Predictions for 2009: World Events and the Economy

Well looking back at my 2008 predictions I didn't do too badly since I was 4-1 in World Events and 3-2 for the Economy. I actually called the Obama win, Musharraf out in Pakistan, no terrorist attacks in the US, and the Iraq War winding down in 2008. I was wrong about Sarkozy solving the Iranian nuclear issue. I got the Bailout of Subprime, tech lagging, rise of alternate energy. But I was wrong about the extent of the correction (I missed it by calling 10%,) and the health care recovery. Well in any case time to put on the Nostradamus floppy hat for 2009:

World Events:
1. Iran will rattle the sabre about a nuclear program but a deal will be made before the end of the year. The deal will consist of Iran enriching uranium under UN auspices and Russia helping them build several nuclear plants. Iran continues a secret bomb making program in the meantime. However this does not save Ahmadinejads job as he will be booted from office and be replaced by moderates.

2. There will be increased tensions over Pakistan's involvement with the terrorist attacks in India. It will escalate into a near war with both sides massing troops on the border and threatening to invade one another. Tensions will be lessened when Pakistan arrests senior people in the ISI (Pakistan's spy unit) that are alleged to have had a hand in the plot. There are skirmishes along their border but there is no major hot war between the two powers in 2009.

3. Israel's invasion of the Gaza strip will severely weaken Hamas and Fatah will eventually gain complete hegemony in Palestine. Fatah takes over the control of the Gaza strip from the Israelis by the end of 2009 and complete a second round of secret purges of Hamas leadership. Hamas is wrecked as a terrorist organization and no longer threatens Israel militarily.

4. Chavez is marginalized in Venezuela as his oil wealth starts to disappear. His power is severely weakened as there is no longer a Bush in the White House to demonize. Chavez does everything he can to stave off an economic ruin in his country as they end up defaulting on their debt creating a mini crisis that the US has to solve.

5. Afghanistan becomes a page one story again this time with the Americans trying to root out the Taliban and bolster their army. The press will portray this war as a righteous affair and never doubt for a minute that we will win there. The Dems will pound the table and look "strong on security" by pointing to their support of victories in Afghanistan. Iraq will receive less and less attention and leave the national news stage. There will not be a major terrorist attack in the US in 2009.


Economy:
1. Obama's stimulus package will work for the most part and will slow unemployment growth by the end of the year. The money for the states will be given some serious scrutiny but will still be filled with pork barrel spending and government giveaways. Obama will take credit for saving the world economy.

2. Many companies tighten their belt and delay projects into the second half of the year. Several retailers go out of business but there will be no equivalent to a Lehman Brothers bankruptcy in 2009. By the third quarter the economy will be out of recession and on the way back to recovery. The Dow will be back above 9,500 by the end of the year.

3. The long awaited housing recovery will be in full swing by the third quarter of 2009. Record low house prices and rock bottom mortgages will force many first time home buyers into the market and will sop up the supply overhang.

4. Along with the economic recovery, oil prices will climb and be at about $80 or so by the end of 2009. Energy stocks will outperform the overall market. Gold will lag for 2009.

5. Treasury yields will return to historical averages as risk aversion starts to leave the market in the first two quarters of 2009. The VIX returns to a trading range and the wide market swings that we saw in 2008 stop for the time being.

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Aspen Bomber: The First Case of "Eat the Rich" Syndrome?

I was reading about this Aspen Bomber by the name of James Charles Blanning and was thinking that it may be the first indication of a new "Eat the Rich" syndrome. This is especially the case because the rich bankers and house-flippers caused the pain in the first place.

In some ways some of this stuff happened during the French Revolution. The targets of the revolution was the aristocracy and their wasteful spending as well as the massive land holdings of the church. The French government was also deep in debt due to bankrolling the American Revolution. Thus the French were not able to help people not starve when there was record unemployment and the agrarian economy of France was decimated by a famine. People in the Us aren't starving to the extent of the pre-Revolutionary French but we do have an "aristocracy" of sorts that was spending like crazy people. Plus the US government is deep in debt due to various bailouts and foreign military adventures.

