Happy New Year! The changing of the calendar is a time when we can all make resolutions and think about how the coming year will be different. It’s also a good time to make predictions for the coming year that we can hide away later – unless they come true, that is. So I thought I’d give my own in plain language just so that those of you who have this bookmarked can make fun of me later.
Ready?
1. Financial stocks will be hot. This is an easy prediction to make because it looks like most of the bad assets have already been written down and banks are sitting on a lot of cash. They will be under a lot of pressure to start making loans, too, and a lot of money will start flowing into the economy by mid 2011. Since defaults rarely occur in the first year of financing, bank profits should soar in 2011.
2. I think about 2M jobs will be added in the US, which is to say just enough to keep us treading water through the year. The headline unemployment rate will drop just below 9%, but only because a lot of people will be dropped from the statistics. The Federal government will continue to dither rather than take real action as they should.
3. There will be another wave of foreclosures by mid 2011 as a lot of temporary fixes put in place in 2008-2010 start to fall apart.
4. Some celebrities will get into serious trouble with the law, but none of them will involve flying cars.
5. Apple will release an iPad with a USB port. Even they aren’t totally dense.
6. I think that Speaker Boehner will get a lot more done than people think. He has to craft some kind of legacy, and I seriously doubt he wants to be known as the guy who stopped everything. It may not happen at first and it may not be a lot, but I think we can expect Congress to be considerably more productive than they were in 2010 (which is to say that something will actually happen!).
7. There will be really bad weather somewhere.
8. I would never bet completely against China, but during 2011 I expect things to happen that will make them look a lot less like the great emerging power of the world and a lot more like just another nation being jerked around by the global financial hurricane.
9. The world will not end. The Rapture will not happen on 21 May, 2011.
10. This will be the year that Latin America starts to take its position on the world stage. It will be led by Brasil and, to a surprising extent, a big turnaround in Colombia – but dragged down by Mexico and Venezuela, who will see increasing pressure and assistance from neighbors to get their act together.
How many of these will come true in 2011? You can keep score at home and let me know at the end of the year. In the meantime, it’s only fair that you make your own predictions in the comments so that I can give you back whatever you give me in a year.
Will this be a better year or not? Fasten your seatbelts!
Barataria - The work of Erik Hare 
You really went out on a limb with the weather prediction and the prediction that the world will not end. You are right about the foreclosure prediction but some of the homes are already bank owned and have not hit the market yet because of the robo signing scandal. Most of the foreclosures hitting the market this year were foreclosed upon last year.
lol loved the weather prediction
I don’t think you went too far out on a limb on anything but it looks like it on first read. We all agree that China is a big bubble ready to pop but it may not go in 2011. I’m not sure about south America yet however so we can take bets on that one. I think your call on jobs is pretty safe even if it is really specific.
Call me old fashioned, but I had to have 10 and I was looking at 9 – hence the weather prediction. But I need a few gimmees, yes?
I had some inside info on the foreclosure problem coming along. In many ways, it’s just like the call I made on European sovereign debt a few months before it happened:
https://erikhare.wordpress.com/2010/02/05/great-recession-great-denial/
Sometimes, you can just see these things coming if you read up on it a lot.
Why didn’t you get more specific on China?
I think you’re already right on Latin America. I’ve hear more about it in the last few months than I ever did before.
OK this is harder than it reads. MN will raise taxes and cut programs. Mpls city and school board will have major trouble by 2013. Our temperature normal highs will be higher in the next decade and we will have more precipitation. Klobuchar will not do anything spectacular. The NE congressional district will be very interesting 2014. Catholic churches will continue to consolidate. Pawlenty will not be elected president. The twins will not win the division. There will be a moderate to severe flu/foodborne illness outbreak. The Northstar rail line will continue to not meet projections. Gas will go to 3.50 / gallon.
I also predict Erik will write about a capital gains tax on homes sold over the median price.
Dan, that’s a bit of a challenge! I’m not sure how to work out capital gains tax, to be honest. I do favor a very flat tax with few write-offs generally, but with cap gains you’re looking at what is defined as “income” to feed into that system. I’d have to crunch a lot of numbers.
Anna, I didn’t want to get specific with China because there are so many ways that they can stumble. It’s one big bubble – but we can be sure that a centrally managed economy like theirs won’t fail the same way ours did. I don’t understand how their government works/doesn’t-work well enough to know just how it will start to fall apart – and, for that matter, what they will tell us when it does. That’s one of many reasons that I think that the “China Fever” we see so many US businesses contracting is a dangerous disease.
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So glad to know the world will not end on 21 May, 2011…I was quite worried!
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