Looking at some of the
predictions about the economy today. These are brutal - and many already coming true.
Go ahead, pooh-pooh all you like, ask any realtor - any commercial realtor especially, how they're doing. They'll likely lie, but watch for that tell-tale eyetwitch. Yeah, you know the one.
1)Housing prices and sales will continue to decline. Expect 3 years before the bottom, as a very optimistic best case scenario.
2)
Commercial real-estate will suffer a steep decline as well.
3)
Consumer demand will drop. Unemployment will rise.
4)
The US will go into a recession at best, a depression at worst.
Expect first stagflation.
5) The Asian economies are not going to "decouple", they are going to have their own financial crises and recessions. Yes, this includes China.
6) China's stock market will collapse some time next year.
7)Multiple banks will probably go insolvent.
8) Protectionism is going to get stronger.
9) I wouldn't be surprised, at some point, to see capital controls put in place to stop money-flight from the US.
10) When the full extent of how bad things are hits Joe Public, expect a move for reregulation of Wall Street and to reinstitute something similiar to Glass-Steagall.
11) The government
will have to bail out Fannie Mae and Freddie Mac because they are insolvent. Minimum 500 billion dollars.
12) Large waves of
government layoffs at the municipal and state levels as the inability to raise money cheaply and the reduced property taxes cascade through the system.
13) The price of oil will actually drop as there is an actual demand reduction for oil. Don't expect this to necessarily be reflected in pump prices, which are constrained by refinery capacity.
14) The federal government will become the largest holder of mortgages, and in effect, owner of houses, in the country. By far.
15) A serious collapse of the US stock market, probably by September at the latest. Maybe within a couple months.
16) One of the Big 3 car companies goes under. Then it'll probably get bailed out.
17) So many countries selling oil in Euros that the dollar is no longer the world's sovereign currency
18) By the end of 2009, actual reported starvation/malnutrition deaths unless Congress and the new president step in with significant aid. The food banks aren't keeping up and neither are food stamps.
19) Continued drops in illegal immigration, whether or not the new president continues having them rounded up in large numbers. The jobs just aren't there for them anymore, especially with the crashing real-estate industry. Many of them made their living as casual construction labor.
20) A huge push to gut entitlements in 2009, no matter who is president. Even if the US quickly pulls out of Iraq, the deficit will be totally out of control, and hundreds of billions will be needed for bailouts. A rapid consensus will form that rather than increasing taxes significantly on the rich, or slashing expenses like the military R&D and equipment appropriations budget, that the real problem is people retiring at 65, poor people getting Medicaid and old folks who aren't destitute receiving Medicare.