So could this Blanning character have fired the first shot against the mega-rich and the "aristocracy" of today? It might be fairly plausible. Some people view our economic trouble through the lens of crooked Hedge fund millionaires and bankers wrecking the economy and escaping with their golden parachutes. I mean the demonization of Bernie Madoff is filled with quite a bit of hate and venom as well. I was just struck by the fact that someone would actually consider a terrorist bombing against the "beautiful people" in Aspen like that. It just seemed like something that could have come out of Revolutionary France.

I guess these sort of attacks depend on how bad things get. I mean the Great Depression didn't cause the US government to fall through massive strikes and violence but there were food riots and the crackdown against the Bonus Marchers. It might just come down to whether the rich are seen to have contempt for the plight of the poor like Mary Antoinette was suppose to have. I think people can take a rich person buying extravagant crap if they are just simply unemployed. However, if normal people are starving to death then it will seriously raise the stakes. It seems that violence against the rich only manifests itself when things are truly dire.

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US Forces Surge into Afghanistan

It seems that we are going to finally focus on Afghanistan and start to shift away from Iraq.

The U.S. is preparing to pour at least 20,000 extra troops into southern Afghanistan to cope with a Taliban insurgency that is fiercer than NATO leaders expected.

The new troops will augment the 12,500 NATO soldiers � mainly British, Canadian and Dutch � in what amounts to an Afghan version of the surge in Iraq.

New construction at Kandahar Air Field foreshadows the upcoming infusion of American power. Runways and housing are being built, along with two new U.S. outposts in Taliban-held regions of Kandahar province.

I guess these newely inserted Captains and Lieutenants are going to have to befriend a whole new set of tribal leaders and attend a whole new set of Tribal Councils.

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Say Goodbye to Nickelodeon, MTV, and Comedy Central for Time Warner

There seems to be some kind of dispute between Time Warner and Viacom over carriage fees.

Viacom has asked for fee increases of between 22 percent and 36 percent per channel, or a total of $39 million more, an amount that could increase customers' cable bills, said Time Warner Cable spokesman Alex Dudley.

"The issue is that they have asked for an exorbitant increase in their carriage fees and their network ratings are sagging," Dudley said. "Basically we're trying to hold the line for our customer."

Viacom spokeswoman Kelly McAndrew disputed the figure, saying Viacom requested an increase in the very low double-digit percentage range.

So bottom line is that if Viacom and Time Warner can't be in some kind of agreement then it might be time to switch to Hulu for your Daily Show and Colbert Report fix. I have been doing that for a while but I think more Americans might take the plunge if this thing drags out for a while.

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Cohen Injects the Iraq War Into Bush's Reading List

It seems that Bush isn't the dummy that the press has made him out to be. The press, however, doesn't seem especially happy about that fact.

It is awfully late in the day for Rove -- and, presumably, Bush -- to assert the president's intellectual bona fides. Now feeling the hot breath of history, they are dropping the good ol' boy persona and picking up the ol' bifocals one. But the books themselves reveal -- actually, confirm -- something about Bush that maybe Rove did not intend. They are not the reading of a widely read man, but instead the books of a man who seeks -- and sees -- vindication in every page. Bush has always been the captive of fixed ideas. His books just support that.

The list Rove provides is long, but it is narrow. It lacks whole shelves of books on how and why the Iraq war was a mistake, one that metastasized into a debacle. Absent is Rajiv Chandrasekaran's "Imperial Life in the Emerald City," Tom Ricks's "Fiasco," George Packer's "The Assassins' Gate" or, on a related topic, Jane Mayer's "The Dark Side" about "extraordinary rendition" and other riffs on the Constitution. Absent too is Barton Gellman's "Angler," about Dick Cheney, the waterboarder in chief.

Why the hell would Bush want to read some book called Fiasco about his handling of the Iraq War. I mean he is probably aware that the Reconstruction period is Iraq was bungled and why does he need some guy named Tom Ricks to tell him that. I mean Bush read the daily reports and was privy to the Top Secret stuff that a reporter like Ricks can only dream of. What good would it be to read some retread like that?

