What now?

The Bitch Is Back

One of the wonderful things about being a futurist and writer is that all you have to do is wait a couple of years and, if you’re any good, the folks who called you a lunatic will squirm and make excuses about the correct predictions you’ve made. As I said earlier in the commentary on the Lincoln Hall flood, I’ve been off promoting my book and courting my new wife, Kathi.  I’m back now, ready to kick ass and play Guitar Hero and my controller’s out of batteries.

Two years ago in September, I made a series of predictions about the state of the world over the forty years following 2007. If you new readers would like to review them now, they start with this one and continue through #6 published on September 12, 2007.  You might also refer to my short piece, Tom Predicts, which was written in March of that same year.

As with most predictions of the future, it turns out that the general trends were correct, but some specifics were missed by a mile.  Let’s take a look at how I’ve done so far:

1)  The Economy

Boy, I nailed this one.  It turns out that the recessions started six months later than I thought it would, but it was the sub-prime loans triggered by the sudden increase in fuel prices that threw us down the toilet.  The housing prices are down in the 40-50% loss range, foreclosures are at levels not seen since the Great Depression, and up to one thousand more banks may fail.  The stock market is showing a strong rally at this point, with the greatest six-month recovery since 1933.

2)  Politics and the Presidential Election

As I said in the introduction to the book version of these articles, I underestimated the ability of Hilary Clinton to self-destruct.  We have, however, a Democratic President elected by a wide coalition of voters.  He made history by being black, rather than a woman.  Hilary is still in the Executive Branch, just as the Secretary of State.  (I will give anyone who successfully predicted that in September of 2007 fifty dollars, btw.  They’re far better at this than I am.) 

The Democrats have a majority in the House and a filibuster-proof one in the Senate.  The Republicans are in total disarry with no clear leadership and in-fighting between the Evangelical, Blue-collar, Eastern Capitalist, and Libertarian factions.  There are already inkings of the Secessionist Movement which will cause the US to go the way of the Soviet Union later in the Century.  You’re seeing them in the “Tea Party” demonstrations on tax collection days and at the town hall meetings over the health care issues.  The Governor of Texas has actually suggested that his state can leave the Union if it wishes.

3)  The Biotech Revolution

We’ve continued on our quest for information on how life is organized.  I think that I have been way too optimistic about the speed of this revolution, since new facts have come to light.  (It turns out that the genome is not really a blueprint, but more like a snapshot of a running computer program.)  We may not have winged kittens soon, but we will probably have artificial life late this year–a full two and a half years earlier than I predicted.  I’ll modfify the earlier prediction by saying that the Moore’s Law intervals will be more like 24 or 30 months rather than 18.  This will probably mean that immortality will come too late for most Baby Boomers.  (That’s the Bad News.  The Good News is that younger generations won’t have to listen to Classic Rock for the next thousand years.)

4)  The Death of Print Newspapers

These have turned out to be quite a bit tougher than I initially imagined.  They’re dead, of course, but they don’t know it yet.  They’re trying a series of experiments to see what can save them and divesting themselves of any distractions–Zell selling the Cubs being the best example of that.  Murdoch’s trying to charge for content on the Internet, the Trib’s changed its style to look more like USA Today, and some newspapers have dropped print days.  In Champaign, the News-Gazette moved from an evening to a morning paper and rearranged its coverage.  I don’t expect any of these changes to work because one cannot overcome a six-orders-of-magnitude difference in production costs.

New Predictions

Now that I’ve got the class’s attention, it’s time to map out coming trends for the next few years.  As I said two years ago, if I end up 75% correct, I’ll be doing better than about anyone out there. 

1)  The Destruction of the Democratic Party

I expect that the mid-term elections of 2010 are going to make the losses in 1994 look trivial.  It’s quite possible that the Republicans will regain control of the House.  The debate over health-care will alienate the moderate blue-collar voters that gave Obama the Presidency. 

 Two PR time bombs are going to explode between now and November of 2010.  For the first time in memory, the net value of Social Security checks are going to drop–that’s the one which will happen very soon.  The cost-of-living adjustment will be zero for the next two years at the same time that the payee contribution to Medicare will go up.  This will cause the over-65 crowd, who vote constantly, to blame those currently in power for “taking away their Social Security to pay for some program or other they hate.”  The second one will occur over the first four months of next year.  Soon after the new Congress was seated, they passed a bill to lower the withholding taken out of paychecks.  They did this without lowering the actual tax liability.  This means that the average worker (who can’t afford a tax lawyer and is nowhere near paranoid enough) looked at his paycheck earlier this year and said, “Wow, they’re giving me more money now!”  Come January, when they finish calculating their taxes on form 1040EZ and see that the tax refund that would have put a down-payment on their big-screen TV is nonexistant and that they may actually owe money (that they won’t have), the pitchforks and torches are going to come out to play.  It is going to be seriously unpretty–I can hardly wait (especially since my family had their withholding changed pay back in what was reduced–heh, heh, heh).

