JUDGING MY 2017 PREDICTIONS

“Those who have knowledge, don’t predict. Those who predict, don’t have knowledge. “ – Lao Tzu

“Prediction is very difficult, especially if it’s about the future.” –Nils Bohr

Last year about this time I did a two part forecast for 2017: A BIASED 2017 FORECAST (PART ONE) and A BIASED 2017 FORECAST (PART TWO). I hadn’t re-read them until today. They were written just after the biggest presidential upset in modern history. Liberal tears were flowing freely and the accusations of Putin throwing the election to Trump had just begun. Two quotes from Part One are as pertinent today as they were then.

“A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.” – Daniel Kahneman, Thinking, Fast and Slow

“It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what is going on.” –  Amos Tversky

The Deep State and their use of propaganda through the fake news corporate media have been revealed by Trump during his first year in office to be the true enemies of the people. The Washington establishment on both sides of the aisle have shown their true colors after being goaded by thousands of provocative Trump tweets. The Deep State establishment has been in control for so long they have been flabbergasted by Trump, who plays the game sometimes and then suddenly flips over the game board and reveals how they have been cheating and misleading the American citizens.

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Since I believe we are in the midst of a Fourth Turning, I framed my predictions around the three main drivers of this crisis: debt, civic decay, and global disorder. I did not have a high level of confidence in my predictions and reality has again proven more surrealistic, non-conforming and irrational to sober realists like myself than one would think. But that’s alright. I’m now used to living in this everything bubble world of debt financed delusion. The bubbles will pop when they are good and ready, not on my timeline.

So let’s get down to the nitty gritty of judging my specific predictions for 2017.

Debt

• With spending on automatic pilot and tax revenue in decline, the national debt will reach $21 trillion in 2017. With most of the debt financed short-term, the increase in rates will ratchet the interest on the debt from $433 billion to over $550 billion.

Verdict: Wrong

The national debt stood at $20.6 trillion at the end of November, but the debt ceiling shenanigans have stopped it in its tracks. If they weren’t playing games it would be close to $20.8 trillion on December 31. Interest on the debt was ONLY $459 billion in fiscal 2017 as short-term rates stayed lower for longer.

• With the CPI increasing by over 3% in the first few months of the year, the Fed will continue to raise rates, and the 10 Year Treasury will breach the 3% level.

Verdict: Wrong

The CPI, according to the lying drones at the BLS, moderated during the year and the 10 Year Treasury topped out at 2.63%. It currently stands at 2.47%.

• With mortgage rates up 1% already, the further increase will result in existing home sales and housing starts falling by 20% in 2017 and home prices falling by 5% to 10%.

Verdict: Wrong

Existing homes sales hit an 11 year high in November at 5.8 million sales, up 3.8% over last November. Housing starts hit a 10 year high of 1.297 in November, up 13% over last November. Prices rose by 5% to 10% as mortgage rates stayed in the 3.6% range for most of the year.

• The short-term OPEC agreement will allow oil prices to move back to $60 per barrel, further eating into consumer discretionary spending. Desperate fracking companies needing cash flow to service their debt will ramp up. Bankrupt or near bankrupt countries like Venezuela, Mexico, and Iran will also increase production. With a slowing global economy and surging supply, prices will collapse again into the $40s in the second half of the year.

Verdict: Wrong

My range of prices was correct but the order was backwards. Prices stayed below $54 per barrel in the first half of the year and bottomed at $43 per barrel in June. As OPEC has kept their quotas in place and the global economy has heated up, prices have surged by 40% to a high price for the year of $60 per barrel today. Prices are the highest in two and a half years.

• Holiday sales for the bricks and mortar retailers will be reported in January as lukewarm at best. By February, the store closing announcements will reach into the hundreds. Sears will finally declare bankruptcy and shutter at least 50% of their stores. Mall developers will begin to declare bankruptcy as vacancies and rising interest rates create a perfect storm.

