25 Predictions for 2009

1. The US Dollar will undergo a substantial devaluation. It will eventually fall below 60 on the US Dollar Index.
   
2. The price of oil will go up again but only because it is denominated in US Dollars. It may potentially rise up to $60 depending upon how far the US Dollar will drop, but will not rise due to increased demand.
3. Oil production throughout 2009 will be substantially lower than the past two years.
   
4. Gold will exceed $1000 per ounce as a result of the dollar drop too.
   
5. US unemployment will exceed 10% sometime during the year.
6. The Dow Jones Industrial Average will drop below 7082.26 (half the October 2007 high of 14,164.53. It's already around 8500 so it won't have far to go).
7. Two quarters of 2009 GDP will be negative. The NBER will not announce an end to the recession at all in 2009.
8. Inflation will rise again a few months after the US Dollar drops (see prediction no. 1 above)
9. Ben Bernanke will resign or will be fired. A major shakeup of the Federal Open Market Committee will see many new faces.
10. US Public Debt will exceed 55% of GDP.
    
11. Barack Obama's decisions will disappoint experts, but will retain a high level of popular support.
12. Paul Krugman will admit he was seriously wrong about something.
13. Iceland's economy will begin to recover in the second half of the year.
    
14. A growing number of Brits will demand adopting the Euro and abandoning the weak Pound. While this number may exceed 50% of the population, it will not be enough for UK politicians to make any decision throughout the year.
15. Australia will lose The Ashes to England in the middle of 2009.
16. More climate scientists will admit that global warming is occurring faster than they thought it would.
17. Sea levels will rise by more than 3mm in 2009.
18. Kevin Rudd will mention Biochar.
19. Applications for Green cards will decline substantially.
20. Linux adoption will exceed 1.2%.
21. Firefox adoption will exceed 25%.
22. Duke Nukem Forever will be released to universal indifference.
23. Robert Mugabe will remain president of Zimbabwe as conditions plumb new depths of misery.
24. The Australian Economy will go into recession.
25. Heath Ledger will posthumously win the 81st Academy Awards Best Actor Oscar for his role as the Joker in The Dark Knight.

Still falling

In general, there is usually a lag between bad economic data and increased unemployment and drops in GDP. As monthly figures come in sounding out bad news in housing, industry, automobile production and so on, the effects upon GDP and employment usually follow months later.

This was why 2007 Q4, which saw GDP change by -0.2%, saw unemployment rise from 4.7% to 5.0% - a rise, but not a substantial one.

Back in the early 1990s, unemployment rose even while the economy began growing again. It was dubbed "the jobless recovery" as a result. What we can learn from this is that unemployment levels often take a while to stabilise even after the economy has begun to heal.

In recent times, though, we have seen a rather precipitous decline in employment levels. September 2008 saw unemployment at 6.1%. October 2008 was 6.5%, and November 2008 6.7%. Japanese trade figures for this period show a record decline. This is not a situation in which such declines are within arbitrary "tolerance levels" - they are record drops, never experienced before.

It is likely that 2008 Q4 saw US GDP decline by more than 1%. It is a steep decline, as exhibited by substantial unemployment growth and a record decline in Japanese trade. Moreover, news articles have pointed out that this was one of the worst Christmas retail seasons for a long, long time.

The only time we will see relief is when monthly indicators begin bottoming out. Once housing prices, for example, begin showing no monthly declines, can we also begin to see a potential recovery.

But the problem is that the economy is still falling. From 2007 Q4 until now, most of these indicators have been falling. Here's housing starts, which have been declining in percentage terms since 2006:

This graph shows percentage growth. Once housing starts level out, the line should go back to zero for a while. It's not looking good is it?

And here's retail sales. Remember, anything below the zero line means decline:

Industrial Production:

Vehicle Sales:

Here's the adjusted Monetary Base. It's difficult to see, but look at the far left of the graph. Panic?

In short, the bottom hasn't been hit yet. That means unemployment has a long way to go up. I predict mid teens at some point, and certainly over 10% some time in 2009.

Conservatism shot itself in the foot

Example.

Larry Kudlow in 2005:

Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.

And where was this mea-culpa inducing article written? The National Review, conservatism's intellectual flagship.

It was supply-side conservatives who created and promoted the conditions for a subprime mortgage collapse, not to mention the fiscal stupidity practised by Congress during the same period.

Conservatives like Kudlow are tainted for life. They will find that less and less people will listen to those who promised a market utopia. Just like Russian Communism, Supply-side conservatives have found themselves red faced and egg faced as the economy collapses, spouting canards and ideological dot points that contradict reality, as though repeating falsehoods somehow makes them correct.

Neo-psych: Beards and Chicks

Neo-psychedelia is the sort of music I'm getting into these days. What seems common amongst these bands is beards and women:

Black Mountain. Beards: 2. Chicks 1.


Dead Meadow. Beards: 2. Chicks 0.



The Black Angels. Beards: 2. Chicks 2.


The Warlocks. Beards: 0. Chicks 2.

Suicide in Art

For whatever reason, I discovered the Wikimedia Suicide in Art category. So for your edification, here are some suicide attempts throughout history.

Suicide by wearing blue pantaloons. Source.


Suicide by self-inflicted gender realignment surgery. Source.


Suicide by falling asleep after playing with knives. Source.


Suicide by gaining weight until knife pierces heart. Source.


Suicide by looking exceedingly ugly (and stabbing the wrong part of your chest). Source.


Suicide by lying down near the docks pretending to sleep while a man smoking a pipe watches you until you starve to death. Source.


