2007 Predictions

Email Print posted by Cenk 01/01/2007 11:56:08 PM EST

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These will be my first ever annual predictions. It's dangerous to put your predictions down on paper because then anyone can look back and see exactly how wrong you were. But I'm just that bold.

Best prediction from last year: Predicting Zarqawi's death a month before it happened.

Here are 2007's predictions:

1.    Iraq Will Get Worse

This might sound like the most mundane and obvious prediction of all time. But I mean it will be a whole new level of worse. Everyone expects it to get gradually worse (except for the retards who still think Bush is going to figure out a way to make it better). I think Iraq will take a precipitous downward turn at some point in 2007.

Most people will be surprised at the speed at which it devolves. We are going to have to take some sort of drastic action when it gets this bad, like leaving right away. The facts on the ground will change our course no matter what silly plan Bush lays out in the beginning of the year. We are going to lose control over what happens in Iraq and we will have to react accordingly.

2.    The US Economy Will Take a Big Hit

To my knowledge, almost no one else in the mainstream press is predicting this. I've been saying the US economy is going to turn down in 2007 for about three years now, so now that 2007 is finally here, I am going to stick to my guns.

The reason no one else is on board for this prediction is because there doesn't seem to be an iceberg on the horizon. But I think there is. In fact, I think there are two.

One is the foreign policy mess we have created. Iraq could get much worse. If we attack Iran, that in itself will easily do it. And there are about eighteen other factors that can push the price of oil up significantly and cause a major ripple in the world economy.

Secondly, our deficits are untenable. There will be a day of reckoning. That's a guarantee. The question is will it happen in 2007? I am not positive about that obviously, but I think so.

If the economy gets hit with some other major blow (Iraq blows up, a major natural disaster, oil prices skyrocket), then that will trigger a cycle of doubt and concern. The dollar is already on its way down (I know I'm annoying, but I also predicted that earlier), some of our creditors have already started to take a look at their investment in us and once you introduce another cause of concern for the US economy, you can begin to have a downward cycle.

We simply have too much debt. And how many George Bush disasters can we go through before the rest of the world begins to wonder if we are as stable as everyone assumes? The minute the world wonders if the US is really credit worthy is the minute we're in a lot of trouble.

3.    The Young Turks Are Going to Blow Up

I mean this in a positive way, not in the Iraq sense of the word. I have never predicted this before, but I think this is the year. I think we will become factors on a national level. We will make several breakthrough deals and step up to another level of fame and notoriety.

Whether this is a good thing we will have to see. I do believe in the saying, "be careful what you wish for." Or as Dave Koller loved to say, "There are two great tragedies in life. One is not getting what you want. The other is getting it."

Those were the days before tragedies like Iraq, George W. Bush and Dick Cheney. So, that's why there were only two at the time.  

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2007 Predictions | 52 comments (52 topical, 0 hidden)
easy predictions (none / 0)
iraq gets worse by the day...

and the obvious depression on the horizon is just what the republicans want , and have been working for

 they dont want it to be fixed by the democratic party,
 it will help republi cans get elected again..

they've been saving and hording money via tax cuts for the wealthy... so their friends and the wealthy will be covered...none of the wealthy will be jumping out of a window to their deaths over the depression this time

when doesnt the young turks blow up? <grin>

by mattinohio on 01/02/2007 06:05:23 AM EST

Predictions - 2007 (none / 0)

Yes, Iraq will get worse, because Bush is genetically incapable of fixing it. And despite desperately needing it, he won't be impeached.

I don't think a depression is likely, although a small recession wouldn't surprise me.  There are too many props and beams in the system now holding the American economy up as the world's engine. Too many economies and wealthy individuals depend on a stable US economy to allow it to sputter for long. (Think China, India, Saudi Arabia, and Rupert Murdock.) That said, HOWEVER, there are more and more macroeconomic pressures building up in the world economy that will eventually lead to a massive worldwide correction. The developed world is now borrowing about $1 Trillion a year from the developing world. (Think for a moment about how SICK that is.) $800 Billion of that borrowing, each year, is being done by the US economy. The Chinese yuan is seriously undervalued now. The US dollar is starting to be significantly overvalued. There will be more cracks in the global economic damn next year, but the screwy system will continue to hold together through 2007, IMHO.

The Young Turks have great potential to grow in 2007, despite whatever happens to Air America Radio. It's one of only two or three progressive shows that are genuinely entertaining, even aside from my agreement with the politics. (But to be even-handed, I'd say that only about one or two conservative shows are actually entertaining . . . I think it must be hard to do a political talk show and make it entertaining . . .good job, Young Turks.)

Other predictions for 2007:

Comcast will buy TIVO.

The Republicans will drum up some made-up controversy about Nancy Pelosi and, within minutes of it appearing on Fox News, demand that she resign. (A no-brainer, I know) She won't.

Al Gore *will* decide to run for the 2008 presidency.

Microsoft's Vista will only be adopted by about 20% of corporate America. Macintosh market share in the US will reach 10% by years' end. Linux will reach 20% of global corporate installations by years' end. 

42" LCD HD TVs will be available next Christmas for under $800. 

Rachel Maddow will be given a daily show on either MSNBC or CNN.

Glenn Beck will say something horrific and end up losing his CNN Headline News show.

