Taxes will have to be raised, and that load will be shared by a lot of people, not just the rich.

I think that we may have actually permanently changed in a minor cultural way. We will start saving more. This will mitigate the credit crunch at some point, because those savings will be used to pay down debt, and pad banks as people deposit actual cash. Credit will get flowing again as this happens.

Our economy will start growing again, very slowly, in late 2010.

After that our economy will stagnate for pretty much the next two decades or so, with flat to minimal growth, as energy gets more expensive, and our economy adjusts.

As energy gets more expensive, manufacturing will move back to the US slowly, because it becomes cheaper to make things here than to ship them from Asia.

I think there is a good chance that there will be a breakthrough green/renewable energy technology within about 5-10 years. This might be a game-changer. Depending on how revolutionary it is, it would have a substantial positive impact on US economic growth.

The price of a barrel of oil will reach a consistant $100 in about 7 years, and $200 in about 13.

A year later we are still stagnated. Mostly due to the lack of consumer spending and lack of corporate investment.

I still see the economy stagnated a year from now. I think people will continue to reduce spending relative to income and start saving more, partly out of necessity. A lot of people have taken some major hits to their credit scores, and will not be given credit, even if they wanted it. That will force savings for needed purchases.

A real societal shift.

Note:
This is pretty much independent of what the government does or doesn't do.

Don't expect changing the party in control of congress to make a difference in that.

I think the big bad bailouts, and the stimulus, both acted to prevent the larger contraction that I predicted. Good to be wrong on that.

Do not expect the US economy to start growing any time soon. I would say that stagnation for a decade or more is the most likely scenario. Elect Republicans, elect Democrats, elect who ever, it won't make much of a difference, although I view the Dems as being more responsible fiscal conservatives, i.e. tax and spend, as opposed to borrow and spend.

[RandomGuy]

There is a good chance that the bailouts will be turned into equity shares, and eventually sold for a profit for the taxpayer. The financial sector will be more regulated, stabilize, and come back in about 2 years.

Got at least the first part right.

The current foreclosure snafu (bad paperwork forcing banks to halt foreclosures) will keep the losses at the big banks going for a while. That and it will likely drive up their costs, as they have to actually work with people.

Seems like the strategic foreclosures on expensive homes is continuing. Contrary to popular belief, strategic foreclosures are being driven by relatively wealthy people walking away. Gee thanks, assholes.

[ChumpDumper]

Oh . I can't believe I missed WC's gas=glass screed.

[boutons_deux]

"The financial sector will be more regulated"

Really?

As with health care, the legislation is passed for financial sectors, but the rule-writing is being lobbied violently, and the Repugs promise to undo/defund all of it.

Could Republicans gut parts of Wall St reform law?



Republicans are targeting specific provisions of the reforms, such as funding for the new consumer watchdog.

Three senior Republican senators -- Richard Shelby, Lamar Alexander and Judd Gregg (who is retiring) -- told Reuters last month that making changes to the law will be a top priority after the congressional election on November 2.

John Boehner, the Republican leader in the House of Representatives, has sharply criticized Dodd-Frank and said he wants to repeal it.

"Banks are trying to move ahead of the regulations so they can shape the regulations themselves,"

Early next year, the Fed must write rules for implementing three key parts of Dodd-Frank:

-- the Volcker rule limiting proprietary trading by banks

-- a rule limiting banks' ability to count trust-preferred securities as Tier One capital

-- new limits on debit card transaction fees.

http://www.reuters.com/assets/print?...6953NN20101006

=======

Blankfein/Goldman is quoted as saying money can flow anywhere and regulations won't stop him. He'll just move his money to wherever self-dealing, insider dealing, gambling, wild speculation, pump-and-dump trading, etc, are not forbidden.

[RandomGuy]

"The financial sector will be more regulated"

Really?

As with health care, the legislation is passed for financial sectors, but the rule-writing is being lobbied violently, and the Repugs promise to undo/defund all of it.

Could Republicans gut parts of Wall St reform law?



Republicans are targeting specific provisions of the reforms, such as funding for the new consumer watchdog.

Three senior Republican senators -- Richard Shelby, Lamar Alexander and Judd Gregg (who is retiring) -- told Reuters last month that making changes to the law will be a top priority after the congressional election on November 2.

