Oil Drum: 2009 Economic/Energy Forecast by Gail Tverberg (aka "Gail the Actuary")

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Nichoman
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Oil Drum: 2009 Economic/Energy Forecast by Gail Tverberg (aka "Gail the Actuary")

Below is an excellent article today by "Gail the Actuary" at The Oil Drum...she links in her most recent article to her earlier 2 posted predictions in the past year that verified quite well.   Dovetails with many key concepts Chris has presented.

   http://www.theoildrum.com/node/4915

Below are some high points...  Entire article (and her earlier 2) is quite informative and IMO compelling at the least. 

Nichoman 

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I think there is a distinct possibility that this could all end very badly. One possibility is that there will be more and more defaults, and the US government will not be able to prop up all of the institutions and will eventually default on its debt. While this seems to be the direction things are headed at the current time, the much more usual outcome is hyperinflation, caused by printing more and more money, wiping out the value of people's savings and pensions. Situations such as these are often accompanied by a new government (including a new constitution), and may even include different country boundaries (for example, Soviet Union after its fall).

Many people have started making preparation for the time when food needs to be produced locally and electricity is often not available. I would not discourage such preparations. While we do not know that the economy will collapse completely, I think such preparations are prudent, in the face of rising risk. Preparation for a major change takes many years, so starting earlier rather than later makes sense. Also, with the tower of debt (Figure 1) and the many feedback loops, the downward spiral can happen more quickly than our prior experience suggests is possible.

I do not expect a steep rise in the price of oil and natural gas in the next year, because the decline in demand is likely to outpace the decline in production in the short-term. If we look back at Figure 2, I expect that funds available to ordinary citizens will continue to decline in 2009, even considering any stimulus plan.

To solve our current financial problems, I expect that the United States (and other countries) will ultimately need a new financial system that is much less debt based. Such a system might start simply as ration coupons for food and energy products, and gradually be expanded to replace our current monetary system. Debt forgiveness and derivative write downs will also probably need to be part of the solution, but with the caveat that debt forgiveness and derivative write downs can be expected to have just as adverse an effect on the balance sheets of financial institutions as outright defaults. In conclusion, 2009 looks like to be a very challenging year for the new administration and for the world as a whole.

We could very well end up with 25% of the people losing their jobs in today's economy, in 2009 or 2010. Some of them may figure out a way to do something that doesn't fit in today's economy. Some may grow more of their own food; some may (illegally) work on dismantling buildings that are no longer being used, and selling the scrap for other uses. In the years ahead, I don't see the traditional unemployment rate as going back down, just more jobs moving to the currently uncounted sector.

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