The final Harry Potter book will be out by years' end ("Harry Potter and the Deathly Hallows") and it will sell a staggering 9 million copies in the first week.

Sony will go through a massive restructuring and will abandon the Playstation 3 in the North American market.

Dick Cheney will be impeached.

General Musharraf of Pakistan will be deposed in a coup. 

Both Bill Gates and Steve Balmer will leave Microsoft.

Pixar will have its first flop.

The new fault-lines in the digital home will morph into a fight between a Google-Apple-Skype alliance, and a Microsoft-Yahoo-Vonage alliance. 

Ohio State 28, Florida 17. 

by Tergenev on 01/03/2007 10:12:32 AM EST

[ Parent ]
worst...movie...ever- longest...sentence...ever (none / 0)
I'm sure I'll once again be roundly ridiculed and denounced and derided for my prediliction for predictions, very nearly an addiction, but with one more addition to this submission, a solicitation in this invitation to be amused as you peruse:

oil will drop below $55 per barrel, the us will invade Iran after a border skirmish after we attack the Mahdi army after we redeploy and add 20,000 troops to Iraq, China will not produce the $1000 car for the US market, as they are already deciding to produce the Cherry with Chrysler, but they still have the ability to do it, and if the cherry is a success, doubt it but if it is, look for the $1000 to $5000 car in 2008, the Dow will stay above 12,000 for another year, but Ford's restructuring will hurt middle America enough to cause the split in the US economy between rich and poor to become permanent, and the poorer will get poorer while the rich maintain, Nancy Pelosi will continue to have tea and crumpets with the Bushies and talk about interior decorating with Laura while fantasizing about ripping down the wallpaper after an impeachment of both Georgy and Dicky but will do nothing to the affect, the housing market will not rebound, the fed after stalling will have to raise rates again to avoid inflation, the Chinese will not float the yuan or peg it to the dollar, the dollar will not magically skyrocket and our debt will continue growing, but the democratic congress will put checks on the rate at which our debt caused by debt keeps growing (currently it is 10 to 20 percent of the budget, real debt is over 60 percent of the non-defense budget and 30 to 40 percent of the total budget) the democrats will roundly agree to stop paying for the Iraq war, costing between 2 and 3 billion a week, but will be undone by rhetoric which places Iraq as a front in the war on terror and will be forced to continue skyrocketing defense budgets, currently close to 500 billion for the pentagon, in the name of the war on terror, the Young Turks will not blow up the spot and have everyone on lockdown but will be sidelined by a vehement and viral attack of republicans and conservatives enraged at the midterms posting on these boards under pseudonyms like KENTX and BYTCH BANG, Comcast will not buy Tivo because Tivo is a competitor but not a big enough competitor in enough of its markets to cause them to panic though it might be a good idea in the long run, Tivo will continue to expand into new services and continue alliances with companies like Yahoo, CNET and  Open Source GPL software, AL gore will not decide to run in 2008 but will be gracious, apple's measly 5 percent stake will shrink while Chinese IBM Lenovo or legend will continue to grow, eclipsing hp and gateway for a larger share of the market, Linux while it will continue to grow will be off the charts in the sense that the only reliable data will come from places like big champagne or Forrester research, the final harry potter script will have harry vs the Santa clause wizard dude who runs the school, harry will kill him with magic but before he dies he'll explain everything and he will die in Harry's arms with harry crying and him telling him he has to keep up the fight and teach new wizards and blah blah blah...

by tiggerporn on 01/03/2007 08:28:42 PM EST

[ Parent ]
Dude... (none / 0)
look into the latest fad called paragraphs.

by loner on 01/04/2007 12:56:02 AM EST

[ Parent ]
Re: 2007 Predictions (none / 0)

1.  Iraq's a Slam Dunk with an imbecile in charge of "stragedy" looking for "nuculer weapons."

2.  I'm from Michigan.  The automotive economy's already been destroyed by the earlier Republican governor who spent the state's "rainy day fund" intended to help cover economic ills on tax reductions, allowed the infrastructure to crumble by not spending what taxes were available properly, failed at making the state an IT leader to convert the economy from automotive dependency, and then moved to Pennsylvania for a job.  Bush's policy of more for oil, less for (small) business, "guest workers," and borrowing like a .. er .. democrat only means more will move to Texas before his "economic stragedy" hits them.

3.  The Young Turks have already become my "must listen" destination.  I trust you'll remain on focus in the event the Dems (who I favor) start to lose their way as they assume power.   We need no more media apologists, but a media whose role is to tell the people "what it means to me" as leaders move through their politics to remain leaders.

Take care,

 

jim 

 

jim http://jimsthoughtsonthings .blogspot.com/

by jimcarravallah on 01/02/2007 09:09:33 AM EST

reason (none / 0)

Is there any reason to believe a economic downturn is coming?

As for debt- we had 10 trillion in debt last year and we'll add to that a little this year, but it's not going to be anything drastic in the scheme of things. You could cite debt every year for the last 50 years as a reason for a impending recession but it wouldn't have forcasted anything at all.

 Are their any econimist who are saying a recession is on the loom or is this doom and gloom lib wishes to spite Bush just as they libs hope the terrorists defeat us in Iraq?

by acroso on 01/02/2007 01:47:01 PM EST

Marketimer (none / 0)
"Is there any reason to believe a economic downturn is coming?"

