Friday, January 9, 2009

Hazy Predictions

We will be heading steadily down and probably bottom out in 2010. What should happen then is that we should begin to find new footing and start growing again. Will we? I don't know. Obama's stimulus plan is the economic equivalent of a spiritual leader coming out and saying, "let's give Satan a chance." Should we travel down that road, we will be stuck in the crater for a while.

But in any case, even should we begin to climb out of the muck, Wall Street's veiwpoint will continue to be dark, probably lagging behind the recovering economic activity by a few years. 2013 is the earliest for a more optimistic opinion, but again, much depends on the murkiness caused by our wonderful leaders in D.C. Ideally, the very scale of the insanity visited upon us by Bush/Obama will encourage us to radically change the situation in 2012, but the stock market's detachment from our underlying economic activity provides us with a problem. The ridiculous amounts of money created by the government (otherwise known as inflation) tends to flow through financial institutions first, before it gets to us. This means early in the inflationary period it could look like everything is peachy, further delaying revelation, and intensifying the pain when everyone finally realizes how little purchasing power they have left.

I am, among other things, hoping to see a relaxation of regulation against nuclear power, and I would take that as a good indication. The green initiatives reek too much of trying to jam a square peg down a round hole; what's desperately needed is freedom for people to come up with viable solutions rather than dumping a lot of money in the same solar, wind, and fuel cell abyss. The reason I think politicians may let up on nuclear power- they want to commit to stupid levels of carbon emission, but the second the blackouts start happening they will be afraid for their career. So they will grab hold of nuclear power, emphasize the 'new' advances in design, and call it green (which it is).

Or, somebody figures out another solution unknown to me. I've always had a fondness for Heinlein's shipstones, so I wouldn't mind being surprised by a fair equivalent. This is the essential nature of the power business- we want the most power possible in the easiest to use package. The current crop of 'alternative' energy sources go in the opposite direction, providing less usability and less power per square inch than oil, coal, and any other naughty energy sources we aren't supposed to be using.

But I, as one of my geography professors used to say, digress.

Vibrant new energy production (not funded by the government) is a good indicator we at least have the potential to grow. Ideally, at the same time we can ditch the dollar and return to gold, but more likely the governments will just dream up a new fiat currency and insist we use that. Needless to say, the more meddling, the worse it gets, and if the politicians refuse to accept that they are the problem, they will instead blame it on someone else and declare war, perhaps on some nation we owe a lot to, in order to solve the problem a la FDR.

Unfortunately, the scale of this craziness is exponentially larger than FDR's follies. I hope the war, if it comes, won't be exponentially larger than World War II. The war most definitely did not end the great depression, but this notion is lodged firmly into the mind of enough people to cause potential problems down the road.

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