Also I don't understand how reading some liberal crap about the "failure" in Iraq will suddenly make a broad reader out of someone. I mean watching a Song for Ellah, Rendition, and Stop-Loss doesn't suddenly make a person into a broad movie watcher.

Cohen, however, could have suggested a nice list of books that Bush would have enjoyed upon looking at his book list. But instead he goes back to the "Iraq is a fiasco let's run away" attitude that infected the Left in 2006. Cohen also could have suggested some "progressive" books that Bush may have enjoyed. I don't know what that would be but I'm sure Cohen knows them. Instead he just dredges up the tired old "Iraq War is a Failure" pablum.

In any case it was cool to have a book that I read Vienna 1814 be on the Presidential Reading List. That book was very entertaining and really gave a nice overview about the "Concert of Vienna" that followed the Napoleonic Wars. Also it shows that Bill Clinton wasn't the only powerful man that got a little side action since just about everyone there had multiple mistresses sometimes at the same time. I hope that Bush enjoyed the book as much as I did.

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Is Fatah Helping Israel Decimate Hamas?

Well it is according to this source.

I've been talking to friends of mine, former Palestinian Authority intelligence officials (ejected from power by the Hamas coup), and they tell me that not only are they rooting for the Israelis to decimate Hamas, but that Fatah has actually been assisting the Israelis with targeting information.

That sounds like a very sound plan if I was heading Fatah. All you have to do is condemn Israel so you don't lose street cred with the "Arab Street" but then you secretly help the IDF wipe out your hated enemy. I remember quite a bit of Fatah guys being murdered and tortured when Hamas seized Gaza. So this is Fatah's way of getting a measure of revenge for those atrocities and wiping out your rival at the same time. Sounds nice and Machiavellian.

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Top 7 Political Blunders of 2008

I was reading this article and I have to agree with their number 1 blunder.


Here�s a man who had spent an entire year telling people that he was a financial conservative, that he wasn�t another George Bush, and that Barack Obama couldn�t handle a crisis.

So, an unpopular bailout comes up for consideration on Capitol Hill and McCain handles the crisis exactly the same way that Obama did, by signing on to George Bush�s $700 billion bailout deal that fiscal conservatives hated with a white hot passion.

In other words, in one fell swoop, John McCain managed to alienate conservatives, prove he really was �another Bush,� and show the American people that Obama could handle a crisis just as well as he could. It was an extraordinary blunder � one that literally may have been the deciding factor in the race for the presidency.


What was worse was when he suspended his campaign in order to go back to Capitol Hill and not do anything other then sit in that meeting with all of the Bailout people and then look serious for the camera. What he should have done is kept above the fray and just let events play out. The bill would have been passed whether he had been there or not. Then he could have just talked about how he would have done things differently if he were President.


Also I think the media parroting that McCain did not know too much about economic matters also hurt him when the crisis was economic. Obama doesn't know much more about the economy but you never had that soundbite of him admitting that. Also McCain not knowing how many houses he had is not such a good idea when people were losing their own houses in record numbers. In any case I think it might be very interestng to see the insiders write books in the next few years once more details of McCains campaign come to light.

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RNC Chairman Candidate Sends Racist CD: Not so Fast!

I love how the MSM likes to blow this stuff up into something it is not by trying to inject race into everything.

The song came with 40 others on an album from conservative satirist Paul Shanklin, a personal friend of Saltsman. The song is a parody of a 2007 Los Angeles Times column of the same title and is written to the tune of �Puff the Magic Dragon.� �Barack the Magic Negro lives in D.C.� the opening of the song goes.

�The L.A. Times, they called him that �cause he�s not authentic like me. Yeah, the guy from the L.A. paper said he makes guilty whites feel good. They�ll vote for him, and not for me, �cause he�s not from the 'hood.�

This is 6 paragraphs into that Politico article. The explanation of what is on the CD should be in the second paragraph right after what the controversy is about. Instead they talk about how this Saltsman guy is sending this CD to the voters for the GOP party chairmanship and how it is helping him among Republicans instead of hurting him. It also give a bunch of GOP members reaction statements.

