Now that 2008 has mercifully ended, it’s time to review how my predictions for the year (made in November of 2007) stack up against reality. (See “2008 Predictions.”)
This was the year that America, after decades of being force-fed debt by the architects of globalization, finally gagged and lapsed into a sort of diabetic coma, the life blood of its economy so overburdened with the sugar of debt that it could bear no more. Yet, even now, as our economy is on life support, the trade deficit tube continues to main-line debt right into our economic artery.
As the effects of the sub-prime mortgage crisis began to spread through the economy in 2007, the real driving force behind it seemed apparent to me. A global economy that relied on one nation, the United States, to indefinitely sustain a massive trade deficit, destroying millions of manufacturing jobs while, at the same time, it relied on those very same American workers to sustain and even expand their rate of consumption, was doomed to collapse from the start. Falling incomes – the result of parasitic economies preying on our job base – and high rates of consumption were always incompatible. The illusion of prosperity could be sustained by the forced feeding of debt for only so long. And no one ever stopped to ask what would happen when the supply of American assets, which were steadily being sold off to finance the trade deficit, began to run out.
So I’m not at all surprised that most of my predictions for 2008, including “long shots” and the most pessimistic sounding of them, proved correct, including:
- – that the trade deficit would remain high despite a falling dollar,
- – that the economy would collapse into recession and that unemployment would begin to rise dramatically,
- – that the government would begin pumping large amounts of money into the economy by the end of the year,
- – that at least one major financial institution would collapse,
- – that at least one of the domestic automakers would collapse,
- – and that the economy would take center stage in the election – bad news for the Republican candidate.
If my “2009 Predictions” are anywhere near as accurate, we’re in for a rough ride.