Not until Bob Brinker says so. The guy called the peak in 2000, and he called the bottom in March 2003.

I get into the pool and out of the pool whenever Lifeguard Bob blows the whistle.

by KenTX on 01/02/2007 02:56:55 PM EST

[ Parent ]
Uh... (none / 0)

 Wasn't there a surplus about 5 and a half years ago? Oh, we'll just add a teeny bit to this 10 trillion dollar deficit that just popped up out of nowhere!! Last time I checked my wallet's not as fat as when the Dems ran the White House....

by mike9766 on 01/02/2007 07:59:17 PM EST

[ Parent ]
$8,598,904,769,798.58 (none / 0)
There is a difference between the national debt and the federal budget deficit. The budget deficit is a one year dealy, where as the national debt is cumulative and grows as the years go by unless we pay it down. The problem is you have to have a surplus in your yearly budget in order to even begin to think about paying it down. But there are those supply siders who feel once you have a surplus you should share the wealth and cut taxes and thus help to grow the economy out of the debt. The other problem is that a larger and larger percentage of our budget now goes to pay interest on our debt. Considering the way the military portion of the budget is growing, there are those who reasonably forecast a day when our entire gov't budget is devoted to defense spending and paying down debt with little room for other social services beyond paying federal workers. The problem with the trickle down theory of cutting taxes to grow your way out of debt isn't that cutting taxes isn't a good thing and it isn't that cutting taxes doesn't help to pump more money into the economy and even perhaps forestall inevitable downturns, the problem is that our debt is now so huge that the interest alone on it is starting to become staggering. The other problems is that you can't predict national natural disasters like Katrina, or in a sense can't predict tragedies like the Iraq war or the war on terror, unless of course you were the one planning them. The tax cuts worked in the sense that they helped the economy, relative to those two unpredictable events, however they were ballooned and sunset which not enough people talk about.

Ballooning them meant that the average joe gets a larger cut the first few years, but the super wealthy get the huge benefit towards the end, exponentially so, by 2010. But when they were created we did indeed have a budget surplus, and they were put into effect with the belief our surplus would grow each year as they helped the economy to grow, they would produce more revenue and larger tax returns. Like I said, if you take into account Katrina and Iraq, to some extent they have worked in that sense, but they haven't produced an economy which can grow itself out of debt, haven't answered the problem of the national debt or done anything about our budget deficits. Every year our budget deficits grow, the national debt gets even larger. The national debt is $8,598,904,769,798.58 as of January 2007.  The conservatives are no longer conservative, but let's say the republican party really is the party of responsible, conservative financial thinkers, you can't tell me they aren't just as shocked by the sheer magnitude of that number. The problem is worldly people involved with business know you can run well with debt and feel since you can make better money with investment, it is a good thing to have a certain amount of debt. But they lack both common sense and any real appreciation of Keynesian economics.

But yes in the sense that the ax is going to fall tomorrow, no, I'm not sure I buy that argument either, since expressed as a percentage of GDP in real terms it is relative to our current rate of growth in the world market and we've still got a growing economy even with downturns in several key sectors. We're moving out of a manufacturing economy and a service economy to the information age and more and more jobs will be outsourced. The big three are restructuring but the vertical integration is going to hammer the union man in the short run, as if it already hasn't. If they become profitable again and successful and that is a big if, the parts suppliers will have to be more competitive.

Google is the hallmark of the new information age and economy, proof that the information age isn't just some high fallootin' theory and can be successful and make other businesses more efficient. Another problem is that wars traditionally have boosted the US economy, World War II the standard bearer, but that isn't the current case and probably won't ever be again unless there is some sort of future cyber war 100 years from now with robots. On the ground in Iraq right now the war is costing big dollars and a war with Iran, after the initial giddy air strikes and HDTV fox broadcasts will only add to the current state of affairs. For those, like Grover Norquist  who believe that small gov't is good gov't and the federal gov't should only be involved in defense and tax collecting and little else, this is a sublime situation so bad that it causes congress to make tough choices on cutting any other program that doesn't fit into that narrow and tiny mold, and thus is actually a good thing.

So in the end, is compassionate conservatism, a nice little spin that won two elections really just another oxymoron like military intelligence?

by tiggerporn on 01/03/2007 07:58:01 PM EST

[ Parent ]
The state of Keynesian economics (none / 0)

I think you somehow associate Keynesian economics with liberalism so you invest your beliefs in it somehow even though you're not even sure what Keynesian economics is? 

 

Monetary 

Keynesian economics is not some cure all. Remember the 70s where they predicted we could never have both inflation and high unemployment- well we did. After that the Fed threw out Keynesian economics permanently, Paul Volcker the liberal appointed by Carter, Greenspan the Ayn Rand fundamentalist, and Bem Bernake Bush's new guy have all been inflation hawks. Hence of the death of Keynesian economics has been permanent in terms of monetary policy.

 

Fiscal 

In terms of fiscal policy, demand side economics it's still highly effective for offsetting aggregate demand shifts\shocks in the short term. This includes government spending that is temporary or tax cuts if given to those who will not use the money for savings and investment but instead for immediate spending.

So that's the state of Keynesians economics in the now. Not sure what you are worshiping about it?

