Thesis: 2009 will be a bad year. It will be worse than the mainstream media predicts, but not as bad as the doomsayers fear. The big story that we’ll be discussing next year is how dire the long term impact of what the government does in 2009 (somewhat similar to 2008).
Other stories will be:
1. Retail bankruptcies
2. Collapse of commercial real estate similar to what we saw in residential this year (many, many defaults).
3. Consumer price inflation in the offing.
4. This one is big: The world will begin to question the ability of the U.S. government to repay it’s debts. The balooning debt coupled with the desire to roll short term bonds due into long term and a lessened desire to fund the U.S. deficit (default risk and dollar devaluation) will lead to a huge leap in long term T Bond yields.
Specific Predictions:
30 Yr T-Bond yield 5% (Today 2.8%)
Inflation (Q4 CPI) 3% (Today 1.1%-Nov)
Yr-Yr GDP growth -6% (2008 1.3%)
30 year mortgage rates 7%
National Unemployment 9% (Today 6.7%)
CA Unemployment 11% (Today 8.4%)
Euro $1.60/Euro (Today 1.40)
Yen 95 Yen/$ (Today 90)
Price of oil $40 (Today $46)
SD House prices down 10% in 2009 (composite Case Schiller)
Sears goes bankrupt
Dow at 8000
