Rage is not a plan.
This blog was started back in the good old days when predicting doom was not a mainstream activity.
The sub-prime collapse, coupled with concern about future petroleum availability for an economy dependent on cheap and abundant oil and grave concerns about the climate changed and climate challenged world I was leaving to my granddaughters, provided the impetus that got SAR started. I've had a week off, visiting the non-blog based world and have come back convinced that there has been no improvement in housing, employment, politics, the economy, oil supply, or global warming. Population remains unmentionable in polite circles.
So here's my current view for the next few years:
Housing – prices continue to spiral downward and foreclosure increase, although glacially due to the complexity of the various frauds committed along the way, the immense and growing overhang of houses and the paperwork morass. Eventually 1 out of 5 mortgages (and 1 out of 10 houses) will be foreclosed, for sale, and forsaken. House prices will continue downward, eventually overshooting, but not for many years.
Employment – real unemployment of 17% will trend into the low 20's, the long term unemployed will become a chronic dole-dependent underclass. These people will not be customers any time in the next 4-5-6 years. There is a relatively straight-forward inverse relationship between house sales and unemployment.
Politics – on the national level, this year will soon be the good old days as complete (and farcical) gridlock sets in. Nothing will pass except for corporate/financial sector written (and demanded) laws. At the state level, 10% – 15% cutbacks will continue for the next few years - each year’s slashed budged a shadow of previous ones. Eventually the states will be able to afford only what can be paid for with ever diminishing federal funds. The state-based social support systems will dissolve. At the city level, hollowed out municipal budgets will be limited to fire, police, some level of schooling and some minimal form of garbage/water/sewerage. The nation's infrastructure will continue to deteriorate – at an ever increasing rate.
Consumer Economy – the consumer (having already reduced credit card debt by 15% mostly through write-offs) will be forced to reduce spending in real terms as real income will continue to shrink. The unemployed who do find work will find lower paying jobs as the global race to the bottom continues. US jobs will continue to be exported or will simply evaporate in a world where they are no longer relevant. The billions of dollars withdrawn from the credit economy are not replaceable – an economy based on falling GDP, falling living standards and falling social cohesion will become the norm.
Oil – the world's oil supply will remain on the current fluctuating plateau of 83 – 85 mbd for a few years and then will slowly decline, even as demand rises and drives the price upwards. Above $90 a barrel or so the price will reduce demand and induce economic slow-downs. Oil to power a real recovery/growth cycle simply does not exist, nor will there be sufficient cheap energy to reverse the (currently) slow erosion of the oil-driven luxury of the last 75 years.
Low-cost easy-to-get oil is gone, mid-range is running out, but hard-to-get and expensive-to-buy oil will be with us for a long time.
Global warming – As an economic factor over the next few years, global warming will mainly show up as costly storms, heat waves and droughts. In the long term, global climate change may be slowed (but only slowed) by the decrease in the availability of petroleum. There is sufficient coal to assure eventual societal/economic collapse, but on a time-scale that will not affect the time-frame addressed here.
Regular kvetching resumes in the morning.