 

by acroso on 01/04/2007 06:17:34 AM EST

[ Parent ]
Heads or Tails?!? (none / 0)
Your argument is based upon the flawed idea that it is the gov't's role to predict economic markets and to raise or lower the prime rate in accordance, and that the only fiscal policy of the gov't proper comes from the executive in terms of tax cuts and should be enacted by his party in congress, or not enacted based upon their voting record. It completely ignores the role of a strong gov't in terms of being proactive with work programs, social security and progressive, responsible, transparent oversight and accountability to counteract forces in free markets. Yours is a Hooveresque laissez-faire argument to begin with. You might as well flip a coin to decide which way the rate at which banks lend to banks overnight goes, up or down a quarter point. Furthermore, with the national debt at 10 trillion and personal savings nearly vanished for the majority of Americans, regardless of an average with the super rich included, how long will your consumer spending hold up if the housing market and the equity it produces crashes? It was going off the gold standard that allowed for high inflation and high unemployment, something Keynes could not have commented on because he was dead at that point.

Can I ask you a question? How do you feel about Social Security reform? Have you read President Bush's proposal on the subject? Do you honestly think you can toss billions into the market without any adverse effect? Do you realize that Social Security, for all its flaws, was designed by those with a Keynesian economic view of the world, and they particularly created it to be firewalled from the rest of gov't control so that it is the one program that has a surplus and is not borrowing money, regardless of future projections. Furthermore, in 1983, Congress enacted special legislation in order to invest that surplus in federal bonds in order to pay down the national debt. George W. Bush is a supply side trickle down voodoo economist just like pappy Herb was regardless of our current bubble economy. I'm rooting for the Bears this year.

Please do not assume that I am either ignorant of Keynes or that I worship him, why do you red state blue state duality freaks insist on seeing everything in these clear cut black and white terms? I merely stated that most people are ignorant of him, which you did not answer but merely assumed I needed a refresher in eco101. Since you did not answer the point you chose to refute me on, I still believe most people are ignorant of him, though I won't make the mistake that you did in assuming, and I won't lecture to you. However, the overall point of my argument was that we have to pay the piper at some point for our national debt, which was echoing Mike's point, which I commented on, and echoing Cenk's original prediction that this would be the year it happened. All of which you completely ignored. Sweet.

by tiggerporn on 01/04/2007 02:45:41 PM EST

[ Parent ]
Keynesian (none / 0)

Keynesian economics has little to nothing to do social security or Debt. You're on a wild tangent there.

Look Keynesian economics is good for correcting shocks to aggragate demand as I said before. Yet somehow you warped my statements into "Hooveresque." Advocating Keynesian corrections for demand side shocks is about as un-Hoover as one can be.

by acroso on 01/04/2007 03:55:27 PM EST

[ Parent ]
Keynes and the 70s (none / 0)

You stated a few posts ago something to the effect that Keynesian economics was disproven in the 70s because Keynesians believe high unemployment and inflation to be mutually exclusive.  There are two things wrong with this.  Neither Keynes nor any other importan Keynesian said this.  Keynesians argue the two are interelated and the rise in one depresses the other but no real economist would ever say the statement you put out there.

The other problem is that the inflation of the 70s was caused by what economists call a supply shock which is the decrease in the supply of a commodity so important to the economy it affects the price of many other goods.  Of course this was oil in the 70s.  The inflation of the 70s was due to rapidly and uncontrollably rising oil costs.  The unemployment in America was actually tempering this inflation (inflation would have been worse without the unemployment).  

The presence of both was due to the severity of the supply shock which was so great the unemployment did not effectively bring it down.  This does not violate any Keynesian theories because the inflation was caused by a phenomenon outside the system (the U.S. economy) and therefore did not fall under the "rules" of the system itself.  

by ProfRich on 01/04/2007 04:35:11 PM EST

[ Parent ]
professor... (none / 0)

"Keynesians argue the two are interrelated and the rise in one depresses the other but no real economist would ever say the statement you put out there."

 Well, Keynesians argued that the you could not have both at the same time. This certainly is true in the short term. Inflation goes up, employment goes down. Employment goes up, inflation goes down.

 This was short sided thinking as Monetary policy as  Volker, Greenspan, and Bernake have successfully shown to be the case. What has been shown is that in the long term- once inelastic markets are overcome, there is no link at all between the two. You can use this gimic as a short term fix, but in the long term (1-4 years or so), you'll have gotten yourself into an even worse situation. AKA stagflation.

How did we fight stagflation? Carter kicked the bums out and put in Volcker. Volcker raised interests rates and slowed down the economy drastically in a time when the economy already stunk costing Carter his presidency without a doubt. After inflation was brought under control the economy was back on track. Unfortunately for Carter, the economy didn't get back on all cylinders until Reagan was in office.


 

 

by acroso on 01/05/2007 12:16:32 AM EST

[ Parent ]
I disagree (none / 0)

What I meant by no Keynesian of note would ever say it is impossible to have inflation and unemployment at the same time is this. (A) Respectable theoriticians don't use words like never and (B) in macroeconomics talking about the impact of a policy is done in the context of all other variables staying the same.  In the 70s a great big variable (oil prices) did not stay the same thus invalidating overly simplified, politically motivated analysis like yours that Volker and Carter simply screwed up and caused stagflation.