Verdict: Mostly Right

Total store closings of 7,000 was more than triple the 2016 number, and more than 2009. There have been 662 bankruptcy filings in the retail sector, including Radio Shack, Toys R Us, Gymboree, and The Limited. Sears and JC Penney are clinging to the cliff, but won’t survive much longer. The mall owners are barely hanging on due to the Wall Street banks allowing them to roll over their debt despite negative cash flow.

• Consumer debt will reach the previous high of $1 trillion, as subprime student loan and auto debt continues to accumulate at an astounding pace. The spigot for student loans is likely to be tightened under Trump, with over 25% of the loans effectively in default. Auto sales (if you can call six year financing and 40% leases, sales) peaked in 2016. Millions of auto buyers are underwater on their loans, subprime auto loans are going into default quicker than you can say Cadillac Escalade, and higher interest rates will price out more potential suckers.

Verdict: Right

Revolving consumer debt reached $1.01 trillion in October. Student loan and auto debt has grown by another $116 billion to a record high of $2.8 trillion. Auto sales are going to finish down 2% over last year, despite record levels of incentives, 0% six year financing for anyone who can fog a mirror, and massive advertising of low payment leases. The bad debt is beginning to pile up on auto maker books.

• The faux jobs recovery is running out of steam. With non-existent wage growth, surging costs for rent, health care, energy, and credit cards tapped out, American families will hunker down and reduce spending further. With consumer spending accounting for 68% of GDP, this will lead to an official recession by the middle of 2017.

Verdict: Wrong

The jobs recovery has been phony. Wage growth has continued to suck. GDP was extremely weak in the first quarter, but has rebounded above 3% in quarter two and three. Of course, the more we pay for healthcare, energy, rent and food, the higher GDP rises. The American consumer continues to spend money they don’t have on shit they don’t need. This is known as Making America Great Again. Even though millions are experiencing recession, the official numbers say everything is rosy.

• All the recent surveys showing consumer confidence soaring and optimism for 2017 are based on nothing but hope. The promises of a Trump administration will not come to fruition until 2018 at the earliest. He will meet resistance from Democrats across the board and resistance amongst his own party. His grand plans for massive tax cuts and spending increases will run into the reality of $1 trillion annual deficits. As reality sets in, and recession arrives, the unwarranted optimism will fade rapidly. Tax cuts will be tempered by reduced spending plans.

Verdict: Mostly Right

All of Trump’s economic promises will not occur until 2018. He’s met tremendous resistance from Democrats and establishment Republicans. His tax bill will help most people who pay income taxes. Corporations will add to their record profits. The size of the cuts was moderated due to deficit issues. Supposedly fiscal conservatives have ignored addressing spending, just as every Congress has done for decades. No one seems concerned with looming $1 trillion deficits.

• The USD hitting fourteen year highs against the basket of worldwide currencies does not bode well for bringing manufacturing jobs back to make America great again. The reason for the strong dollar is because we are the best looking horse in the glue factory. With Europe and Japan promoting negative interest rates and the Fed slowly raising rates, the dollar will continue to rise. This will hurt our manufacturing businesses, increase our $500 billion annual trade deficit further, and depress the profits of our global corporations.

Verdict: Partially Right

The USD weakened by 10% during 2017, but the trade deficit has expanded to over $550 billion. Corporate profits are no higher than they were two years ago, despite the Wall Street rhetoric. The decline in the USD has postponed the continued decline in manufacturing jobs.

With rising inflation, rising interest rates, stagnant wages, falling corporate profits, stock valuations at all-time highs, and corporations no longer able to finance stock buy backs at no cost, the stock market will finally hit the wall after a seven year bull market. This last surge of euphoria, based on nothing but Trumpmania sweeping Wall Street, will constitute the final blow-off. The market is currently valued to provide nominal returns of less than 1% over the next twelve years and is likely to experience an abrupt sell-off of 50% in the near future. I believe the near future will be 2017. I think the powers that be will be testing Trump’s mettle in his first year to see if he’ll play ball and do their bidding.