If you just see "Barack the Magic Negro" splashed up there you think that the GOP is forwarding racist stuff. But if you read the part that it is the actual title of a Los Angeles Times article then you see it in a totally different light. It is just a parody of an actual article and is not racist in the least. It just goes to show you how far the MSM goes to tar and feather the GOP.

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Red Chinese Flex Their Naval Muscles

It seems that the Chinese are taking a wider role in protecting shipping from Somali Pirates.

The naval force that set sail from southern Hainan on Friday afternoon included a supply ship and two destroyers � armed with guided missiles, special forces and two helicopters. China announced it was joining the anti-piracy mission Tuesday after the U.N. Security Council authorized nations to conduct land and air attacks on pirate bases.

The US is applauding the move and are probably interested in seeing how the Chinese Blue Water navy is getting along. If you think about it this may be one of the first times that a major Chinese naval force has left their ports bound for Africa since the Great Armada of Zhang He.

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The Bank of General Motors?

Now things are getting stranger and stranger when it comes to financial news. GM just formed its lending arm into a bank holding company.

The Fed announced Wednesday that it had approved GMAC Financial Services' request to become a bank holding company. That designation makes GMAC eligible to receive a portion of the bailout fund and get emergency loans directly from the Fed.

Analysts had speculated that without financial help, GMAC would have had to file for bankruptcy protection or shut down, dealing a serious blow to GM's own chances for survival. The Fed cited "emergency conditions" in justifying its decision.

I guess you get a free tire rotation when you open a new checking account. In any case I will rather be banking with the Bank of Toyota or the First National Bank of Mercedes Benz since they will still have depositors 5 years from now. The Bank of GM is kind of iffy.

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The Cause of the Recession: Sausages!

I love it when you can find an entire summary of a complicated issue in one paragraph that is suitable to put into a history book. Here is one for the subprime mortgage mess and the recession it caused.


Don't have enough money to buy that McMansion? No problem. Countrywide will give you a subprime loan. What do they care? They are just selling it to Bear Stearns or Lehman Brothers -- may they rest in peace -- where it can be wrapped up into a toxic sausage called a C.D.O. And once it's wrapped nice and tight, Moody's, Standard And Poor's or one of the other crooked ratings agencies will bless it with a pristine AAA rating so it can be sold to a European bank or some other sucker overseas stretching for a slightly better yield.


Yup a it can be summed just like this:


1. Homebuyer: "I want a McMansion in Florida or California!"

2. Countrywide: "Sure here's the money. No I don't need to see any paperwork or proof of anything at all. Go ahead and take it. In fact your home loan was approved in 60 seconds!"

3. Lehman Brothers: "Can I buy that loan off of you? I need it to make sausages (CDOs) with it and sell it to gullible folks for big profits."

4. Moody's: "That sausage is 100% grade-AAA. Its safe, wholesome, and tasty as well! Here is the bill for my services Mr. Lehman."

5. Foreign Bank: "I need another 1% yield in my portfolio to get my bonus. Moody's says that Lehman sausages are grade AAA so let's go with them. Also I know that US house prices have gone up every year since the 1950s. They must be a can't lose investment! I'll take 10 pallets worth of those sausages Mr. Lehman."

6. Homebuyer: " I owe $5000 on my mortgage NEXT MONTH? I can't afford that!"


*everything crumbles to dust*


So to sum it up this is what caused the "Great Recession of 2008:"

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Harbinger Capital Partners to Limit Redemptions to 60-70%

It must suck if you were a hedge fund investor that is being told here is $0.70 on the $1.00 after you have already tanked for a 23% loss for the year. Also people have already pulled money out in record numbers:

The $10 billion Harbinger Capital Partners Master Fund tumbled 23 percent this year through November, after being up 43 percent as of June 30, said the people, who asked not to be identified because the information is private. New York-based Harbinger will put the fund�s private-equity holdings, about 15 investments, in a side-pocket, or segregated account, so they don�t have to be sold at distressed prices.

