I had big plans for a long post about what I see coming for us in 2008, but work & family have left me with little time to pontificate, so here’s a short list of bullet points as to what I see coming.
- I was going to say that this would be the year that oil cracked the $100/barrel mark, but that was achieved on the first trading day of the new year. Oil prices will bounce around once again this year, but will generally rise over time. The weakening US dollar and rising global consumption will push prices up, and the only thing I could see to cause prices to fall would be a general economic recession/depression.
- On a related note, gas prices will keep rising. On my way into the office this morning, the local gas mart was charging $3.05 per gallon for regular unleaded, which is 33% or so higher than it was at this time last year. This is supposed to be one of the low points for demand, so if we’re hovering around three bucks right now, I can easily see $3.50 or even $4 per gallon at some point this year, especially if a hurricane hits the oil patch hard or if the Middle East situation deteriorates. Again, the main thing that would keep this from happening would be an economic crash of some sort.
- Iraq & Afghanistan will probably stay in limbo for this year. The current administration appears to be doing what it can to keep things ‘stable’ over there until 2009 when it becomes someone else’s problem. The main wild card here will be Pakistan, I think, since the Bhutto assassination looks to have opened up a hornet’s nest that Musharraf and company might not be able to contain.
- Speaking of elections, I don’t think the US presidential elections will be a big deal. Regardless of what happens now in the early primaries, both major parties will choose someone who appeals to their establishment, and that means a president who’s overly friendly to big business, more or less blind to the long-term financial problems coming our way, and will support business-as-usual for the most part. Regardless of the rhetoric we’ll be inundated with over the course of this year, even a ‘candidate for change’ will quickly run afoul of the entrenched special interests & bureaucracy in D.C. and have a tough time changing much of anything, especially if Congress continues to be held by very thin majorities. If Clinton wins the Democratic nomination, then the Republicans have a chance. If Obama wins the nomination, I think he’s got a great shot to win it, since none of the Republican candidates are particularly appealing.
- Whoever makes it in, that person will do nothing to reduce the expanded powers of the President that the Bush regime has embarked upon since taking office. Whether by signing statements or executive orders, the power of the presidency has expanded greatly in the last 8 years, and I doubt that anyone who takes office would willingly give up those powers especially with a docile Congress.
- If there is a year that China will take center stage as the world’s new economic superpower, this will be it. I think nothing major will happen until after the summer Olympics in Beijing, but at some point I can’t help but think that the Chinese will nakedly use their new-found clout to their advantage, whether it’s in dealings with the US (it’s almost insolvent debtor), Taiwan or in the global energy/resource grab. Already we have some major US firms gladly taking cash infusions from the Chinese Sovereign Wealth Fund in exchange for an ownership stake. A lot will depend on the US Dollar… if Washington shows no intent to slow down the dollar’s decline, the Chinese will be unhappy, and how they choose to show their displeasure will have ramifications for those of us in the states. One rumor that has been floating around for a while has Beijing telling Washington that they will ‘repatriate’ Taiwan sometime after the Olympics, and if the US does anything to interfere, they’ll start dumping dollars in earnest. I don’t know if that would happen or not, but if the US shows little regard for the sawbuck I don’t see why anyone else would either.
- The economy will be the big question mark for the US this year… the slowdown started in earnest in 2007 and I see no real reason why that would stop anytime soon. That said, US citizens have shown a remarkable resolve to ignore what their lyin’ eyes are telling them and believe the government’s insistence that the state of our economy is strong & getting stronger. Jeff Vail thinks we will be able to muddle through 2008 without the wheels falling off, and barring a black swan event of some sort I think that’s the most likely scenario. ARM resets will reach their crescendo in the spring, and that will likely trigger more bankruptcies & foreclosures across the country. I don’t think we’ll be able to keep the damage contained, so to speak, but it will take some time for the public to realize they’ve got a serious problem on their hands, and both major political parties have a strong interest to keep things intact until early November.
- Scientists are predicting another active hurricane season, but as 2007 showed, that might not mean much from an economic/oil standpoint (at least if you’re in the US, residents from Honduras & Southern Mexico would disagree I’m sure). I’ve learned not to stick my neck out too far when it comes to Mother Nature, so all I’ll say for now is that this is something to keep an eye on.
- Food prices will continue to rise due to a combination of the sick dollar, rising energy prices, competition from biofuels, droughts, and overall supply & demand. I personally am planning on eating less meat this year and am trying to raise or prepare a larger (albeit still small) percentage of my family’s food.
Well, that’s enough prognostication for now. We’ll see how (in)accurate I am at the end of the year.