Sunday, January 01, 2012

2011 Predictions - Second Half Review

As 2011 draws to a close and 2012 comes into view, we here at The Real Effect take stock of the predictions that have transpired over the last year.

To be sure, this was a stunner of a year for us. Not only were the predictions even more specific, there were tons more of them. For instance, PIIGS had dominated the news in 2010, but the newly created EFSF wasn't even on anyone's radar, let alone the thought of most of Europe detonating.

Of course we wasted little time in pimping ourselves out, noting the massive oil gains, silver gains, and a comprehensive look at all of them at the close of the first half.

Time for review - (This is going to be a work in progress due to the enormity of the research required.)
I redacted much of the filler material and left most of the "meat" in the post. August responses are in red.

Total: (31/42 - 74%)

  • Europe detonates, especially in the east - (Occurring now. +1)
    • Eastern Europe sinks to crisis level with reports of food shortages, rioting and widespread Depression. (+1)
    • Western Europe contracts massively, putting extraordinary pressure on the Euro. (+1) But the call out of Belgium isn't about revoking the Euro, rather about the preservation of the European Union and the need to 'pull together'. I would expect that we could begin to see propaganda calling for a United Europe in the face of "x" (economic crisis, terror, war). Ultimately in the endgame, foreign creditors feel the massive pinch as they try to protect their investments, but the lack of a favorable response by the people will lead to war with the far east, but not yet.
      • Bonds play an absolutely critical role with the European Financial Stability Facility taking center stage. (If that was any more accurate, I would be lethal. +1) The days of "free money" are coming to an end.
 Greek bank run....