Suicide by being drunk and stupid in front of your army buddies. Source.


Suicide by finding a really, really bad place to urinate. Source.


Suicide by ripping down the shower curtain and hoping Norman Bates will attack you. Source.


Suicide by drunken, debauched sorority party. Source.


Suicide by suddenly looking up at the wrong time. Source.


Suicide by lighting crew. Source.


Suicide by eating too much at Christmas. Source.


Suicide by imbibing American brewed lite beer. Source.


Suicide by crowd-surfing at the coliseum. Source.

Merry Christmas

It may be December 24th everywhere else in the world but here across the international date line it is Christmas day. It's 8.25am and I've so far consumed a cup of tea and a fruit mince pie. I'm currently consuming a cup of coffee and a croissant with another one to follow. Then it's off to church and then to my Mother-in-law's where we will have the present giving, Christmas lunch and undoubtedly an afternoon of children playing, eating chocolates and looking at our gifts.

Merry Christmas. I'll post again tonight about the meaning of Christmas too.

Am I the cutting edge?

Arianna Huffington, today:

The collapse of Communism as a political system sounded the death knell for Marxism as an ideology. But while laissez-faire capitalism has been a monumental failure in practice, and soundly defeated at the polls, the ideology is still alive and kicking.

The only place you can find an American Marxist these days is teaching a college linguistic theory class. But you can find all manner of free market fundamentalists still on the Senate floor or in Governor's mansions or showing up on TV trying to peddle the deregulation snake oil.

...

It's time to drive the final nail into the coffin of laissez-faire capitalism by treating it like the discredited ideology it inarguably is. If not, the Dr. Frankensteins of the right will surely try to revive the monster and send it marauding through our economy once again.

OSO, September 2005:

The fact is that the strict free-market capitalism that is promoted and adhered to by its ideologues in the US is as empty and as inefficient as the strict communism that was promoted by Soviet ideologues back in the 1970s. What is needed is a recognition that government and private enterprise can and should exist side-by-side in a truly free society. The market cannot produce from itself things like universal health care, law enforcement and public education - in the same way that the government cannot efficiently produce the raw materials, services and consumer goods that the market is so good at controlling.

Paul Krugman, today:

A more plausible route to sustained recovery would be a drastic reduction in the U.S. trade deficit, which soared at the same time the housing bubble was inflating. By selling more to other countries and spending more of our own income on U.S.-produced goods, we could get to full employment without a boom in either consumption or investment spending.

OSO, October 2007:

At this present moment in time the United States is the world's biggest consumer. Although the US is also a producer, the economy is geared more towards consumption than production. China and Japan's economies are geared more towards production than consumption.

The world economy therefore needs the United States to consume less, and for China and Japan to consume more.

Where's my Nobel Prize?

(bitter self promotion is now over)

1969 - The Stooges

Geothermal power is it

• Proven Technology - Iceland and New Zealand have used it for decades.
• Widely Available - Shallow "hot spots" in the crust are located all over the globe. India, China, Russia, Europe, North America (and more) - all have "hot spots" that can be exploited for power.
• Zero carbon emissions - It's just water being emptied down one pipe, going into the earth's crust, turning into steam, exiting out another pipe, turning a turbine, cooling down again, and then emptied down the inlet pipe again.
• Localised - a nation's electricity can be sourced within its own borders or from neighbours.
• Inexpensive - over the long term. The initial building phase is very expensive (drilling down a few kilometres, arranging the pipes etc) but, once the infrastructure is built, it is cheap to maintain.
• Plentiful - the potential amount of electricity available to be exploited is several magnitudes greater than current demand. If demand = 1, potential supply = 1000+.
• Self-replenishing - while "hot spots" eventually begin to cool when used for geothermal power purposes, they are replenished by the heat of the earth's core. Shutting down a geothermal plant for a few years may be all that is needed to heat up the "hot spot" again.
• Zero pollution - no particulates like coal power, no radioactive wastes like nuclear power, no "visual pollution" like wind turbines. The power plant could even be built totally underground, thus preserving anything important on the surface.
• Simple and reliable - the technology needed to build the power plant and to keep it running has been available for more than 50 years.
• Replaces oil - electric vehicles can be charged with electrical power sourced from geothermal. Electric trains can replace diesel ones. This completely negates 99% of the demand for oil.
  

Sam Bottoms - "Lance" from Apocalypse Now - has died

In case you can't remember who he is:

Willard: "Lance on the forward 50's was a famous surfer from the beaches south of LA. You look at him and you wouldn't believe he ever fired a weapon in his whole life."

Lance: "I think we have to wait until the tide comes up!"

(radio) "...I can't get no... satisfaction..."

Lance: "Give me that dog!"

Lance: "Hey, you know that last tab of acid I was saving? I dropped it."

Lance: "Purple haze!"

Willard: "Chief, tell them to hold fire. It's just little sticks. They're just trying to scare us."

Chief: "A Spear?"

Willard: "Part of me was afraid of what I would find and what I would do when I got there. I knew the risks, or imagined I knew. But the thing I felt the most, much stronger than fear, was the desire to confront him."

Chef: "Ain't coming in there. Them bastards attcked us."

Willard: "Everybody wanted me to do it, him most of all. I felt like he was up there, waiting for me to take the pain away. He just wanted to go out like a soldier, standing up, not like some poor, wasted, rag-assed renegade. Even the jungle wanted him dead, and that's who he really took his orders from anyway."

Kurtz: "The horror. The horror..."

LA Times Obit.