John Boehner, the Republican leader in the House of Representatives, has sharply criticized Dodd-Frank and said he wants to repeal it.

"Banks are trying to move ahead of the regulations so they can shape the regulations themselves,"

Early next year, the Fed must write rules for implementing three key parts of Dodd-Frank:

-- the Volcker rule limiting proprietary trading by banks

-- a rule limiting banks' ability to count trust-preferred securities as Tier One capital

-- new limits on debit card transaction fees.

http://www.reuters.com/assets/print?...6953NN20101006

=======

Blankfein/Goldman is quoted as saying money can flow anywhere and regulations won't stop him. He'll just move his money to wherever self-dealing, insider dealing, gambling, wild speculation, pump-and-dump trading, etc, are not forbidden.

I thought the regulation would be a bit more strict than the weak sauce that was served up.

Guess we haven't really learned our lesson about letting the financial sector "innovate".

.

We did not electe enough Democrats to really enact enough reform to be meaningful. We got instead, a lot of Republicans falling all over themselves to be seen as "business friendly".

[CosmicCowboy]

I thought the regulation would be a bit more strict than the weak sauce that was served up.

Guess we haven't really learned our lesson about letting the financial sector "innovate".

.

We did not electe enough Democrats to really enact enough reform to be meaningful. We got instead, a lot of Republicans falling all over themselves to be seen as "business friendly".

your naivete in blaming everything on Republicans is amusing. Goldman Sachs OWNS the Obama administration.

[RandomGuy]

your naivete in blaming everything on Republicans is amusing. Goldman Sachs OWNS the Obama administration.

In case you didn't notice, the executive branch doesn't write the laws.

[Parker2112]

In case you didn't notice, the executive branch doesn't write the laws.

The OP prediction essentially says things stay the same. Hate to break it to you, but as boomers exit the system things are NOT going to stay the same.

[Nbadan]

I wouldn't make any predictions about the future of the economy until after the mid-terms....the last thing the economy needs is more tax cuts, but if the GOP wins control of the House that's exactly what they will propose to make Dems and Obama look bad........the Dem Senate won't go for that...they are already biting at the bit to let the Bush tax cuts, which has created net deficit job growth and record deficits, expire...

[RandomGuy]

The OP prediction essentially says things stay the same. Hate to break it to you, but as boomers exit the system things are NOT going to stay the same.

Hmm.

I predicted that our economy will stagnate, as opposed to historical growth patterns.

I said our debt will catch up to us, and that we will have to change to pay it off.

I also predicted a long-term waning of the GOP. I think that will make the right wing in this country more militant, as they feel more disenfranchised, probably leading to more anti-government terrorism, ala Oklahoma city bombings.

I also predicted that manufacturing will slowly start coming back.

I think the way we get energy will markedly change in 20-40 years.

Not sure if that is "essentially the same" or not. I don't see any drastic changes, no. There is some leeway for some revolutionary technology to be something of a game changer, but that doesn't take any real insight to say.

[RandomGuy]

I wouldn't make any predictions about the future of the economy until after the mid-terms....the last thing the economy needs is more tax cuts, but if the GOP wins control of the House that's exactly what they will propose to make Dems and Obama look bad........the Dem Senate won't go for that...they are already biting at the bit to let the Bush tax cuts, which has created net deficit job growth and record deficits, expire...

Much of what takes place in the economy won't be much affected by those cuts, and wasn't in the first place.

I really do hope the GOP gets control of everything. Because I think things will be ty for a good while. I would prefer the GOP gets the blame for that, so we can finally discard their ty policies as proven failures.

[Winehole23]

I really do hope the GOP gets control of everything. Because I think things will be ty for a good while. I would prefer the GOP gets the blame for that, so we can finally discard their ty policies as proven failures.

WC has been saying something very like this lately, only it goes the other way around.

[Wild Cobra]

Why doesn't trickle-down work?

Consider this. If I have a taxable income of $60k after my deductions, then a marginal rate change from 25% to 28% has more than a $1,800 change in my net take home pay, for what I then put into the economy. This money produces real jobs rather than government jobs. Now the 3% isn't directly applicable. The first part of the tax will increase from 10% to 15%, some stay at 15%, some go from 15% to 25%, and the remainder goes from 25% to 28%. In the end, I will definitely pay more than $1,800 more in 2011 when the tax cuts expire.

