Happy New year! I think... well, happy in the sort of usual sense.
*sigh* Putting lipstick on this oinky ain't working.
I'll let the Master of Doom do the talking; read here. Now this guy got a lot right back when 2008 was coming in; he was one of very few commentators on economics and society basically to call it right. This time he is saying he feels the Dow will bottom at 4,000. I feel it will bottom at 5,000. He has been known to be pessimistic while I have been known to be optimistic about these things. So maybe it's more like 4,500. Cold comfort. Some time in the past year I predicted (I can't recall if I posted it here on my blog or not) that the Dow would see 7,500 at some point. It almost made it that low but didn't actually stay there for long without heading back toward 8,000. So there, maybe we are both being too pessimistic and 2009 will see a low of only 6,000. That'd be better anyway.
Mr. K. I feel has the general trend correct for his 2009 predictions. Some details I will say he is speculating on because a lot of particular things can't really be predicted. For example, he can't, nor should he try, predict about stuff that is in the realm of dependent causes. Terrorist attacks for example, or the effects thereof, are not something he can really predict. General trends, such as "It looks like a big one will occur some time in the next 5 years," are entertainable. But to say "2009 is the year such-and-such a thing will happen," falls too much in the realm of prophecy and is, IMO, reckless. So I am glad he hasn't gone there. But for example his prediction that a kind of servant class of underemployed people will emerge and sort of begin to melt into the homes of their employers-- that is speculative and in the realm of dependent causes. So I feel he is going too far with that one.
Inflation - the last topic I posted on-- this I feel he has right. He ends this piece of his column with: "I'll forecast the that the US dollar is worth 40 percent of its current value by next Christmas." I agree, though I place it at 50%. Alas, 10% either way won't matter to the person whose 401(k) used to be worth a cool mill in 1972 dollars on Dec. 1, 2007 and then on Dec. 1, 2009 instead is worth a not-so-cool $230,000 because it lost half its value in 2008-2009 while the actual buying power of what was left dropped 40-50%. Is it worth $230k or $250k? The $20k difference isn't that important when someone who planned on retiring at 65 now faces the prospect of working at McDonald's in his golden years since he can't live off the 401(k) even with Social Security kicking in. And as for the 30-YO couple with two young kids and a non-retirement investment portfolio that has done the same nose-dive-- well, lots of plans are now on hold or out of reach, possibly home-ownership soon to be a thing of the past for them. Hard to say who is getting shafted worse, really. More like it's bad for both kinds of people but in different ways. At least the 30-YOs still have their health (or so I'd hope).
Housing - egad, that is just a mess. I saw on the news last night that 8 million more homes are expected to go into foreclosure in 2009. Now put that figure into perspective; 300 million people in the US, right? Imagine 30% own their own homes or live in an owned home (i.e., live there as part of a family and not paying rent). That would mean about 90 million people live in owned homes. Now imagine 30 million actual homes exist with 3 people on average living in each. Eight million homes foreclosed upon out of 30 million: That is 26% of all owned homes foreclosed on! And to think, how many million were already sunk in 2008? 4 million? This is just nuts.
Consider all those people now moving into rental units... the classic definition of a "serf" has always included one who doesn't own the land he lives on but works it anyway. "Tenant farming" it what it is called today. But back in the bad old days when monarchical aristocracy was the rule, the word "serf" was more freely used. Going from land-owner (home-owner) to renter seems like going from free-man to serf. I think it's an apt analogy though thankfully all the trappings of serfhood are not in fact looming. But to have so many people become detached from the future of their own domiciles so quickly-- it can't have a good effect on civility, that is for sure. (When I say "civility" I am not talking about please and thank-you, either, but more the behavior people show toward their own neighbors, their cities, whether they choose to vote or invest in the world around them, etc.) I remember when I rented I had no interest in my neighborhoods because I knew I wouldn't be there for long. I knew this because I didn't own the place I lived in. And while I was not the sort to dump trash in apartment building parking lots or wake up neighbors at 3:00 AM with noise or music, I had neighbors who did. Living in a largely-owned neighborhood later, the contrast is significant. The people in the neighborhood own their places so they take care of them and basically behave themselves, since the value of the property is affected by the quality of life of those who live near them. Renters, and I know from experience, simply don't have the same investment in the neighborhood that owners have. So all these people losing the basic motivation to be invested in the well-being of their communities and to act accordingly can't be good for the country.
I am not surprised by Mr. K's 2009 predictions. I just wish they were a bit less realistic. :)
*sigh* Putting lipstick on this oinky ain't working.