Of course you compound this with the equally ill-informed assertion that Reagan came along and fixed everything.  The 80s economy sucked.  Signs of prosperity were an illusion and can be directly attributed to borrowing money which can give the illusion of a growing economy.

In the 80s America was the equilavent of a 20 something douchebag making 30Gs a year, spending a hundred and putting the difference on credit cards. He thinks he is doing great.   Until he gets the bill. 

by ProfRich on 01/05/2007 01:21:25 AM EST

[ Parent ]
professor (none / 0)

by acroso on 01/05/2007 03:54:09 AM EST

[ Parent ]
professor (none / 0)

by acroso on 01/05/2007 04:00:15 AM EST

[ Parent ]
professor1 (none / 0)
No, Volcker solved stagflation not caused it....mr. I have no idea what I'm talking about. You obviously like the word Keynesian without actually knowing what it means.

by acroso on 01/05/2007 04:01:54 AM EST

[ Parent ]
Wow, nice non-rebuttal (none / 0)

I put the wrong fed chairman in the wrong place.  I suppose that does invalidate my entire thesis and arguments that you have utterly fail to address.

Nice work, sir!

by ProfRich on 01/05/2007 10:43:59 AM EST

[ Parent ]
Which Fed Chairman did you mean? (none / 0)

I'm not sure what your rebuttel is except that you don't have one, and do you have the slightest clue about the subject matter you are debating.

Btw- which Fed Chairman did you mean to talk about during the Carter Administration?

 And is there really any debate at all that inflation and employment aren't linked in the long term. This is what the total rebuttel of Keynesian Fed policy has been all about since Carter got the ball rolling with Volcker.

by acroso on 01/05/2007 02:35:48 PM EST

[ Parent ]
Very simple now (none / 0)

1) I do not care what any or all of Carter's Fed Chairmen were named.  It is irrelevant.  I do not believe any of them caused stagflation so who cares.

2) My rebuttal is this.  Stagflation was caused by a supply shock outside the U.S. economic system.  I swear I mentioned that briefly somewhere back there.  This supply shock (sudden and uncontrolled spike in oil prices) caused the inflation.  This in no way contradicts Keynesian theory.

Conservatives, in their classic simpleminded manner heard the complex argument that in a closed system with all other variables held constant unemployment and inflation tend to go up as the other goes down.  They both went up once and conservatives ignored the actual theory (discarding the key precepts "closed system" and "all other variables kept constant") and declared victory.

This is very similar to how you disregard my argument entirely (in fact pretending it does not even exist) and declare victory cause I used the wrong guy's name. 

by ProfRich on 01/05/2007 03:06:28 PM EST

[ Parent ]
what you said (none / 1)

by acroso on 01/05/2007 07:55:04 PM EST

[ Parent ]
professor (none / 1)

by acroso on 01/05/2007 08:06:48 PM EST

[ Parent ]
mac (none / 0)

My mac can't post on this site.

As for stagflation. Well the inflation was certainly caused by outside forces- oil prices. Stagflation was caused by a poor Fed response. Keynesians thought stagflation to be theoretically impossible. Faced with creeping inflation and high unemployment- they chose to cut interest rates. The Volcker, Greenspan, Bernake crowd would choose to raise interests rates at the first site of inflation regardless of the slow down in growth that action causes- and since we've had the inflation hawks in power at the fed we really haven't had inflation.

Cutting interest rates only caused more inflation, and left the Keynesians not knowing what to do and looking like chickens with their heads caught off.

This is why Carter had to fire them and put Volcker in who reined in. Of course by the time Volcker was in charge inflation was completely out of control, and raising interests rates always causes a slow down in growth, which led to even stronger stagflation while the economy was reining in on inflation. Super high interest rates to fight the super high inflation that was allowed to get out of control, and the very slow growth because of the very high interests rates- this is why I think Volcker probably cost Carter his reelection.

by acroso on 01/06/2007 06:09:58 PM EST

[ Parent ]
Need help with a term (none / 0)

Back in college I took quite a few economic classes and in every single one the teacher would always preface virtually every thing with a phrase that meant "assuming every else remains the same."  It was omnipresent , every theory or law or explanation in the book began with this phrase and I can't remember it for the life of me!  Anyone know what I am talking about?

Anyway, Arco, I don't really care about the Fed Chairman and I have no interest in arguing when and how and with who Carter screwed up.  We can all agree he mishandled some things as president (at least for now, enjoy it cause one day he will be a dead president and therefore perfect. :-)  )   

This seems to be your tactic, you find something you want to argue about (meaning something you think you can win) then you completely ignore what the other guy says and just keep talking about your point no matter how little the other guy cares.

Here is my last word on this.  Keynesian economics was not proven wrong by stagflation because: 1) Keynesians did not say stagflation was impossible (no reasonable theorist would make a statement with such force and so little qualifiers.)  They said it would not happen in a closed system if all the other variables remained the same.  Our economy is neither a closed system or one where the variables all stand still so conservatives can deny progress and revert us to the brilliant economic policies of Coolidge and Hoover.

2) Stagflation makes perfect sense in the context of the big picture according to a Keynesian.  It is the expected outcome when  a massive supply shock meets the Fed policies of the Carter administration.

