Dog bites man

News of the mundane.

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.

Daily News

I will not pretend to have been a large fan of the positions Christopher Hitchens but only because I found him too much the fundamentalist in his anti-religious tirades.  He remained always, however, a joy to read and as a writer he will be noted as one of the best of a generation.  One could not help but audibly whoop at the way he would make a point, assuming of course that he was on your side of the argument.  It is a loss to say goodbye to this English man of letters.

The death of Christopher Hitchens deprives us of a writer of verve and charm, a controversialist, and an intellectual. He was a journalist, above all – he filed many dispatches from war zones – and the long essay was the form in which he was most comfortable. His skill in this neglected discipline places him in the English tradition of men of letters.

Mr Hitchens did not produce many full‑length books, but he did turn out scores of graceful and erudite essays. This work will be seen as his distinctive contribution to the literature of our time; the belligerent, proselytising atheism that made him a celebrity is a distraction.

As a polemicist, he certainly could be intemperate. Often, he was rude to the point of absurdity, referring to Diana, Princess of Wales, after her death, as a “simpering Bambi narcissist”. But he spoke his mind, and in a world of anodyne public figures this was refreshing. Nor was all his work vituperative: he wrote with sensitivity about favourite writers such as Evelyn Waugh, Anthony Powell and P G Wodehouse.

The despot Kim Jong Il is dead.  Long live the despot Kim Jong Un.  The death of the despot is only lamentable because he died in bed and of old age instead of a lamppost.  The succession to the son does insert a degree of instability into a regime that was already known for its provocations.  It is doubtful that the younger Jong enjoys universal support so future provocations are likely as either his opponents seek to undermine his leadership or as he attempts to consolidate it with new accomplishments.  As the Diplomat observes:

Kim Jong-un has apparently begun to put his own people in place, but it’s hard to imagine that such a process is complete or irreversible. There are many fissures within North Korean society, and relatively few individuals who can bridge those gaps to project power across the system. This works in the favor of the Kim family, which remains at the center of power.  

What we don't know is whether there might be cleavages within the family or other disconnects between the family and the bureaucracy that might emerge as points of conflict as the process unfolds.

Image from Salon.com

NY Times columnist and former Enron adviser Paul Krugman is joining the chorus of concern over what sounds like the eerie ripping of a property bubble in China.  Paul is not the first to mention a concern and we can agree with him that Chinese statistics are even a greater exercise in fiction than most economic statistics give one pause to assert a trend.  Moreover this is not Dr. Krugman's first note of concern about the situation in China.  If the future bears out the concern, however, there will be an increased criticism on the impact of stimulus on an economy and the Chan narrative will be used to support Austrian School against the Keynesian vision shared by Dr. Krugman.  The argument can wait, however, until after we know what the future holds and how it will impact the larger world economy.

And anecdotal evidence suggests that while China’s government may not be constrained by rule of law, it is constrained by pervasive corruption, which means that what actually happens at the local level may bear little resemblance to what is ordered in Beijing.

I hope that I’m being needlessly alarmist here. But it’s impossible not to be worried: China’s story just sounds too much like the crack-ups we’ve already seen elsewhere. And a world economy already suffering from the mess in Europe really, really doesn’t need a new epicenter of crisis.

I confess to a degree of sympathy for the Austrian economic argument but most of this is merely a reaction to the limits of Keynsianism.  It is not that one school is always right and the other wrong but economics is situational.  Economics shares this with parenting: sometimes there is a need to intervene and sometimes there is a need to stay out of the way.  The situation is complex and living in a different society with different challenges than the 1930's the connection between the value of Keynes to that original context becomes more clear.  Robert Samuelson makes this very point very well and reminds us that Lord Keynes (unintentionally) foretold it:

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."
-- John Maynard Keynes, 1936

WASHINGTON -- The eclipse of Keynesian economics proceeds. When Keynes wrote "The General Theory of Employment, Interest and Money" in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps. Now, huge governments are often saddled with massive debts. Standard Keynesian remedies for downturns -- spend more and tax less -- presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won't work.

Speaking of the 1930's and 40's Bloomberg publishes an opinion piece outlining how World War II did not end the Depression just by adding demand to the economy but by transforming the economy and adding entire an entire sector (aerospace) to the nation.  Of course it didn't hurt that once the war was over those our factories were the last left untouched for the rebuilding of Europe and parts of Asia.

Saturday, 17 December 2011

Gary Hart: GOP volatility caused by voters not knowing what they want

Most national candidates, and too many political commentators, miss the mini-primaries that lead up to the real events. In coalition parties, which theDemocrats have been since F.D.R. and the Republicans have been since Nixon, campaigns are formed by creating personal coalitions around the various candidates. And for grassroots campaigns, of the sort I constructed for myself in 1983-84, it is even more basic than that. It is about finding key people in key primary states who combine a high reputation, organizational skill and a network of political contacts to form a campaign nucleus around which the rest of the state can be organized. I was once asked how many people I needed to win New Hampshire and I said, “Six.”

The Rest of Illinois Tired of being governed from Chicago

'Why would anyone want to live in Illinois?" So muses Curt Wooters, who works for the state and helps his dad run the family's sporting-goods store in Findlay, 200 miles south of Chicago. Imagine California without the sunshine, New York without the cultural elan, New Jersey without Chris Christie. That's Illinois.

Evel Knievel would be proud

A newfound comet defied long odds today (Dec. 15), surviving a suicidal dive through the sun's hellishly hot atmosphere, according to NASA scientists.

The should compare the grades of students who write when their drunk.

Writer, philosopher, gadfly, and Slate contributor Chrisopher Hitchens died on Thursday of complications from esophageal cancer. While drinking and smoking may have contributed to his untimely passing, Hitchens didn’t regret either habit: “Writing is what’s important to me, and anything that helps me do that—or enhances and prolongs and deepens and sometimes intensifies argument and conversation—is worth it to me.” After Steve Jobs died, we explained how LSD may enhance creativity among innately creative people. Does alcohol improve your writing?