Well looking back at my 2008 predictions I didn't do too badly since I was 4-1 in World Events and 3-2 for the Economy. I actually called the Obama win, Musharraf out in Pakistan, no terrorist attacks in the US, and the Iraq War winding down in 2008. I was wrong about Sarkozy solving the Iranian nuclear issue. I got the Bailout of Subprime, tech lagging, rise of alternate energy. But I was wrong about the extent of the correction (I missed it by calling 10%,) and the health care recovery. Well in any case time to put on the Nostradamus floppy hat for 2009:
World Events:
1. Iran will rattle the sabre about a nuclear program but a deal will be made before the end of the year. The deal will consist of Iran enriching uranium under UN auspices and Russia helping them build several nuclear plants. Iran continues a secret bomb making program in the meantime. However this does not save Ahmadinejads job as he will be booted from office and be replaced by moderates.
2. There will be increased tensions over Pakistan's involvement with the terrorist attacks in India. It will escalate into a near war with both sides massing troops on the border and threatening to invade one another. Tensions will be lessened when Pakistan arrests senior people in the ISI (Pakistan's spy unit) that are alleged to have had a hand in the plot. There are skirmishes along their border but there is no major hot war between the two powers in 2009.
3. Israel's invasion of the Gaza strip will severely weaken Hamas and Fatah will eventually gain complete hegemony in Palestine. Fatah takes over the control of the Gaza strip from the Israelis by the end of 2009 and complete a second round of secret purges of Hamas leadership. Hamas is wrecked as a terrorist organization and no longer threatens Israel militarily.
4. Chavez is marginalized in Venezuela as his oil wealth starts to disappear. His power is severely weakened as there is no longer a Bush in the White House to demonize. Chavez does everything he can to stave off an economic ruin in his country as they end up defaulting on their debt creating a mini crisis that the US has to solve.
5. Afghanistan becomes a page one story again this time with the Americans trying to root out the Taliban and bolster their army. The press will portray this war as a righteous affair and never doubt for a minute that we will win there. The Dems will pound the table and look "strong on security" by pointing to their support of victories in Afghanistan. Iraq will receive less and less attention and leave the national news stage. There will not be a major terrorist attack in the US in 2009.
Economy:
1. Obama's stimulus package will work for the most part and will slow unemployment growth by the end of the year. The money for the states will be given some serious scrutiny but will still be filled with pork barrel spending and government giveaways. Obama will take credit for saving the world economy.
2. Many companies tighten their belt and delay projects into the second half of the year. Several retailers go out of business but there will be no equivalent to a Lehman Brothers bankruptcy in 2009. By the third quarter the economy will be out of recession and on the way back to recovery. The Dow will be back above 9,500 by the end of the year.
3. The long awaited housing recovery will be in full swing by the third quarter of 2009. Record low house prices and rock bottom mortgages will force many first time home buyers into the market and will sop up the supply overhang.
4. Along with the economic recovery, oil prices will climb and be at about $80 or so by the end of 2009. Energy stocks will outperform the overall market. Gold will lag for 2009.
5. Treasury yields will return to historical averages as risk aversion starts to leave the market in the first two quarters of 2009. The VIX returns to a trading range and the wide market swings that we saw in 2008 stop for the time being.
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