Monday, February 21, 2011

2011 Predictions - Off to a Strong Start

We are off to a strong start with our 2011 predictions here at The Real Effect -

Commodities -
Actual Inflation is rampant and MASSIVE (+10-20%)
So far commodities have been on an absolute tear and might outgain 20%.
Oil becomes a political issue again It will easily top $100 a barrel and probably aim for $150 again. 

With oil building support for the last 3 months I was worried I was going to be late to the party on this one, however after officially breaking out just after the 1st of the year, some of the annualized gains so far are looking as high as 60%! In some ways, it seems to be driven by nothing but politics.

Silver becomes especially difficult to physically source as the Comex cracks and demand goes up. (Perhaps hitting $40 in Q1, then cooling down until winter)
Again, this commodity is on an TEAR, hitting $34 on Monday with an absolute crush on the silver shorts.
Food becomes more expensive, shortages continue.
THE story behind the Egyptian riots has been food, driven in part by the speculators.

  • State governments stagger
    • Deficits swell as many budgets were predicated upon the "summer of recovery" which turns out to be less of a recovery and more of a flat-line.
Wisconsin leads the way as it becomes obvious that "Houston, we have a problem." I could continue, but I believe that this will suffice for the time being.

Looking forward, it will become critical that each issue is parsed ad nauseum as the devil will continue to prowl in the details. If we do not do our due diligence, all we accomplish is to trade one tyranny for another.

For instance, in the current Wisconsin situation, ignorance not only abounds, it seems to be the rule. Taking the sides into consideration in general:
  • "Pro-Teacher" side -
    • Cannot explain "collective bargaining" to anyone
    • Feel that it is a "right", not a legislative grant.
    • Believe that the current bill is dealing specifically with teachers, which it is not. It is dealing with state workers.
    • Cannot grasp the concept of cost or what the tax base is doing to the employment picture.
  • "Pro-Cut" side -
    • Refuses to look at corporate welfare as just that.
    • Is ignoring malfeasance and crime on the part of bankers and executives.
    • Believes in just as much "big government" as the other side. (The number of individuals that I have heard support "Drug testing welfare recipients (The poor)" is stunning.)
  • "Pro-Liberty" side, the issue that neither side is really considering
    • Comprehensive Annual Financial Reports vs. Budget
    • The cause of Liberty - REPEALING MOST TAXES, excessive "policing" (Most revenue generation), "Licensing", strip searches at airports, Wars, a sound monetary policy, ya know things that affect ALL of us.
In short, we have a lot of work to do.

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