I am in the midst of preparing a forecast for the next five to ten years for the United States economy, and by extension the world because of the intertwining effects of the dollar reserve currency and US consumption in the global economy. And of course the US position as the world’s sole superpower.
Before I do that, I thought it might be useful to see a recap of my last five year forecast, to set the playing field as it were, as a sort of an introduction. The next forecast will be similar in format and style, but may be a little more complex, because the US, and the world, are at a critical crossroads in history.
The greatest struggle in writing this sort of thing is to keep it brief, to prevent it expanding into a lengthy treatise that examines too many particulars, too many possibilities. Forecasters often succumb to the temptation to throw out many specific predictions and possibilities, in the hopes of ‘hits’ that will be remembered, with misses forgotten, without giving sufficient weight to the probabilities. In addition, clarity and consciences are always the challenge in writing non-fiction regarding complex subjects.
Please keep in mind that this forecast was published on my old website at the beginning of 2005, when optimism was running high, the maestro was still on his throne, black swans still an uncommon topic, and the US was in a fresh bull market in stocks with a growing housing bubble that very few would admit, and many would vehemently deny. This forecast is being written in darker hours, when some of the horsemen have already been unleashed.
I have edited out extraneous contemporary detail, and most of the charts which are dated, except for one. I edited out some grammatical errors and awkward phrasing. The timeframe has been ‘compartmentalized’ to five years, from a more open-ended original, because at the time I wrote in 2005 I did not imagine I would still be at this blogging effort five years later. I have also renumbered the footnotes and eliminated several for the sake of simplicity and relevance.
In case you missed it, Federal Reserve Chairman Ben Bernanke was on Capitol Hill this morning making his case in regards to the Bank of America – Merrill Lynch deal. The Chairman stated in unequivocal terms that he did not pressure anyone. Rather, he stated that he cautioned Ken Lewis about the prudence of invoking a MAC clause and doubted whether Lewis could be successful in extracting himself from the deal (I agree that the MAC clause was not going to help BofA).
Whether Bernanke is justified in his defense is irrelevant at this juncture. What is relevant, however, is that the Bank of America – Merrill Lynch deal has become a central episode for political recriminations and posturing. As I said two weeks ago:
My take here is that the Bank of America case has become very political – and that means the blame game is going to be played. Someone — Bernanke, Lewis, Thain or Paulson — is going to take the fall. The knives are out.
Indeed, the knives are out and it is looking increasingly likely that Bernanke will be the scapegoat. Below is a Bloomberg News video with Rep. Edolphus Towns (D-NY), Chairman of the House Oversight Committee. If you listen to what Towns is saying, it does not look very good for Ben Bernanke.
Here’s a conspiracy theory for you. As I am not much of a conspiracy theorist, I ill keep this one pretty simple. Here’s the chain of events.
Back in late September when the world was falling apart, Ben Bernanke, Tim Geithner and Hank Paulson were all desperate to keep things from unravelling. As a result, they were pleased that Ken Lewis and Bank of America were willing to pony up massive $44 billion to take over Merrill Lynch. They might even have encouraged the deal (i.e. we will smooth the way. There will be no FTC hurdles. We will soft peddle investigation into Countrywide mortgage fraud, etc)
The problem, of course, was that Merrill Lynch was a bottomless pit of…
By Brendan Byrne. Originally published at ValueWalk.
Tensions between India and Pakistan continue to rise, with the war of words rumbling on between the two nuclear-armed neighbors.
Two Pakistani soldiers lost their lives in an episode of cross-border firing in Kashmir on Thursday, action which India claims were “surgical strikes.” However Pakistan has since “completely rejected” India’s claims, according to Reuters.
Image source: Wikimedia CommonsSurgical strike claims rejected by ...
Two days ago we noted that as we approached the quarter end's window dressing, when the financial system's balance sheet most closely approaches what it would be like without Fed backstops if only for regulatory purposes, General Collateral - a closely followed indicator of dollar funding costs and thus of cash availability - spiked to the highest in 7 years, surging to 0.85% after opening the day at 0.68%.
We expected this number to keep rising as we neared the Sept 30 qua...
Below looks at Commodities ETF DBC over the past decade. Since the highs in 2008, DBC has been a great asset to avoid. Is it time to start paying attention and potentially own this hard hit ETF? Check out the rare price situation below in DBC.
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The CRB (Commodities Index) has been down 5-years in a row, this has never happened in the history of commoditi...
In early 2009, the seven largest publicly traded college operators were worth a combined $51 billion. Today, they’ve been all but wiped out.
When Barack Obama took office, America’s seven largest publicly traded college operators were worth a combined $51 billion, with more than 815,000 students enrolled at campuses spread across the country. The schools were flooded with with people seeking shelter from the recession, returning to school to pick up new skills.
Almost eight years later, the industry has been decimated. The seven largest listed operators are worth just over $6 billion, and the most valuable co...
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I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.
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Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer. One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."
Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.
Genetic components are the DNA sequences that are 'inherited.' Some of these genes are stronger than others in their expression (e.g., eye color). Yet, some genes turn on or off due to external factors (environmental), and it is und...
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