Fun Predictions for 2007-2012

[synthetik]

[biliruben]

[sniglet]

I lean a bit more to the deflationary side. Here's my current take:

2007
- Recession by December 2007
- 1st average MoM median price decline in Puget Sound at the end of 2007 (by .5%)
- Dow closes year at 11500
- gold closes year at $580 an ounce
- oil closes year at $58 a barrel
- mortgage rates for 30 year fixed at 7%
- Shanghai index ends year at 3000 (4230 now)

2008
- Boeing announces plans to scale back production due to cancellation of some orders by end of 2008
- major tech-firms announce that sales are declining and there is evidence upgrade cycle is slowing significantly by year-end
- recession continues throughout year, with each quarter showing negative GDP growth
- Seattle area real-estate prices drop 5% YoY by December
- total number of foreclosure are up 200% YoY
- Dow closes year at 10000
- gold closes year at $490 an ounce
- oil closes year at $50 a barrel
- mortgage rates for 30 year fixed at 6.2%
- Shanghai index ends year at 1500

2009
- Boeing announces lay-offs as orders continue to be cancelled
- major tech-firms announce hiring freezes and/or lay-offs
- recession continues throughout year, with each quarter showing negative GDP growth
- Seattle area real-estate prices drop 15% YoY by December
- total number of foreclosure are up 400% YoY
- Dow closes year at 8500
- gold closes year at $400 an ounce
- oil closes year at $47 a barrel
- mortgage rates for 30 year fixed at 5.8% (with 20% down and 750 credit score)
- Shanghai index ends year at 800

2010
- lay-offs occur at all major Puget Sound employers
- Washington unemployment rate hits 11%
- Seattle area real-estate prices drop 25% YoY by December
- total number of foreclosure are up 800% YoY
- Dow closes year at 6000
- gold closes year at $320 an ounce
- oil closes year at $35 a barrel
- mortgage rates for 30 year fixed at 5% (with 20% down and 800 credit score)
- Shanghai index ends year at 150

2016
- first year of economic growth for US since 2007
- Washington unemployment rate hits 25% (up from 28% the year before)
- Seattle area real-estate prices rise 3% YoY by December (but down 85% from December 2007)
- total number of foreclosure are down 10% YoY (down 700% from 2010)
- Dow closes year at 2500
- gold closes year at $400 an ounce
- oil closes year at $25 a barrel
- mortgage rates for 30 year fixed at 4.2% (with 20% down and 800 credit score)
- Shanghai index is still not even posted, ever since the riots of 2011 that destroyed the exchange

[perplexd]

Is someone out there burning money and not telling synthetik or me about it?

Last I checked, money printing was in overdrive by every central bank on the planet. Now that they aren't backed by gold, the fiat currencies are only backed by confidence and the oil markets. Once peak oil screws up the oil markets, we'll find out how much money they printed and how shaky that confidence really is.

I hate to say so, but if you think we've had a housing bubble because of cheap credit, imagine how you'll feel once you find out that we've had a 50 year everything bubble because of cheap oil!!!!

Remember, $60/barrel is still 18 cents a pint, less than you pay for water. Remember synthetik's predictions when you look back on $4 gas as "the good old days". It's dirt cheap and not going to last.

This means that there is nothing to buy with all those dollars that (unless I'm wrong) nobody is burning up or recycling. This will make deflation next to impossible. Remember, Germany's Weimar inflation was because they had to print money to pay the war debts. The only difference with us will be that we're paying what we think of as peace debts (because we export our wars -- we don't hold them here).

[EconE]

Doesn't look like any of the above scenarios are very optimistic whether inflationary or deflationary.

WRT oil and PM's...jeeze...those are such murky markets that all I can say is "who knows?". If I were a gold bug (which I am not) I certainly wouldn't buy paper gold. Bullion only. Oil...well...I think that it will go higher because people will still need to get around and they certainly won't have money for new fangled cars.

Use of public transportation will increase and people won't be such snobs about taking a bus. People will learn how to walk places again or ride a bike.

sorry...just rambling.

great thread though.

[rose-colored-coolaid]

First off, are you really that pessimistic? For example, we can't have stagflation again. Why you asked? Because the Fed has pegged inflation at 3% a year max, regardless of what is really happening.