I am done with this thread. 

by ProfRich on 01/07/2007 01:00:04 AM EST

[ Parent ]
the new kid is a lot of fun (none / 0)
"Back in college I took quite a few economic classes and in every single one the teacher would always preface virtually every thing with a phrase that meant "assuming every else remains the same."  It was omnipresent , every theory or law or explanation in the book began with this phrase and I can't remember it for the life of me!  Anyone know what I am talking about?"

I believe the term you are looking for is "static-line model".

If that's not correct, twba will know the answer. I don't think you've crossed swords with him on the subject of economics. This is gonna be funny as a John Murthafukker!

"I am done with this thread." 

I've noticed you say this everytime you start getting your ass kicked. Well, I'm not done with you. 

Guys like you always run away from the forum after taking a few beatings. Do me a favor, and please don't leave. I'm having as much fun as a cat has when he shakes a rat. 
 

by KenTX on 01/07/2007 02:49:40 AM EST

[ Parent ]
That is not the term (none / 0)

And when I say I am done it is because I don't find arguing for arguments sake to be that enjoyable of a hobby.  I understand that in your mind every conversation must have a winner and loser but that is not really how my mind works (That is what sports and video games are for.)  If you would like to see how normal people function take a look at the last posts on the founding father's religion thread after you stopped posting there.

I know what I know and I know what I don't care about and convincing you I have won some contest that exists only in your head is definitely something I don't care about. 

by ProfRich on 01/07/2007 03:24:37 AM EST

[ Parent ]
professor (none / 0)
You're done with this thread because you have no idea about the subject matter you're attempting to debate.

by acroso on 01/07/2007 05:04:04 AM EST

[ Parent ]
Carter (none / 0)

Also- you're not reading my posts correctly. Carter handled Stagflation perfectly- by firing the Keynesians and RAISING interests rates....and it costs him his presidency by doing so.

by acroso on 01/07/2007 05:07:58 AM EST

[ Parent ]
I am reading them fine (none / 0)
I just don't care about how Carter handled stagflation, I am just pointing out stagflation did not disporve Keynes.

by ProfRich on 01/07/2007 12:06:05 PM EST

[ Parent ]
Keynesians (none / 0)

Keynesian montary economics CAUSED stagflation. Cutting interests rates was the wrong response.

by acroso on 01/07/2007 01:44:00 PM EST

[ Parent ]
also (none / 0)

I suppose from your obvious support of Keynesian Monetary policy you think the next dem president should kick Bernake out and put in a Keynesian? (that is if you could even find one...they don't really exist anymore but with 6 billion people you probably could find one...)?

by acroso on 01/07/2007 01:56:49 PM EST

[ Parent ]
Why are we still talking about this? (none / 0)

I don't really care who is fed chairman.  First, it is a post that seems to be fine manned by a conservative and second, I do not really think the Fed chairman has the level of omnipotence over the economy that you think he does.  I know republicans really like to imagine a world controlled by massivley powerful individuals and the fed chairman is some Wizard of Oz character but I don't really see it like that.  So this is pretty uninteresting to me.

And as for Keynesians, of course there are no more Keynesian, like everything else, they had to swtich over to the neo versions.  You know, neo-keynesians, neo-classicists, neo-cons, Neo from the Matrix.  I think this was mandated in the 90s when a new version of windows came out or something.

Interestingly, neo-cons have the dubious distinction of being decidedly crappier than the original version. 

by ProfRich on 01/07/2007 11:54:13 PM EST

[ Parent ]
neo-classicists (none / 0)

neo-classicists- ah you mean like Volcker, Greenspan, and Bernake? The people who raise interest rates when faced with inflation?


by acroso on 01/08/2007 07:23:24 AM EST

[ Parent ]
Actually (none / 0)
Rich seems pretty well-informed and intelligent.  Not to mention literate, which is more than I can say for some other people here ::coughacrosocoughcoughTiny Dancer::

by jarett on 01/07/2007 11:20:43 PM EST

[ Parent ]
Now you made me blush (none / 0)
Please allow this to undo some of the damage done to my great home state's reputation by the likes of the Bush and Ken!

by ProfRich on 01/07/2007 11:56:42 PM EST

[ Parent ]
Phrases (none / 0)
Ceteris paribus is the phrase the old economists used, but these days you're more likely to hear "all else being equal" or "holding all else constant."

by Twba on 01/07/2007 10:25:43 AM EST

[ Parent ]
Thnak you! (none / 0)
Ceteris Parabus was it.  I must have heard that a million times in college.  So much so that I never forget (the concept anyway).

by ProfRich on 01/07/2007 12:06:53 PM EST

[ Parent ]
The myth of steady state (none / 0)
"assuming every else remains the same." 

I have to say the biggest problem with traditional  economics (or much of engineering for that matter) is that we're always basing our theories on a completely false assumption.  I'm sure ken and jarret can attest to the number of times when solving an engineering problem they "assumed steady state".  This may be true at times for simple and highly controlled systems, but the real world is a very messy, non-linear, dynamic and complex.  We get into trouble when things start changing that we don't account for in our models or theories.   

by alphasigmookie on 01/09/2007 08:42:54 PM EST

[ Parent ]
A Sad Story to Watch for in 2007 (none / 0)

I don't know how it will affect the Macroeconomy but here is a story that is coming and it is going to be big and painful.  Housing in America is about to become a very serious problem and here is why.