Verdict: Wrong

I missed this prediction by a mile. The Dow is up about 5,000 points, or 24% in 2017. With interest rates still near record lows, consumers leveraging up, and companies still using all their profits and debt to buy back their stock, the euphoria has ramped up to epic levels only seen in 1929 and 2001. Trump and Wall Street appear to be seeing eye to eye. Valuations at record highs, rising interest rates, and an aging bull market are not deterring thirty something Ivy League MBA traders from betting the ranch on further gains. So far, so good.

I did a little better on the civic decay predictions for 2017, but left wing liberal nutjobs are very predictable.

Civic Decay

• Obama trying to sow discord between the U.S. and Russia will fail, as Trump and Putin will meet and find common ground in the Middle East, the Ukraine, and Turkey. Republican neo-cons like McCain and Graham will be outraged. Liberal warmongers who once protested Bush’s wars will also be outraged. The mainstream media will continue to try and fan the flames of war.

Verdict: Partially Right

It is being proven the Obama administration in collusion with Clinton’s people tried to frame Trump with fake Russian collusion charges. It is currently blowing up in their faces. Trump and Putin have met and mutually destroyed ISIS in Syria and Iraq. The unrelenting pressure from neo-cons and the left wing media has kept Putin and Trump from ratcheting down the rhetoric. The antagonism between Russia and the U.S. is increasing, as the corporate propaganda media attempts to stir up a war.

• Before leaving office Obama will poke a final stick in the eye of Trump and his supporters by pardoning Hillary Clinton for all possible wrongdoing. This will infuriate the right. Trump will do everything in his power to investigate the Clinton foundation and any issues which could incriminate Bill, Holder, Lynch or Obama. The peaceful transition of power has not been observed by the left, so all bets are off once Trump takes office.

Verdict: Wrong

Obama did not pardon Clinton for her many wrongdoings. Trump seemed to be willing to let Hillary ride off into the sunset, but she refused. Her never ending book tour and continued bashing of Trump has infuriated Trump. She is  going to wish Obama had pardoned her, once Trump gets done with her. The Uranium One and Russian dossier are going to bite her in the ass. Donna Brazile stabbed her in the back, and there are many more who hate her guts. The Seth Rich murder will be the cherry on top.

• Well-funded (by Soros) domestic agitators, including BLM and various femi-nazi groups, will attempt to disrupt the inauguration ceremonies. There will be violence, conflicts with Trump supporters, and police confrontations. This will further widen the divide in this country. The left have proven to be those who promote violence and will continue to do so. If they venture outside of their urban safe zones, they will be met with a white heavily armed populace.

Verdict: Right

Exactly as predicted, from the time of Trump’s inauguration, the violent left wingers funded by Soros have created havoc across the land. From the vagina hat wearing feminazis during the inauguration to the counter protestors that provoked violence in Charlottesville, the left have refused to accept the Trump presidency as legitimate. The violent rhetoric from the left has spurred assassination attempts of Republican Congressmen, the violent suppression of free speech by conservative speakers on college campuses, and the gunning down of police. The divide in the country has never been wider and continues to grow.

• The left wing mainstream media will not be deterred in their efforts to bring down the Trump presidency. They will fire away on a daily basis as their ratings drop lower and lower. Their railing against “fake news” has backfired, driving more people to alternative media sites where they will not be inundated with Deep State approved propaganda. The press will do their utmost to agitate the masses, creating and promoting conflict. Trump will continue to bypass and scorn the media outlets by taking his message directly to the people.

Verdict: Right

The fall of the fake news corporate left wing media has been epic during Trump’s first year. His daily tweets railing against CNN, MSNBC, NYT and WAPO have infuriated these left wing scribblers like waving a red cape in front of an enraged bull. There stories about Trump are 90% negative. They have been caught lying, exaggerating and producing fake news on numerous occasions and have seen the public trust in their reporting reach all-time lows. They continue to agitate and promote division in the country, but Trump has clearly made them look like idiots. 

