2012: The world will not end but it may seem like it.

There must be no greater form of self-effacing humor than the making of predictions.  Nothing, except perhaps the reviewing of the last years resolutions, causes more humility than looking back at what one thought would happen the prior year.  This is why I generally stick to my oft heard refrain, "I don't know and neither do you" but what fun is that?

So, looking forward to the humiliation to come, my predictions for 2012: The world will not end but it may seem like it.

1.  The Chinese property bubble finally pops spreading financial carnage far and wide.  Banks through out Asia will feel the pain first and, as the second and third order effects become apparent, the rest of the world.  As China unwinds I would expect the price of all commodities to fall through the floor.  Gold, Silver, oil, rare earths, metals and anything else you can think of should become cheaper, renewing talk of deflation.

On-going unemployment (at 9% by year end 2012) in the United States MAY result in your own paycheck decreasing.  If wage deflation does begin, we will have to give renewed attention to those who are worried about an extended period of economy wide deflation.  By December 2012, however, I think we'll be back to worrying about inflation in the United States.

2.  Decreased demand in Asian and Europe plus a soft winter in the United States will cause oil prices to fall significantly.  I will be able to buy diesel for 2.00 a gallon over the course of the year.  For the year the oil high price will be 109.83, low will be 42.15 and on Dec 31, 2012 the price will be on its way back up (the decline of cheap oil will still dominate the price trend) at 84.16.

3.  Mitt Romney will be the safe "John Kerry Candidate " of the GOP.  He will choose a governor from the mid-west (Tim Pawlenty, Mitch Daniel or Scott Walker) as his running mate.  Who wins in a Romney v Obama race is up in the air.  It comes down to one question, Is David Axelrod as effective as Karl Rove?  I suspect not and so I think we will be complaining about a President Romney soon enough but even I'm not foolish enough to predict it.

4.  OWS will continue but with less effect.  The movement born of a self-important impulse to do what ever it takes to "be heard" (i.e. make the news) will continue to escalate as moderating influences drift (or run) away and the righteous core screams for attention and affirmation.  Americans as a whole want to know what a movement is for, not only what it is against and the vague answers and growing militancy of OWS will strike Americans cold.


5.  The Euro will cease to continue as we know it.  There are three or four ways this whole thing could go down and I have no insight as to which way the cookie will crumble.  I am willing to predict, however, that crumbling ceases being a threat in 2012 and becomes a reality.

The Major Wildcard which could throw all these predictions into dis-array?  The Persian Gulf.  A war in the Persian Gulf would hasten the collapse of the Chinese giant but would remove all the benefits of creative destruction that would otherwise be made available to the world economy.  Oil prices would be high and fluctuating and oil is used in the manufacture and transportation of everything.  A President Obama could ride a wave of patriotism to a second-term (if the gods of war favor him).  OWS could find a new lease on life in a war to be against.  Who knows, the bond markets might even be distracted for a time granting Europe a few month reprieve.

What ever the Macro-events of 2012 may be, let us work to make our microcosms places of joy and friendship.  Make your own bailout by paying off debts and you will find yourself less concerned about inflation, deflation or the price of the drive to work.  Organize a home pantry so you can buy in bulk when items are on sale and have a cushion for whatever life throws at you.  Begin raising some portion of your own food and feel the empowerment which flows from doing.