One of the very, very few good things about the Bush years is you could buy a house really cheap.  And at a great interest rate.  And Americans bought houses in record numbers at 4-6%.  Due to the low rates people who were on thier way to a life of renting could buy an entry level home, entry level homeowners bought nicer, bigger homes and so on and so forth.  Everyone was able to buy a lot more house than they could traditionally afford.  It was nice.  Of course when people buy a house, assuming they are approved for the loan what is the key and sometimes only question they ask?  

Can we make the payment.  Well at 4 or 5% the answer was almost always YES!  And they could even work the payment down with and ARM. And that is how most homes have been bought over the last few years.  4-6% on a 2-28 or 5-25 ARM and no one can believe how cheap thier payment is.

But pretty soon those ARMs are gonna cut loose and go to market rate and it will happen from a single month to the next and now your "I can't believe how cheap this is house" will go up.  A lot!  Do you know what the difference is between 4% and a 8% (which is still a pretty low rate)? 53% increase in a payment.  Could you make your rent or house payment if it went up 53%?  Add $530 for every thousand you pay now and slide that number into your budget?

When I got my first house earlier this year I was in the 4-6% range. I told my parents and people of their generation and they laughed.  Without exception their first loans were between 12% and 18%. For the record, 12% is an increase of 115% in payment over 4. (More than double!!)  18 is 215% (more than triple!!!).

I don't know where the interest will go, but it will damn sure go up and a lot of people are gonna wake up one day and find that ARM ran out and they are back to renting.  Traditionally when you do an ARM you refi before the ARM ends but if the market rate is 3-6 points higher than when you bought you are now refinancing to a HIGHER payment which creates the same problem.

I bought on a fixed rate (although the mortgage companies seemed to think was a silly thing to do).  But I will still be hurt because when everyone tries to sell their house or gets foreclosed on the value of houses will collapse and consequently the value of mine will as well.  The most hurt will be those people who get foreclosed and evicted obviously but lets not forget those people who have to sell thier house for less than the outstanding loan and end up without a house and still owing money on the house.  Ouch.

So that is my prediction for 2007.  

by ProfRich on 01/04/2007 05:01:59 PM EST

Not as pessimistic (none / 0)
I had the exact same feeling through most of last year.  However home loan rates are still comfortably under 6% for 30 year loans.  This was very supprising to me as I was expecting the exact same rise in mortgage rates.  In essence those who bought more than they could handle have been given a bit of a reprieve and a chance to re-fi with still low rates. 

Looking into it a bit more i think what has happened is that mortgage rates are tied to long term bond rates like the 10 year treasury bond.  Normaly when the fed raises rates bond rates increase as well.  This hasn't happend.  In my opinion it is because our huge debt has lead to a very large demand for stable US investments from foreigners holding our debt.  This has increased demand for bonds which increases price and decreases rates. 

Unfortunatly this is only going to slow down the bursting of the housing bubble.  There will still be those who's house value has dropped below their equity and they cannot re-finance.  There will also be those that just flat can't pay because they were given a loan they couldn't really afford due to lax lending standards.  These things along with flippers and second home buyers getting out of the market will definitly significantly increase the supply of houses.  Add to that the reluctance of investors and buyers to get in the market right now and prices are definitly headed lower in most of the country.

The balancing act will be whether or not the recession in the housing sector will effect the economy enough to significantly increase unemployment.  Any significant increase in unemployment will lead to an increase in forclosures and worsen the housing situation putting more pressure on the economy in a negative feed-back loop.  Other catalysts that could start this cycle could be sustained increases in energy prices (above $75 a barrel or so), increases in credit card interest rates, or a significant rise in mortgage rates.  If none of these things happen we may, just by the skin of our teeth get the "soft landing" in housing that the talking heads are predicting.

by alphasigmookie on 01/04/2007 08:56:00 PM EST

[ Parent ]
Thanks (none / 0)

Sounds like you understand this more than I do and I am glad it might not be as dire as I think it will be.  I still think the displacement of families will be a story, the question is how big a story.

Also, I have heard a lot that our level of debt will lead to an increase in interest rates.  Since the debt is only getting worse won't that eventually wreck the rate?  That is assuming the adults can't fix it in time now that they have taken back Congress. 

by ProfRich on 01/04/2007 10:06:58 PM EST

[ Parent ]
Still could be bad (none / 0)
Oh it still very likely won't be pleasant.  The economy and realestate dodged a couple of bullets this year when energy prices stabalized towards the end of the year and mortgage rates stayed low.  It will take some more matrix style bullet dodging in 2007 if we are going to get through without at least a mild recession.  I guess i'm just trying not to underestimate the bullet dodging ability of our economy. 

As for debt causing an increase in rates i'm not so sure.  I'm starting to notice an interesting dynamic that seems to be causing some non-intuitive results.  Consumers buy products from japan and china on credit either by taking out home equity loans or credit cards.  This results in a large trade deficit.  This leads to americans with tight budgets and a bunch of worthless crap and Chinese and Japanese with a bunch of dollars. 