• Building the wall, shutting off the immigration pipeline of Muslim refugees, defunding sanctuary cities, and fully supporting local police across the country will trigger snowflakes, BLM terrorists, illegal immigrants, and various Soros funded radical groups to stage violent protests in the liberal urban enclaves. They are waiting for their next high profile police shooting to pounce. The civil chaos and violent protests will increase as the year progresses.

Verdict: Partially Right

Trump has not built the wall and most of his attempts to stop the Muslim hordes from invading our country have been stopped by left wing judges. The defunding of sanctuary cities has also been stymied by the courts. Soros has continued to fund domestic terrorist groups and lone wolf Muslims have been killing or attempting to kill infidels on a consistent basis. As Trump puts more conservative judges on the Supreme Court and Federal courts across the country, his immigration policies will take hold.

• Whoever Trump nominates as his Supreme Court justice will face enormous scrutiny. The left wing media will stop at nothing to destroy the nominee. The hearings in Congress will be nasty, rude, and vitriolic. The animosity between the opposing sides will reach epic proportions. Both sides know the Supreme Court is of vital importance to the future course of the country.

Verdict: Right

When Trump nominated Neil Gorsuch to the Supreme Court the usual left wing suspects in the fake news media attempted to take him down. He was grilled mercilessly by the Democrat noobs in Congress who looked stupid when confronted by an intelligent man with integrity. Following the standard political divide, only three Democrats voted for his confirmation. With a couple more seats likely to be filled in the next three years, Trump could solidify a conservative majority for many years.

• With Obama failing to fade into the sunset and his enormous ego and arrogance spurring him to agitate the left wingers, there will be no de-intensifying of the rhetoric between the right and the left. As we’ve seen, the left are the proponents of violence as their chief weapon. An attempt on the life of Trump is a distinct possibility in his first year in office. A successful or unsuccessful attempt would have far reaching consequences that could lead to civil chaos.

Verdict: Wrong

Obama and Hillary continue to agitate and attempt to undermine Trump’s presidency. The Russian collusion bullshit has kept the left wing press busy with fake news stories for months. The violent rhetoric from the left has resulted in congressmen shot and senators physically attacked. But, thus far, no one has attempted to assassinate Trump. His biggest worry should be from within his corrupt surveillance state agencies.

My predictions regarding global disorder were so wrong, I should learn my lesson and never make another prediction for as long as I live. Let’s examine my epic wrongness.

Global Disorder

• Obama, in a despicable act of trying to fence Trump in, has introduced further sanctions against Russia and Putin based upon no solid evidence other than the opinions of the same people who were sure there were WMD in Iraq. The MSM and the neo-con faction of his party are all on Obama’s side. I expect Trump to override Obama’s childish display of antagonism, while showing the neo-cons there is a new sheriff in town, by developing a working relationship with Putin and lowering the tensions between the two countries.

Verdict: Wrong

Trump’s attempts at normalization with Putin have been undermined by the neo-cons, left wing media, and the FBI/CIA/Clinton/Obama Russiagate propagators of fake news. The tensions have increased over the last few months.

• Trump and Putin will come to an agreement regarding keeping Assad in power in Syria while turning both nations’ attention to obliterating ISIS and the so called “moderate” Al Qaeda terrorists in the Middle East. General Mattis and Trump’s team of rational thinkers will develop a feasible plan to destroy ISIS once and for all. Safe zones will jointly be created in Syria and Iraq by the U.S. and Russia to stem the tide of refugees pouring into the EU and U.S.

Verdict: Partially Right

Essentially Putin decided Assad would stay in power and Russia would make a serious effort in destroying ISIS. The U.S. reluctantly went along after their continued efforts to get rid of Assad were dashed. ISIS has been effectively obliterated and Assad is in firm control. There is continued tension between the U.S. and Russia in no fly zones in and around Syria.

