2011

Commentary By Ron Beasley

What's a new year without predictions?  Dave Cohen at Decline of the Empire plays it safe and predicts what we won't see.  My favorite:

Our elected representatives in Congress will not put themselves on trial, find themselves guilty of wanton corruption, gross negligence, meanness of spirit, mind-boggling stupidity, and all-around depravity, and then go on to amend all the rules of our political system to reinstate a Democracy, or failing that, a Republic.

Go check out the rest and find your own favorite.

ASPO-USA asked a number of people for predictions.  The most interesting one was from Charles A. Hall and David J. Murphy - China will reach peak domestic coal.

It looks to me as if the coal/power shortage in China is continuing to spread and will get much worse in the next two months. Beijing�s only possible short-term response is to import as much more energy in the form of oil, coal, and natural gas as they can, thus driving the oil prices above $100 a barrel in the next few months. The Wall Street consensus that China�s oil imports will fall to a 6 percent increase this year seems much too low when you factor in the need to grow at 8-10 percent, replenish stocks, build a strategic reserve, and cope with the growing coal shortage. The likelihood that we will see another 2008 type oil price spike in the next six months seems to be growing every day.

So what are mine? 

• If I ignore unpredictable shocks to the system I see us remaining on a slightly undulating and gradually decreasing plateau.  Growth will be limited by the price of oil - even our anemic growth stops when oil hits $100 a barrel.  Recession again at $110 at which point the price of oil will decline - that feedback loop I have talked about before.  We will probably end 2011 in slightly worse shape  than it began.


• It will become increasingly difficult for the FED and the Obama administration to claim that the too big to fail banks are solvent.  The foreclosures will continue but there will be few buyers for the forclosed properties.  Further bailouts seem unlikely.  At least one of the big five will fail - my money is on Bank of America and JP Morgan Chase may not be too far behind. 


• While we will be out of Iraq Afghanistan will be a US war by the end of 2011 as the rest of the "partners" realize they can't afford to throw anymore money down a bottomless pit.  US public opinion will have further soured and the Obama administration will be looking for an exit.


• Sarah Palin will remain a money making cult figure but few will still consider her to be a serious political player - exactly what Sarah wants.

Feel free to bookmark this post, I'm going to.

Cross posted at The Moderate Voice