On the other side we have the government which is running up debt with the war in Iraq.  To pay for this war they issue treasury bonds, which increases the supply of bonds, theoretically raising rates.  Most of the chinese and japanese don't really want to trade their dollars for other currency, partially because that would lower the value of the other dollars they hold and partially because most other currencies are paying even lower interest rates than the US so instead they buy US treasury bonds increasing demand.  Since the trade deficit (~$800 billion) is larger than the federal deficit (~$300 billion) this puts some upward pressure on the price of bonds and downward pressure on the interest rate. 

I think this is exactly the type of cycle that helped fuel the housing bubble in the first place.  Lower mortgage rates lead to increased buying, which raised prices, which allowed consumers to borrow and spend, which fueled the trade deficit, and increased demand for bonds, lowering rates further.  How this cycle ends however i'm not sure.  There seem to be a few possibilities.  One is that consumers will start to realize they are getting in over their heads and start to pay down debt and cut spending.  This will slow the economy and shrink the trade deficit.  This will decrease foreign demand for bonds and potentially increase mortgage rates. 

Another possibility is that foregners will tire of holding so much american debt and start to sell dollars for other currencies or assets.  This will put downward pressure on the dollar increasing the cost of imports and raising rates due to decreased demand.  Another possible cause of this could be that demand becomes so high for US treasuries (because of so many dollars held abroad) that the rate is too low to attract more investors who instead trade sell their dollars.  If other countries increase their own interest rates it could also attract foreign dollars as well.  Any scenario that leads to a fairly rapid decrease in the dollar would also increase inflation because we import so much, especially oil and it would take more dollars to buy these things.  In such a situation we would likely see a recurrance of 70's style stagflation where growth is stunted but inflation his high. 

Who knows though this little debt scheem may be able to continue far longer than any of us would ever deem possible so I'm not willing to bet a significant chunk of change that it will start to unwind in 2007, but i also won't bet the farm that it won't. 

Anyway that's my pulled outta my ass econ lesson for the day.  Hope you all enjoyed. 

[disclosure I am invested mostly in foreign, commodities, and renewable energy stocks (yes ken i put my money where my mouth is) but still hold some US index funds in my 401k]

by alphasigmookie on 01/05/2007 12:00:54 AM EST

[ Parent ]
Retraction and Revision (none / 0)
I'd just like to retract an earlier statement I made disagreeing with Cenk about the Young Turks going over the top this year.

The Young Turks will blow up the spot and have everyone on lockdown in the 2007.

But of COOOUUUUURRSSEEEEEEEE!

How silly of me not to agree. Although I would like to see more revenue streams, perhaps cell phone ring tones of popular young turk sound effects?!? And of course more effective monetization of click throughs and ad space.

But come on, they're in LA, of course they're going to take it to the next level, it is just a matter of time, why not sooner rather than later?

by tiggerporn on 01/05/2007 10:25:11 AM EST

2007 prediction (none / 0)

Just two predictions 

1) There will be an increase in troops somewhere between 10-50 thousand in order to continue to kill the terrorists in Iraq and Afganistan.

2) Democrats will complain because this is contrary to their surrender mentality.

by acroso on 01/07/2007 10:42:20 AM EST

your worries about the economy are valid (none / 0)
for six years we have been told over and over that the economy is strong and healthy.  i think when you look at it closely, you will find its filled with dry rot.  look at your local communities and all the unemployed, the stores that are closed, the bums on the street that will work for food.

on top of that, the runup in the stockmarket has set us up for a big fall, or as they say in the business, a correction.  its ironic how the ultrarich complain about taxes being used to redistribute income when they actively promote the biggest redistribution tool in history, the stockmarket.  remember that the people buying stock right now are getting it from people converting their ownings back to a safer form.

by thbbbt on 01/08/2007 07:41:23 AM EST

3rd prediction (none / 0)
Romney will be the Republican nominee (that might be a 08 prediction but close enough)

by acroso on 01/08/2007 06:53:57 PM EST

4th Prediction (none / 0)
Arcoso will be gang raped by Mexican gypsies on their way to build the trans American highway in order to subvert American sovereignty.

by Marion E Delcalcetin on 01/08/2007 07:29:11 PM EST

[ Parent ]
5th Prediction (none / 0)

Arcoso will discover he ees related to General Pauncho Vila. Suddenly he will embrace his illeagle heritage and demand 5 arces of land and a burro in Sedona.

Me trae a los rasgones!

by Marion E Delcalcetin on 01/09/2007 07:06:58 PM EST

[ Parent ]
6th Prediction (none / 0)
Acroso will volunteer for duty with the Minutemen and be killed while defending the National Guard from a 75 year old Mexican woman in a wheel chair rolling across the border.

by Marion E Delcalcetin on 01/10/2007 08:42:53 PM EST

[ Parent ]
Grandma (none / 0)

What's she coming over for- a social security scam, disability? Medicare? Big government victim that needs dems to maintain victim hood? votes for favor mentality?

 

Without victims or guilt the dems lose.

 

by acroso on 01/10/2007 08:53:36 PM EST

[ Parent ]
Acroso the Victim (none / 0)

Oh no señor she is going to be a guest worker and also get a free continental breakfast as the Hampton Inn...

You know..it seems your friend Señor Bush has done quite well with victims and guilt.. can you say 9-11?

by Marion E Delcalcetin on 01/10/2007 10:17:19 PM EST

[ Parent ]
2007 Predictions | 52 comments (52 topical, 0 hidden)
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