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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Offbeat Economic and Financial Predictions for 2009

Stock-Markets / Forecasts & Technical Analysis Jan 07, 2009 - 02:27 PM GMT

By: Oxbury_Research

Stock-Markets Best Financial Markets Analysis ArticleIn this week's article, I wanted to follow up my article from last week – Predictions for 2009 - and this time offer some offbeat predictions for 2009. First, however, I wanted to make a few observations about making prognostications. Many times prognosticators look to the past for patterns which will repeat themselves in the future.


I myself look to history quite often, searching for parallels to what is happening today. However, I always keep in mind that famous Mark Twain quote - “History doesn't repeat itself, at best it sometimes rhymes”. The consensus Wall Street deflationists are ignoring this bit of wisdom.

The deflationists are assuming that hard economic times, like the 1930s, will lead to massive deflation. I predict that our current hard economic times will “rhyme”. The actions of the Bernacke Federal Reserve are completely different than the Federal Reserve of the 1930s. I believe that in 2009 we will have a lousy economy, burdened with $50 trillion of Uncle Sam's IOUs, and chronically high inflation.

Human (Psycho)logy

My view that the future danger we will face in the US economy will be very high inflation has led to people looking at me strangely and whispering behind my back. I'm hoping that it's not my looks or the way I'm dressed that it causing the whispering.

This brings me to my next point. Although people endlessly ask for prognostications, they rarely want to hear the answers. When people ask “What is going to happen?”, what they are seeking is reassurance and reaffirmation of their own views.

Since people feel most comfortable in a crowd, their view will most likely be the current prevailing consensus view. This is especially true on Wall Street where people are afraid to stand out from the crowd. I wrote about this phenomenon in an article a few weeks ago for Oxbury Publishing titled Wall Street Holidays .

People do not want to hear contrarian thoughts. People simply want to be told that they are correct and they want to be congratulated on their wisdom. Contrarians are scoffed at and ignored because, after all, they are nuts . Even when proven right they are disliked as being the bearer of “bad” news.

What about the other end of the spectrum – the people who constantly spout drivel and nonsense, such as the pundits seen daily on CNBC air? When confronted, these pundits either “don't recall” that they ever said such stupid things or they claim that they “knew” some event would happen all along.

My favorite though is seeing these pundits claim that they were victims of events that “no one” could have predicted. This is the Curly defense from the Three Stooges - “Sorry Moe, I'm a victim of circumstances! Nyuk! Nyuk!” Unfortunately, anyone who listened to these pundits and followed their advice is not laughing.

Some Non-Predictions

Some predictions are so easy that they really aren't predictions at all. Examples would include the following: The $50 billion Bernie Madoff Ponzi scheme will be dwarfed by other similar Wall Street scandals to be revealed in 2009 and government bailouts will continue to grow exponentially across a wide spectrum of poorly-run American industries in 2009.

Another non-prediction that is a virtual certainty is that upon taking office on January 20 th , President Obama will propose a massive stimulus program for the US economy in the range of $1 trillion.

When thinking about how Congress will choose to spend all of that money I am reminded of that famous quote by Nikita Khrushev - “Politicians are the same all over. They promise to build bridges even when there are no rivers”. Please no comments about using a quote from a dead Communist comrade .

Offbeat Predictions

Here are a half dozen of my offbeat predictions for 2009.

Offbeat Prediction #1 - Speaking of Comrade Khrushev, in 2009 we will see a speech by Comrade Ben Bernacke where he takes off his shoe and pounds the podium saying, “History is on the side of the Federal Reserve. We will bury deflation (and you) in mounds of worthless Federal Reserve notes”!

Soon after the speech, black helicopters will be seen over every community in America dumping what seems like an infinite amount of Federal Reserve notes onto the populace below.

Offbeat Prediction #2 Fed chairman Bernacke will claim that he was abducted by aliens aboard a UFO. Ben will say that the aliens told him that they were from a planet called ZIRP – the Zero Interest Rate Planet.

Mr. Bernacke will say that the aliens gave him that the key to everlasting economic prosperity. This prosperity is to be brought about by having zero interest rates forever and flooding the economy with an infinite supply of funny money.

Offbeat Prediction #3 – 2009 will see new Treasury secretary, Tim Geithner, win the Sgt. Schultz award for the 2 nd year in a row. In 2008, Mr. Geithner won the award for his job as head of the New York Fed, overseeing Wall Street.

He exemplified the true spirit of the Sgt. Schultz award - “I hear nothing, I see nothing, and most of all I know nothing”! I think we would hard-pressed to find a more deserving recipient for the Sgt. Schultz award than than the “brilliant” Mr. Geithner.

Offbeat Prediction #4 In 2009, Bernie Madoff will be named as peace envoy to the Mideast. He will become an American folk hero after swindling Mideast rulers of their riches, thereby eliminating all US debts. Mr. Madoff gets the Mideast leaders to invest all of their vast fortunes into a scheme called the American Dream.

This scheme offers participants a luxurious lifestyle and a large, steady return on their money without breaking a sweat or doing any work. Participants just sit back, let other people do everything for them, and rely on the kindness of strangers to bail them out of any difficulties.

Offbeat Prediction #5 Wall Street will win the award as the most admired institution in America for 2009, narrowly beating out Congress. Americans will be overjoyed that their remaining savings has been invested by Wall Street into the last remaining financial market bubble – US Treasuries. After all, who doesn't love locking in those negative interest rates?

The tie-breaker in the voting for the award will be that Wall Street outdid Congress at their own game. In 2009, Wall Street will make trillions of dollars more disappear much like Wall Street did with the $700 billion TARP money. Wall Street will show those amateurs in Congress how to really spend (lose) taxpayers money rapidly.

Offbeat Prediction #6 All across America financial advisors and money managers will be nominated for humanitarian awards. These money managers will be lauded for putting their clients' financial needs ahead of any personal gain. They will held up to children as examples of what type of Americans they should strive to be when they grow up.

Disclosure: no positions

Regards,

By Tony D'Altorio

Analyst, Oxbury Research

Tony worked for more than 20 years in the investment business. Most of those years were spent with Charles Schwab & Co., both as a broker and as a trading supervisor. As a supervisor, he oversaw, at times, dozens of employees. Tony was trading supervisor during the great crash of 1987 and was responsible for millions of dollars of customers' orders.

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2008 Copyright Nick Thomas / Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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