Archive for January 1st, 2009

Predictions for 2009

As we head into 2009 there is a sense of uncertainty and unease about the end of this first decade of the 21st century.   The election of Barack Obama inspires hope as well, at least among his supporters.  So as we go into this year, here are my predictions for 2009:

1.  The Minnesota Vikings will win the superbowl.   (OK, that one is more wishful thinking, but…)

2.  The economy will not improve dramatically as it becomes clear that this is not a quick recession.   Unemployment may hit 10% late in the year, and GDP will drop by amounts not seen since WWII.

3.  Stagflation will return, thanks to the cheap credit and heavy borrowing being done to support a stimulus package.   Late in the year people will again be talking about the “misery index” (unemployment + inflation).

4.  Barack Obama’s approval rating will slip below 50% late in the year, as people will blame him for not taking the right actions to fix the economy.   In that Obama will join Presidents like Reagan and Clinton who had early problems, often being blamed for things beyond their control.

5.  The illusion to be shattered in 2009 is the idea that the government has the policy tools to fix this recession.   The stimulus will cause inflation, no stimulus will lead to a deeper recession or perhaps a depression.  Ultimately, people will understand that the key is to increase production.   The Obama Administration will target stimulus spending to that end, but  structural adjustments to the US economy will take years.

6.  Shi’ite Hezbollah, not really minding seeing its Sunni rival Hamas weakened by Israel, will choose a time to re-assert its position as the major anti-Israeli organization with actions from inside Lebanon.  Israel will signal to Iran that Hezbollah actions make an Israeli attack on Iranian facilities an almost certainty.  Iran will then reign Hezbollah in, leading to a public feud between Nasrallah and the Iranian Guardian Council.

7.  Oil prices will rise in the summer due to the tensions in the Mideast, but as the global recession hits Asian economies the price will drop back down.

8.  The EU Constitution will go into effect when Ireland approves it, choosing the constitution treaty over the option to leave the EU.

9.  The US will be removing troops all year from Iraq, even though it will become painfully obvious that the government really does not have much control over the country, which will be a defacto split between Sunni, Shi’ite and Kurd, with the Shi’ite sectors often under different kinds of leadership.   Although Iran will remain a dominant actor for the Shi’ite militias and parties, the departure of the US will also lead Shi’ite Iraqis to start breaking with control from Iran.

10.   Robert Mugabe will finally be removed from power (possibly by murder), and the international community will rush to bring food and security to the suffering Zimbabwean people.  By mid-2009 this will be the new “cause celebre” as concern for Darfur will fade, even though the problems there persist.

11.  The US will finally end its counter productive boycott of Cuba, and this will start a process whereby Cuba will liberalize and re-develop relations with the US.

12.  President Obama will conclude a surprising economic agreement with China designed to allow China to shift towards consumption and the US towards production.   Both sides will decide that it’s more important to steer the process than to just leave it to the market.

13.  The Christmas season of 2009 will be noted for a return to old fashioned values, away from the hyperconsumerism of recent years, and a trend will start towards “simplifying Christmas” and “the meaning of the season.”  Retailers will have a very poor year, and many stores and chains will go out of business.

14.  Al qaeda will attempt a terror attack designed to harm the western economic system, focused on trying to drive up the price of oil or limiting access to oil.

15.  A major global economic summit will lay the ground work for a new international economic order, with regulation of world credit markets, transnational corporations, and trade practices.  The resulting treaty will also exercise controls over private actors who have been able to evade the law due to weak international regulation.  Extremely controversial, only the large Democratic majority in the Senate will assure its passage.  Although coming in some of the darkest days of this recession, it will set the framework for a major recovery down the line.

16.  In the wake of the (above predicted) Zimbabwean revival, a new movement designed to bring real change and competent government to African countries will grow.   The push for transparency will have a real impact, and 2009 will be remembered as the start of the African revival.

17.  Despite the economic turmoil, the health care crisis in the US will need to be addressed.  Obama will early on help states who are way behind on Medicare payments, a situation which threatens the financial stability of hospitals across the country.   Pharmaceuticals will emerge as a villain this year, as their practice of trying to simply make new “super” drugs for profit are shown not to benefit patients, even as it contributes to massive health cost increases.  A major plan to reform and alter the health care system will be passed by the end of the year.  It will be extremely controversial, and represent a blend of federal mandates and choices for state implementation, and will alter the nature of health care in America perhaps forever.

In a year I’ll look back and see how my crystal ball fared.