• The U.S. dependency on Saudi oil will continue to decrease, further reducing their influence on U.S. policy in the Middle East. Saudi failure in Syria, Yemen and keeping Iran contained will lead to further discontent in the kingdom. Financial woes, declining oil output and religious tensions will fray the fabric of their insular society and lead to a religious uprising and civil war.

Verdict: Partially Right

Saudi Arabia has failed in Syria and Yemen. Iran has gained the upper hand in Iraq and Syria, while causing Saudi Arabia continued grief in Yemen. Turmoil in the kingdom has led to a massive purge of billionaires. The country’s budget deficits are immense and low oil prices continue to impact the kingdom negatively. As a dictatorship, uprisings by the peasants are crushed immediately. 

• Turkey has been pushed into the Russian sphere of influence by U.S. meddling. The country is falling apart. A civil war on par with the Syrian conflict is likely to breakout. Russia would likely support the dictator Erdogan against rebel forces supported by NATO. Religious and sectarian violence will tear the country apart and create further tensions between Russia and the U.S.

Verdict: Wrong

Turkey is a dictatorship run by an unbalanced thug. He has been battling Germany, the U.S. and Kurds for most of the year. He has been driven into the Russian sphere of influence. Whenever dissent rears its head in Turkey, Erdogan crushes it without mercy. Civil war has not broken out yet.

• Israel will pre-emptively take action either covertly or overtly to damage the Iranian nuclear program without informing the U.S. of its actions in advance. This will be supported by the neo-con factions in the U.S. government, but will strain relations between Netanyahu and Trump.

Verdict: Wrong

Israel has not attacked Iran. They have occasionally attacked Syria and Hezbollah trying to keep Iran in check. Israel has been taking a different tack, getting close with Trump and convincing him to take action against Iran. So far, Trump has resisted taking on Iran directly.

• The crackpot efforts at demonetization by Modi in India will destroy the Indian economy and cause societal upheaval among his 1.25 billion mostly poor citizens. With the eighth largest economy on the planet imploding, the economic reverberations across Southeast Asia will be enormous, possibly being the trigger for the next step down in this ongoing global recession. India’s weakness could spur their enemy Pakistan to take aggressive border actions which could lead to military conflict.

Verdict: Partially Right

Modi has created massive financial turmoil in India, hurting the poorest with his demonetization scheme. GDP has dropped to the lowest levels in three years as it is propped up by massive public spending. The country has not fallen into official recession and has not triggered a recession in Southeast Asia. Military conflict with Pakistan edges closer every day, as Pakistani soldiers were killed along the border last week.

• With the fourth largest economy in the world in near permanent recession for the last twenty years, Japan’s debt to GDP ratio of 230% portends financial collapse. In the midst of a demographic implosion, with negative interest rates, and a central bank buying all the newly issued debt and billions in stocks, Japan is a bug seeking a windshield. When this Ponzi economy crashes, the worldwide impact will be significant. If Japan doesn’t trigger the global eruption, it will be a major contributor as the detonation spreads around the world.

Verdict: Wrong

Japan has continued to avoid catastrophe, despite crushing levels of debt, negative interest rates, a demographic Armageddon, and consumers unwilling or unable to spend. Without a central bank buying stocks and printing yen, the Japanese ponzi scheme would have collapsed years ago. the windshield draws closer.

• China continues to steadily devalue the yuan against the USD and has eliminated all the gains since 2010. At the same time they have reduced their foreign reserves by over 20% since mid-2014. China’s third largest economy in the world is slowing rapidly as more bad debt builds up in their system. They have a real estate bubble that makes the U.S. bubble seem like a pimple on the ass of a fly. A trade war initiated by Donald Trump would be the pin bursting the Chinese debt bubble. The situation could intensify into a bond selloff and panic. If derivative positions of over-leveraged or poorly-hedged globally systemic banks begin to unravel, cascading losses could lead to a vicious cycle and a tragic outcome.