Now that is one volitile fund. It went from up 43% to down 23% in 6 months. So that is a 66% downward move since June. I wonder if some of this was because of the curbs on short selling or was it just a domino effect that was due to redemptions earlier in the year? They had to settle those redemptions and to do so they had to empty out all the winners. This sent the price of those winners rolling downward like an avelanch. At least Harbinger is letting people pull their money out.

Hedge-fund firms including Tudor Investment Corp. and Citadel Investment Group LLC have suspended all redemptions.

That means some big money investors will have chunks of their money frozen at a paper loss and they will be unable to touch it. I would hate to have money that I entrusted to a fund manager frozen in that fund at a big loss. Plus, alot of the leverage tricks that these funds used to make big money might be dead so the chances of getting your money back are even slimmer.

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Madoff's Ponzi scheme Claims First Victim

It seems that the founder of a hedge fund called Access International Advisors Thierry Magon de La Villehuchet killed himself after trying his best to get his clients money back. The bad part is that it looks like Access put almost all its faith (and cash) on Madoff.

Access said in a Dec. 12 letter to clients that funds including its LUXALPHA SICAV-American Selection invested solely with Madoff�s eponymous investment firm. The fund had $1.4 billion in assets as of Nov. 17, according to data compiled by Bloomberg.

Access says it carries out �extensive� due diligence on the funds to which it allocates money, a process that can take as long as six months and cost $100,000. It also hires private investigators to run �extensive background checks� on fund managers, including searches on professional credentials, regulatory filings and bankruptcy, according to marketing documents dated September.

I guess Madoff fooled those private investigators and all of the checks and balances that Access was able to do. I think it might have been a good idea to diversify this fund since it would have resulted in people losing far less money then they did. Instead, La Villehuchet put all of his faith in Madoff and was strait-up robbed. That is why diversification is important whether you are a beginning investor or a billionaire hedge fund guy.

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Afghan Troop Surge Might Be Too Late

It seems like there are some naysayers to the plan to double the amount of US troops in Afghanistan.

�We may have missed the golden moment there,� said Lawrence Korb, a former Pentagon official who has long advocated an increased U.S. focus on Afghanistan.

The tension between the short-run need for more muscle to thwart the Taliban and the long-term trap of becoming the latest in a long line of foreign intruders bogged down in Afghanistan forms the core of the dilemma confronting Obama.

The only problem I have with this statement is that the other foreign intruders were there to conquer Afghanistan and pretty much subjugate their people. The British and then the Soviets had designs on making the country part of their spheres of influence. So they were looked at as occupiers because they were there with the goal to actually occupy the country for an extended period of time.

The US on the other hand just want to build a lasting peace in the country and then leave. They know that they cannot do that with the Taliban in charge. So they are trying to buff up the Afghan army and have work together to crush the Taliban again.

I think the US may be one of the only foreign intruders to sit down with tribal leaders (instead of installing them by fiat) and work out some kind of agreement to defeat the Taliban and rebuild the country at the same time. So the US is trying to do some road and school construction, while protecting the population with Afghan help, and killing the Taliban at the same time. Kind of like a humanitarian organization with tanks. It worked in Iraq so it should be at least given a shot in Afghanistan as well.

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Bush Pardons Hero of Israel

Bush is pretty light with the pardon pen but at least he honored this guy even though he died years ago. The guy wasn't even Jewish as well.

In the summer of 1948, Winters, a Protestant from Boston who exported produce, worked with others to transfer two converted B-17 "Flying Fortresses" to Israel's defense forces. He personally flew one of the aircraft from Miami to Czechoslovakia, where that plane and a third B-17 were retrofitted for use as bombers.

He was sentenced to 18 months in prison and a $5000 fine. But if he didn't get a chance to send those bombers then there probably wouldn't be an Israel today.

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