Tell me that this, multiplied by others in America doesn't make a difference. Tell me that the larger changes in a richer person's spending ability doesn't play a difference in what they buy in this economy.

Why do liberals thing that a person's money belongs to the government, and the government allows us to keep some of it?

Why the at ude "they don't need that much?" Who's the selfish one here?

It may not be measurable in real economic differences because of the complexities, but if you taxes everyone all but what they needed to live by, there would be no economy. The slope that progresses in economic power as more people have more money doesn't magically flatten out.

[Wild Cobra]

WC has been saying something very like this lately, only it goes the other way around.

Except I want the RINO's weeded out too.

[RandomGuy]

Tell me that the larger changes in a richer person's spending ability doesn't play a difference in what they buy in this economy.

The larger changes in richer people's spending abilities don't play a difference in what they buy in this economy.

[RandomGuy]

Why the at ude "they don't need that much?" Who's the selfish one here?

When you choose to participate, then you gain all the benefits and pay all the costs.

If I were to benefit most from a system, would I have an ethical or moral responsibility to support that system?

[Wild Cobra]

The larger changes in richer people's spending abilities don't play a difference in what they buy in this economy.

I get it.

You audited everyone's spending.

OK...

I get it now...

[Wild Cobra]

When you choose to participate, then you gain all the benefits and pay all the costs.

If I were to benefit most from a system, would I have an ethical or moral responsibility to support that system?

I don't disagree with paying taxes. I disagree with the idea that other people have the right to my money through the tax system rather than doing for themselves, and want to keep a system that lets them not fight hard for work.

You get more of what ever you reward and less of what you penalize.

The war ion poverty just creates more people on poverty, because poverty actually pays decent.

The war on the rich simply makes them shelter their money, move their residency, etc. We end up with less rich tax payers. Not more.

[RandomGuy]

I don't disagree with paying taxes. I disagree with the idea that other people have the right to my money through the tax system rather than doing for themselves, and want to keep a system that lets them not fight hard for work.

You get more of what ever you reward and less of what you penalize.

The war ion poverty just creates more people on poverty, because poverty actually pays decent.

The war on the rich simply makes them shelter their money, move their residency, etc. We end up with less rich tax payers. Not more.

Then how do you explain the fact that countries with more generous social safety nets tend to have less "sticky" poverty? (more upward social mobility)

[RandomGuy]

I get it.

You audited everyone's spending.

OK...

I get it now...

I was just doing what you asked.

You said:

"Tell me that the larger changes in a richer person's spending ability doesn't play a difference in what they buy in this economy."

I'm not kidding and don't call me Shirley.

Sorry, it was an attempt at literal humor.

[Wild Cobra]

I was just doing what you asked.

You said:

"Tell me that the larger changes in a richer person's spending ability doesn't play a difference in what they buy in this economy."

I'm not kidding and don't call me Shirley.

Sorry, it was an attempt at literal humor.

OK, I'm slow on such things, especially when not person to person seeing a persons face, or hearing the tone of their voice.

[RandomGuy]

OK, I'm slow on such things, especially when not person to person seeing a persons face, or hearing the tone of their voice.

Pshaw, we all have that problem occasionally. Don't sweat it.

[RandomGuy]

Gold will stay high for many of the reasons that oil will, but will drop like a lead ballon in about 2 years. I will find this highly amusing.

My time is just about up.

I think the Chinese, having little to invest their money in, have propped up the price. With their inflation, they may sustain gold for a while more.

Gold has actually pretty thin overall demand, and that can be fickle.

I guess we will get to see.

[Wild Cobra]

My time is just about up.

I think the Chinese, having little to invest their money in, have propped up the price. With their inflation, they may sustain gold for a while more.

Gold has actually pretty thin overall demand, and that can be fickle.

I guess we will get to see.

It not only changes with our own economic fears, but that or others. It is a world commodity. If I had reliable insight a few years ago, I would have bought some. Now that it's as high as it is, no thanks. This bubble can pop any time. The losers are the ones buying late. I think it's too late now.