I'll let the Master of Doom do the talking; read here. Now this guy got a lot right back when 2008 was coming in; he was one of very few commentators on economics and society basically to call it right. This time he is saying he feels the Dow will bottom at 4,000. I feel it will bottom at 5,000. He has been known to be pessimistic while I have been known to be optimistic about these things. So maybe it's more like 4,500. Cold comfort. Some time in the past year I predicted (I can't recall if I posted it here on my blog or not) that the Dow would see 7,500 at some point. It almost made it that low but didn't actually stay there for long without heading back toward 8,000. So there, maybe we are both being too pessimistic and 2009 will see a low of only 6,000. That'd be better anyway.
Mr. K. I feel has the general trend correct for his 2009 predictions. Some details I will say he is speculating on because a lot of particular things can't really be predicted. For example, he can't, nor should he try, predict about stuff that is in the realm of dependent causes. Terrorist attacks for example, or the effects thereof, are not something he can really predict. General trends, such as "It looks like a big one will occur some time in the next 5 years," are entertainable. But to say "2009 is the year such-and-such a thing will happen," falls too much in the realm of prophecy and is, IMO, reckless. So I am glad he hasn't gone there. But for example his prediction that a kind of servant class of underemployed people will emerge and sort of begin to melt into the homes of their employers-- that is speculative and in the realm of dependent causes. So I feel he is going too far with that one.
Inflation - the last topic I posted on-- this I feel he has right. He ends this piece of his column with: "I'll forecast the that the US dollar is worth 40 percent of its current value by next Christmas." I agree, though I place it at 50%. Alas, 10% either way won't matter to the person whose 401(k) used to be worth a cool mill in 1972 dollars on Dec. 1, 2007 and then on Dec. 1, 2009 instead is worth a not-so-cool $230,000 because it lost half its value in 2008-2009 while the actual buying power of what was left dropped 40-50%. Is it worth $230k or $250k? The $20k difference isn't that important when someone who planned on retiring at 65 now faces the prospect of working at McDonald's in his golden years since he can't live off the 401(k) even with Social Security kicking in. And as for the 30-YO couple with two young kids and a non-retirement investment portfolio that has done the same nose-dive-- well, lots of plans are now on hold or out of reach, possibly home-ownership soon to be a thing of the past for them. Hard to say who is getting shafted worse, really. More like it's bad for both kinds of people but in different ways. At least the 30-YOs still have their health (or so I'd hope).
Housing - egad, that is just a mess. I saw on the news last night that 8 million more homes are expected to go into foreclosure in 2009. Now put that figure into perspective; 300 million people in the US, right? Imagine 30% own their own homes or live in an owned home (i.e., live there as part of a family and not paying rent). That would mean about 90 million people live in owned homes. Now imagine 30 million actual homes exist with 3 people on average living in each. Eight million homes foreclosed upon out of 30 million: That is 26% of all owned homes foreclosed on! And to think, how many million were already sunk in 2008? 4 million? This is just nuts.
Consider all those people now moving into rental units... the classic definition of a "serf" has always included one who doesn't own the land he lives on but works it anyway. "Tenant farming" it what it is called today. But back in the bad old days when monarchical aristocracy was the rule, the word "serf" was more freely used. Going from land-owner (home-owner) to renter seems like going from free-man to serf. I think it's an apt analogy though thankfully all the trappings of serfhood are not in fact looming. But to have so many people become detached from the future of their own domiciles so quickly-- it can't have a good effect on civility, that is for sure. (When I say "civility" I am not talking about please and thank-you, either, but more the behavior people show toward their own neighbors, their cities, whether they choose to vote or invest in the world around them, etc.) I remember when I rented I had no interest in my neighborhoods because I knew I wouldn't be there for long. I knew this because I didn't own the place I lived in. And while I was not the sort to dump trash in apartment building parking lots or wake up neighbors at 3:00 AM with noise or music, I had neighbors who did. Living in a largely-owned neighborhood later, the contrast is significant. The people in the neighborhood own their places so they take care of them and basically behave themselves, since the value of the property is affected by the quality of life of those who live near them. Renters, and I know from experience, simply don't have the same investment in the neighborhood that owners have. So all these people losing the basic motivation to be invested in the well-being of their communities and to act accordingly can't be good for the country.
I am not surprised by Mr. K's 2009 predictions. I just wish they were a bit less realistic. :)
posted by Matt Campbell at 11:51 PM
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