Verdict: Wrong

Trump has backed off from his trade war rhetoric during the campaign. He has taken no substantive actions which would negatively impact the Chinese economy. The centrally managed economy is saturated with bad debt, but with government controlled banks not recognizing the losses, the fraud is sustained. All is well, until it’s not. The appearance of stability and growth masks the rot spreading throughout their system.

• Potential military conflict between China and Japan/U.S. over the islands in the South China Sea ramps up by the day. No one wants a war, but all it would take is a careless stupid act by a low level military officer to create a crisis. China is already bent out of shape by Trump acknowledging the existence of Taiwan. China is still essentially a dictatorship. The country is racked by corruption. An economic collapse could be met with distracting the public through a military adventure against Taiwan. These scenarios are unlikely in 2017, but not out of the question.

Verdict: Wrong

The U.S. and Japan have backed off in provoking China over the South China Sea islands, as they realize China has already won this battle. The U.S. has been relying on China to pressure North Korea into stopping their nuclear program. The Chinese will do what is in their best interests, and not what the U.S. tells them to do. An economic collapse is in their future, but the timing is unknown.

• The most likely and potentially most dire event which could affect the world in 2017 is the disintegration of the EU. Greece is still a basket case. Italy is on the brink. The EU area economy barely registers positive after years of negative interest rates and debt issuance. Unemployment rates, excluding Germany, range between 10% and 25%. Brexit and Trump’s victory portend a further shift to the right in the EU. The right wing party will win the French presidency. Merkel will be defeated in the upcoming elections. France and Italy are likely to have a referendum on leaving the EU. The departure of either will end the failed experiment. The insolvent Italian, French and German banks, specifically Deutsche Bank, will collapse in an EU disintegration scenario.

Verdict: Wrong

The EU is still intact. Their economy has grown in the 2% range in 2017 and unemployment has fallen slightly to 7.6%. The right wingers have made inroads during elections, but did not win in France or Germany. The status quo remains in control. Terror attacks occur on a frequent basis. The Muslim hordes are destroying France, Sweden and Germany. The debt grows by the hour, until it matters. Disintegration is inevitable.

• The influx of Muslims into Europe is destroying their culture and leading to violence, terrorism, bloodshed, and now retribution. The left wingers have made a dreadful mistake in allowing hordes of Muslims to invade their countries. Their already fraying social welfare states are now completely bankrupt and citizens are afraid to go into the streets for fear of being attacked by members of the religion of peace. With the right gaining power in France, Germany and Italy, the blowback against Muslims will be violent and bloody. European cities will be rocked with violence throughout 2017.

Verdict: Right

The Muslim refugees from the Middle East are destroying the finances of countries across Europe. They have already destroyed the social fabric of the EU. The impact so far has been socialist politicians losing power as populist parties appeal to the deplorables in each country. The push back from native populations has only just begun.

Overall, that was some pretty pathetic prognostications. I concluded my 2017 prediction article knowing my biases had skewed my predictions and that most would not happen. At least I know myself.

I think it is pretty obvious my pessimism bias may have skewed my predictions for 2017. I’ve been pessimistic for the last eight years and the stock market is up 200%. I try to assess the world from a logical fact based frame of mind, but for the last eight years the world has been kept afloat by a combination of debt, delusions and denial. My confidence level in my predictions is quite low. But, if one or two of the low probability events comes to fruition, the financial and/or human devastation will make 2008 look like a walk in the park. 

After reviewing my results, at least I don’t charge for this shit. I’d be really embarrassed if I was Casey, Stockman, or Martenson and charged people a fee to give such poor predictions. I have convinced myself to not write a 2018 prediction article. Maybe one or two of my pessimistic 2017 forecasts will come to fruition in 2018. Or maybe not.  I’m sure the stock market will go up another 25% in 2018. Trump says so. Be sure to read my new book.