Top predictions for 2008
(I stand behind 2007 without necessitating a review. Please consult Archives to review.)

#1. Commencement of the “Greater Depression”

 Welcome to the “Good-Ole-Days!” As more and more Americans get wiped out by falling real estate, credit card debt, globalization and Federal-Reserve induced inflationary policies, we shall start witnessing a falling standard-of-living not seen since the Crash of 29… Of course, our beloved government planners, cushy bankers and money managers, all basking in their guaranteed one million dollar plus incomes, will tell us this is little more than a ‘rough patch,’ ‘correction’ or ‘terrorist Mideast conspiracy.’ however, for the vanishing Middle Class, this will be of little consolation. Unlike ’29 when few owned homes, cars, gadgets, today’s generations cannot conceive living like much of the world—without roads, oil, water, electric, prepackaged food. As more and more families pack into the family home/farm/commune—out of sheer survival mode, and learn to pool their resources, we shall start seeing the return of the family where each member will learn responsibility, planning and values. This process may take a decade or so to take effect—provided we can escape to such places to avert the rampant crime accompanying poverty.

#2. Default of the Dollar

 Don’t be fooled by the carpings of the Secretary of the Treasury, the Chairman of the Fed, the Prez, for there is no way the US will pay back the debts it owes to the world. This would necessitate either overweening taxation or austerity. No politician ever got elected on these platforms. Until this point in time, the secret for default has been to allow the dollar to lose value, but even in allowing this, deficits soar beyond comprehension. The rest of the world is starting to wake up to this sleight-of-hand trick by realizing that 4% interest of US Treasuries are losing twice the money at 8% depreciation of the dollar. How will the US resolve this dilemma? By one of two ways: printing money, then lying about the ramifications of inflation or by starting war (as most Empires in decline do) and blaming the problems on the enemy. 2007 was the first real wakeup call when international bankers woke up to the fact that “US assets” in the form of SIV’s, CDO’s and derivatives were virtually worthless in their portfolios.

#3. Gold Enters Cycle 2

 Despite all the panic induced by chartists, governments and enemies of gold, gold experienced its greatest gains since the 1970’s. We are now entering the second of four cycles in which we shall take out the old high of 850+ and catch up to worldwide printing machines and inflation-adjusted prices. According to statisticians much more cognizant of the indices than I, gold would need to reach between 1700-2300 dollars per ounce—EXCLUDING all the monetary printing ensuing during that process. How long will this take? It could take between a year to five years because, remember this, world governments/bankers have trillions of dollars to try to manipulate the free markets. $100 dollar trading days in gold may become commonplace, for dishonest governments have nothing to gain from being pegged to gold. Ironically, what will restore the true value of gold and commodities will be the old Communist bloc—stuck with miles of useless paper currencies, best converted into useful commodities. I agree very much with what Jim Rogers has been preaching since 2001: the average commodity bull market lasts 12 years. According to his theory, gold has a good five more years, but watch out: the 3d cycle (probably in the last couple years) will be the most volatile. In this final bull cycle, gold will make its most appreciative gains (1980), then will come a spike in which there will be only sellers and you will be helpless watching your profits evaporate overnight (I’ve been there!).

#4: The End of Capitalism (as we know it)

  No system lasts forever. Regardless of whether the theory is valid, purposeful or corruptive, evolution has a penchant for changing everything. Thus, not unlike Communism which claimed to represent the interests of the Proletariat, Henry Ford’s conception of Capitalism in which workers’ elevation was as important as business profits—Capitalism has done a 180 degree turn in which workers are expendable, accounting devices distort corporate balance sheets and the stockholder is a pawn to CEO’s and managers. One of the major tenets of Capitalism, Free Market Forces, has been displaced by manipulation. The Treasury and the Fed no longer allow free market forces to operate naturally. Instead of a “natural” recession after x number of years—to clean out the excesses, monetary policy is manipulated in the way that incumbent politicians demand so that the “crunch” will occur under another administration. The influential “Big Shots” whine over social programs, yet demand greedy perks/options/severances at the expense of the country...Adieu, Capitalism (and soon Adieu, Big Shots!).

#5: Crime Runs Rampant

 We are already running out of places to house criminals. What will happen as more and more people are out of work, lack basic necessities, whose easiest path left is to rob? Unlike the Public Works Programs of the Roosevelt era, the American government will lack the resources to put people back to work. Similar to the Russian fiasco in Afghanistan, the US has shot its wad in the Mideast. The billions of dollars which would have put people to work fixing the infrastructure of roads, bridges, parks, waterways—is passé. Eventually, the riots of the 60’s will be child’s play. And because of the Interstate System, not even remote farms will be a safe haven, as the proliferation of drugs and crime has proven.

#6: Guns-And-Butter Diplomacy’s Final Fling

 I will not blame our Bushman Prez entirely for the military solution to all problems. It is inherent in the American way of life:Music, TV, Pro Sports. Misadventures in the Mideast (‘Bring ‘em on!’) is the outcome of a mentality that looks open events as amusement. Instead of throwing Christians to the lions, we throw troops to the terrorists. In my little soccer league, I have noticed in the past few years how winning prevails above all—maiming, infractions, malice. Likewise, America is stirring up the world into one huge bowl game in which the military, corporations and government prove that they can win and the rabble will cheer them on! But I’ve got news for the Big Boyz: it ain’t working—any more than the Iron Curtain worked for Communism. The world is rebelling against the US (i.e.: the World Police.) Whether their governments are oppressive or benign, it is none of our business!

#7: Realization of the Environment

  Although it only made #13 in the polls, Americans are starting to wake up to the fact that something is happening to the Environment. A few polar caps melting, a few island tribes being washed away and several species of animals nearing extinction might only raise an eyebrow or two, but those owners of seashore homes who are losing them to the onslaught of higher and higher tides are directly feeling the pinch where they think it matters most: in their purse strings. Actually, there is an answer to the overall mess inherent in the US economy: develop the country into a World Recreation Tourist Mecca. Forests and mountains can be easily developed for hiking, camping, kayaking, canoeing, mountaineering and environmental treks. The old tourist who wants luxury on the Riviera is a dying breed. Many people worldwide are seeking adventure, health, fitness. Instead of tearing up the parks for developers, gear the country towards an adventure Mecca. Each state could develop its own unique program and easily surpass what any other country offers. The US has the natural resources to achieve this. Only “Old-Thinking” stands in the way…

Le Scott, January, 2008

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