Lately I’ve been seeing a lot of posts prognosticating that 2015 is going to be The Year where everything turns around. Employees are in the driver’s seat! Salaries are going up! The economy is in real recovery!
All from the same troop of jackasses who thought real estate prices could never go down, and that pre crash we were in a post scarcity world where wealth would just pile up endlessly for everyone. Well, I say horse shit.
One, prediction can only be made in broad, qualitative terms. Quantitative predictions are almost always wrong. Two, trends are great, until they reverse, and then they’re not trends anymore. So, here’s my prognostication:
There may be a slight uptick in salaries in 2015. The Fed against all probability has managed to reflate a bit of a bubble, so people might feel richer for it, at least for a while. However, some policies and realities continue regardless of the optimism of a few. For one, monetary policy here and in almost every other country has gone full retard, and the underlying misallocations of capital thanks to near zero, and in reality negative interest loans when you account for devaluation, will eventually have to be exposed and corrected. What that means is the crash of 2008 was chump change compared to what’s coming.
The end of the petro dollar seems inevitable, and without that the US loses some clout in the world. China and Russia will get friendlier, and India will go along with them. And specifically to China, my guess is that’s where the black swan event will occur that will bring on the next depression. You’ve got them being the latest blip on the skyscraper index, and they are literally building entire cities for no one in that country. If ever there was a real Austrian Economics style bubble economy happening, it’s in China, and when that one pops it’s going to take a big chunk of the world with it.
And, to top all that off, monetary and trade policy remains moronic in the US, regulations are piling up, and income inequality is being exacerbated to an extreme, with the levels of expatriation of the rich going through the roof.
In the US we are seeing a blip upwards on what is otherwise a very long path downward, and it won’t be long before capital starts flowing out of the US en masse. I’m with Peter Schiff, eventually this will resolve itself into a currency crisis, and I’m pretty sure most currency crisis lead to military crisis.
So, overall, my guess is it’s not too much longer before World War III gets going in earnest.
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