  • United States
    • No recovery. The public is aware, but the media begins to be aware that all of the so-called recovery talk was nothing more than statistical nonsense.(No recovery and LOTS of crisis. +1 )
    • Consumer spending hits a wall and continues to decline moderately.(Reports are all falling.  +1)
    • The country faces the worst Christmas in at least 25 years. (I haven't found the numbers on this yet. +0/1)
      • As this plays out throughout the first quarter, this kills off many struggling chains or at a bare minimum, (barring "bailouts") sets the stage for later Corporate Death. (Even Wal-Mart is getting hit among other stores closing.)
    • Massive Unemployment U-3 goes to 11%, U-6 to 18.5%  (Yes, I know I'm asking for it) (The trend is finally moving back up to 9.2%, not 11% yet, but when the government bond bubble pops, it will get there in a hurry. +0/1)
    • The Employment rate continues to plunge (Yup, less people in the workforce. +1)
  • Actual Inflation is rampant and MASSIVE (+10-20%) (OFFICIAL inflation approached 4% repeatedly. +1)
    • Commodities - MASSIVE increases in cost. (+1)
      • Oil becomes a political issue again (Due to being dollar driven) It will easily top $100 a barrel and probably aim for $150 again. (Oil hit $114.18 in May,  hugged $100 for a few months, briefly collapsed to the support level $75 (Euro crisis) and is rapidly approaching $100 again. +1)
      • Gold - $1800 - $2000, Silver - $40 - 60 (Gold hit $1900 - Hold at $1700, silver $48 - Hold at $32. Right smack dab in the middle of both! +1)
        • Expect a massive rally in the first quarter of 2011, cooling off for the summer and then another strong rally at the back half of the year.(The first two happened, the rally appears to be being circumvented somehow. Detonating MF Global?)
        • 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) It's been speculated that the MF Global default was to avert a Comex default.
      • Cotton - Clothing becomes expensive. This will eat away at many "cheap" clothing alternatives like Wal-Mart and Target. (Nymex saw a 30 - 40% jump in the 1st half of the year, to only fall hard on the second half. +.5/1)
      • Food becomes more expensive, shortages continue. (+1)
  • Local governments collapse
  • 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. (We are learning now that many budgets were in fact based on growth scenarios in the range of 5-8% in some cases. Absurd. +1)
  • Federal government surges nominally. While appearing to die, the federal government starts consuming everything in a dire attempt to stay solvent. (Sink or swim mentality)
  • Foreclosure-gate rocks the world (It is entering the next phase, lawsuits. +1)
    • Housing prices decline nominally by at least 5% (As Vox Day points out this is the amount of the 2009 tax credit) more likely 10% and perhaps it gets as bad as 20%. (It's safe to say we got 5%, but there appears to be a dead cat bounce going on at the moment and with homes sales being revised down massively by the NAR, the contraction is coming. +1) (On a side note, "since the fourth quarter of 2007, C&D loans are down $374.3 billion or 59.5%.")
    • H.R. 3808 is resurrected by the Republicans and signed into law. (This will be seen as bipartisanship)(+0/1)
    • Individuals and companies attempt to protect their capitol by investing in anything that is inflation proof. (Silver and Gold are starting another bull run that will be eclipsed when QE3 is announced.)
  • Stocks sell off nominally, finally. (When priced to inflation, which is absolutely necessary, the markets are not only down nominally for the year, but tanking to the tune of 5%. While not a massive plunge, the S&P ended up down for the year. +1)
    •  Many of these institutions are holding a certain "value" on their books with regards to housing prices. If these values start plummeting, the banks will either be forced to seek another bailout or get crushed.
    • HFT (High Frequency Trading) becomes a mainstream term due to increasing exposure to the concept by the mainstream media. (Adobe(While increasing in discussion, it has hardly breached the mass consciousness. +0/1)
With much of the fallout from "The Currency War" devastating the global economies, the action leaves the banks and hits the courts eventually ending on the battlefield. (More towards 2012) (Starting already with 5 US wars. +1)
  • Worldwide, America is blamed for the global economic fallout.  (CDS, MBS securities) (Russia and China continue to point fingers. +1)
    • This stokes anti-American/liberty resentment which will find a place to mature later.
  • A world war by the end of 2012 (See the Religious War Series for details)  (+0/N/A)
  • North Korea/South Korea trade volleys, but do NOT go to war. (The North is flexing its nuclear muscles multiple times, the South is shooting at what it thinks are North Korean passenger planes. +1)
  • The neoconservative version of the Tea Party takes its seats and promptly sells/blows out. (+1)
    • To be sure there will be plenty of grandstanding about "austerity", but sacred cows like defense spending, corporate welfare and education will be supported by the NeoTeas. (We saw this recently with the support for the debt ceiling increase. +1)
    • Critical legislation and opportunities (Like an End the Fed bill) are torpedoed by the appropriate sides.(+0/1)
    • I will go so far as to say that a major 'patriot' will betray the movement. (Here you go, Mitt Romney is our man. Haley endorses Mitt, Taxed Enough Already?, Romney. +1)
  • January - A lot of rhetoric, but not a lot of results. Talks by Republicans will resume of obstructionism and "dirty politics" by Obama. (+1)
  • Presidential Race heats up - May?
    • The third party "change" meme becomes more palatable, but not yet as frustrations lead to a party that will eventually become the Global Party
    • The cry will go out that 'In this hour, we cannot afford to be divided.' (+0/1)
After a massive downturn over the last 5 years, the remnants of much of the "religious right" get fed up with the left's "societal engineering".  This leads to the following -
  • Nationalistic denominationalism - The Christians return to the forefront with a vengeance as the Glenn Beck rally/Palin crowd embrace "Americana" nationalism and go after the infidels. (Look at that, there's Beck, whipping up the Christians and promoting war. Looks like Rick Perry is getting in on the act as well. +1)
    • The "founder's intent"/"What this country was founded on" ends up fueling a nationalistic religious fervor that seeks to incarcerate and make war anyone who doesn't see their light. (+0/1 Perhaps a bit early on that one.)
But the rub lies in the fact that the left and the right are destined to destroy one another and lead to a new left/right party. (+0/1 - I don't know that we'll get this before 2012.)

  • Worldly obsession with 'otherworldly' entities picks up steam but does not reach critical mass. Such items will include:
    • Aliens/Project Bluebeam (+0/1)
    • Angel/Demon gates (+0/1)
    • Of particular note is the relative juggernauts that the Denver Broncos and Green Bay Packers have become this season. Both teams are helmed by devout Christians.
  • In reaction to rampant criminality, virtues become fashionable/marketable again.
  • Crime increases - The desperate lower class sees the upper class as the reason for their suffering. Except the middle class will be their target, not the bankers. (Witness the riots in Wisconsin. #OWS in the second half.)
As Obamacare takes hold, in order to make the "system" solvent, the Government moves to do the following:
  • The licensing and eventual banning of vitamins and nutritional supplements. (Competition is a sin) (New FDA guidelines get us partway there. Banning of more supplements. +1/1)
  • Healthcare shortages are realized (Medicare is eyed up) as workers retire early en-masse in order to avoid being part of the system. Doctors especially become more scarce as new recruits refuse to enter the field. (And there is the evidence that doctors are leaving. +1/1)
    • A black market for health care becomes viable. (+0/1)
Note: This post will be updated as information becomes available.

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