In 2012, the GOP will regain the Senate.  Obama will, however, have won re-election by a first-quarter 2012 recovery bill that will look as if it’s working.  He will be the last Democratic President of the United States, since soon after his election, it will be clear that it really didn’t.

2)  The Double-Dip Depression

Even though the last six months has had the greatest stock market recovery since 1933, as I said above, like 1933, we’ve got another seven or eight years of Depression ahead of us.  Some of the high-percentage growth in the Dow and S&P have been in a few heavily-traded stocks, which have recovered due to government bail-outs.  Behind the curtain, though, none of the reasons for the initial stock drop have been remedied.  Remember, the burning economy of the 90s and the oughts were due to Baby Boomers spending money they didn’t have yet as fast as they could.  Their money is gone now–dissolved in homes that have lost half their value and 401ks that are now more like 201bs.  Their spending habits have changed, permanently, just like the habits of those who lived through Great Depression 1 changed.  In addition, close to a thousand banks are on the point of failing and had the FDIC not instituted two “special assessments” of member banks, it would already be out of money.

Around November of 2009, perhaps earlier if something traumatic happens (like a spike in oil prices, an assassination, or Israel attacking Iran), the market will crash again as those who trade stocks finally realize that there is absolutely nothing backing their paper.  This time there won’t be any real bottom–it’s possible that it might drop as low as 1400.  If the market continues even to exist after this trauma, it will recover to 2007 levels (adjusted for inflation) by around 2030.  This will, for all practical purposes, eliminate all but a few financial institutions and the rest of the retirement funds other than government pensions and Social Security.  The tax bases of the individual states will collapse to California levels and many supposedly essential services will be forced to close.

The official unemployment figures released by the Federal Government put unemployment at 9.4%.  In reality, if you count those workers who have stopped looking or have less hours than they want, you’re looking at 16%.  At the height of Great Depression 2, the official figures will run at 16% and the real value will be closer to 22 or 23%.  This will be the state of the economy by late 2012. 

The government will continue to attempt to remedy these economic woes by one action after another.  None will work, since the theories of economics that they’re using are still based upon a pre-information society in which nations were more independent.  Over the next five years or so, a new economic theory, rushed into being by the pressures of world economic collapse, will be devised and by applying it, recovery will slowly and carefully begin.

3) The Next Two Bubbles 

An economic bubble occurs when a good or service is priced far higher than would be paid if the market behaved rationally.  They’re nothing new, they’ve been happening as  long as there have been banks to loan money–the first big one was in Holland in the early 17th Century and involved tulips, of all things.

Right now, the two most overpriced goods available are education and health-care.  It’s a toss-up which one will be the first to go–my bet is education.

At the moment, universities across the country are turning out young people who are deeply in debt with no real way to pay it back.  The number of people currently employed within our economy is the same as it was in 2006.  This means that many jobs are only available by attrition–the retirement or firing of older employees.  The number of employees now able to retire has dropped drastically, which means that the number of new jobs are going to diminish, rather than increase.

In May of 2009, only about 20% of graduating college students in the US had jobs waiting for them when they left campus.  This means that, with the 50% drop-out rate (within the first four years) of college freshmen, a student paying his first-semester tuition has less than a ten percent job of getting a Bachelor’s Degree and a job three and a half years later.  Once the information that college will suck up any remaining mutual funds they have while providing little improvement in their child’s status, they’re going to start looking at alternatives or delay entry by a number of years until the “economy improves”  Of course, it’s not going to in the near term.  Dropping college enrollments will add to the loss of state revenues and alumni donations (as their funds dry up) and colleges will begin laying off non-essential personnel, which will reduce their effectiveness even further. 

I’m not sure what will replace brick-and-mortar institutions, probably something like the University of Phoenix, with its low overhead.  The University of Illinois had its chance to get in on the ground floor, but it blew that.

I’m going to save my analysis of the health-care bubble for a second article in a couple of days, since I want to talk about “Health-Care Reform” in detail anyway.

4)  Someone Elses Gets the Moon

Over the past eight years, the emphasis at NASA has been getting back to the Moon in preparation for a Mars mission later in the Century.  An advisor panel reported to the President and after consideration, the emphasis has been moved away from the Moon and placed elsewhere.  Each time this happens, it sets the program back four years (which is why post-depression private industry will end up being America’s drive into space.

Whatever flag is next planted on our satellite’s surface, the astronauts will be saying words like, “Uma etapa pequena…”  That’s fine, for NASA’s emphasis is now on the Lagrange Points and Earth-Crossing Asteroids, two destinations that will be ultimately much more useful, use less delta-V, and may end up saving the Earth’s life from an Armageddon-like scenario.

All right folks, I’ve just passed the 2000-word point, which is enough for a magazine article.  I welcome any comments, criticisms, discussion, as long as they’re civil.  Let’s talk.

Tom