On a more serious note, peak oil. This will radically alter our lifestyles, but I for one welcome it. Oil and the automobile has in many ways been the worst invention ever devised. Because of the automobile we have urban sprawl, asphalt everywhere, outsourcing, obesity, and it murders more Americans a year than any other non-natural (think cancer) source. Yes, there are benefits, but nobody ever really stops to think about the negative side effects.

So my prediction. Peak oil means smaller more concentrated cities become norm. Tower agriculture will catch on to feed these small cities. This will reduce the resources needed to feed, while making most areas self sufficient. People will ride a bike to work in the same small city they live in. Total economic activity will go down, and people will rely on their neighbors more. This means less Michael Bay movies, but more time to sit down and read a book.

In short, the world will change, some people will be better off, others worst off, but mostly we'll figure out how to make due with a more energy neutral world. In the end, people will be better off, and they will look back at the era between 1970 and 2020 as anomalous and foolish. They won't envy us.

[The Tim]

I'm less than convinced about the whole "Peak Oil" thing, as I've seen some fairly compelling arguments that , and replenishing deep beneath the surface of the earth.

That said, I'm definitely not a fan of the internal combustion engine or the gasoline monopoly (see some of my venting as H0NGK0NGPH00EY ). I ride to work (and everywhere else) as often as possible, and when someone comes out with an all-electric car capable of freeway speeds and even a paltry 50-mile range for under $20,000 it will be the first ever brand-new car I buy.

So I'm not some sort of H3-driving, oil-junkie, I'm just not convinced that we're really going to reach peak oil any time soon, if ever.

[sniglet]

[EconE]

[The Tim]

[synthetik]

We already peaked in oil in most places around the world. The US was the world's #1 oil producer for 100 years, I believe until we peaked in Dec. 1970 (look up Hubbert's Law)

We aren't finding ANY new large sources of oil - haven't discovered any in years, even though the world as a whole has ramped up disovery efforts.

The essential problem is that the 6.4B people on the planet are eating oil. Without oil, we never would have reached more than 2B people. The only reason we can feed that many people is simply, oil. Period.

Petrochemicals are used in fertilizer and pesticide - and the reason we have wide scale agriculture.

If oil is replenishing somehow, why haven't we made any new discoveries? Why are all countries that we have data for in decline? Why is Saudi Arabia pumping massive amounts of salt water into the ground to get more oil?

At current consumption rates with the growth of Chindya, my understanding is that we need a new Saudi Arabia every 3 years.

Demand has or will outstrip supply VERY soon and I think that's why we've begun this endless cycle of resource wars.

There are countless books on the subject, find them on amazon or at any B&N - most are in the "nature" section (some are under economics). Read Kunstler's "The Long Emergency" for a primer.

Personally, I don't welcome Peak Oil. That means the beginning of the end of most of what we know. It ultimately means that we'll probably lose 2/3 of our population.

I've read up on all the alternatives - and once you do, you'll understand that all combined, they won't have much of an effect. Uranium and Coal are good short term solutions however those are finite as well. We've reached Peak Natural Gas in the US as well.

Maybe if we had started working on this problem in the 70's and began conservation efforts and efforts to control the population, something could have been done.

Still, I'm an optimistic person and will do whatever I can to make it through this difficult time. I am not scared or worried in the least. I'm not even "down" about it. Reality is reality, and you have to just do the best you can.

I totally understand the desire to continue to believe that a solution is at hand - that technology will save us.

I could put up a bunch of graphs and links, but all you need is below. I have several Peak Oil DVD documentaries and would be glad to mail you a copy if you PM me.

http://www.theoildrum.com
http://www.seattleoil.com

[rose-colored-coolaid]

Tim,

I'm not sure if it really matters where oil comes from. Imagine a giant differential equation. Black box (earth) produces oil at rate X, people and nature use up oil at rate Y. If X < Y, eventually the oil will be gone. Does Gold's theory speculate on the rate of oil production? It looked to me like it focuses on how, not how fast.

Just my 2 cents.

[sniglet]

[EconE]

[The Tim]