11 Big Surprises for the Next Decade - an Israeli's Financia

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Monday, January 4, 2010
11 Big Surprises for the Next Decade


1. The Collapse Of The Euro- With Germany having such a different economy than the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) the weaker economies of the Euro region had a choice- to leave the Euro or to suffer massive deflation (since prices where too high and devaluation impossible due to the fact that they didn't have control on the currency). Massive deflation meant budget deficits north of 10% of GDP and with no monetization possible the sovereign debt market of the PIIGS started to collapse. Some countries tried to cut the budget, which brought severe civil unrest while the economy continued to detoriate. Others refused to physically reform which resulted in further revolts in their sovereign bond markets. The first domino to fall was Greece- when the yield on  the 10 year government bond reached 8% percent it was clear that without a bailout from Germany they where bust, and bust they went. Like after the collapse of Lehman Brothers, the collapse of Greece caused a general panic in the markets, with government bonds of the rest of the PIIGS collapsing since it was clear that Germany will not bail them out. European banks refused to lend to each other and the havoc was over only when the rest of the PIIGS left the currency.




2. China Bluff Exposed, Regime Overthrown- China's communist regime continued to print money, lending it to everybody that wanted and didn't want it. The giant housing, infrastructure, and manufacturing bubble came to a violent crash when the debts where not paid and inflation forced the authorities to tighten despite massive unemployment. The combination of high inflation and high unemployment in the urban centers took the people to the streets. The Chinese citizens refused to accept state intervention in the economy and their personal life demanding more personal and economic freedom resulting in prolonged civil unrest which almost reached a full scaled civil war. The collapse of the Chinese regime and economy resulted in a colossal bust for commodity prices, albeit temporarily and caused a severe recession in Australia, Brazil, Russia, Argentina, and the Gulf States.



3. Despite China's Collapse Commodity Prices Turn Up Again- Just a year after China's colossal bust commodity prices resumed their up trend. General scarcity combined with large physical deficits and money printing worldwide caused commodity prices to go up despite a weak world economy. Investors an eventfully the public started to seriously question the legitimism of fiat currencies around the world.



4. Pakistan Collapses- The nuclear state falls victim of various terrorist groups who eventually succeeded in overthrowing the regime. The country falls into a bloody civil war. The U.S military, in a planned operation which was planned during the Bush years takes control of the military facilities and dismantles them. The civil war affects India, which increasingly suffers from terrorist attacks throughout the decade. The collapse of Pakistan symbolizes a new phase in the global "War on Terror" with the pro- American Gulf States becoming the main target.



5. A Third Party Emerges In The United States- When Obama's first and last term ended the American public as fed up with anything that had to do with the elite- Wall Street, the big banks, Congress, the Senate, the Federal Reserve and the both of the big parties. As a result a third party emerged which managed to get a large amount of seats in both houses. The party's candidate for president got 25% of the votes in 2012 and won the election in 2016. The third party fundamentally changed the way politics is done in Washington and resulted in a large change in United States foreign policy. A lot of countries where left to deal with their problems alone. At the beginning, this policy caused havoc and even chaos in different countries around the world which suddenly where shocked by the shortage of American financial and military aid.



6. Top Officials in the Federal Reserve Criminally Investigated- A silent change that started after the financial collapse of 2008 gained momentum with the bill to audit the Fed. After the bill was approved everyone could know who got all the money that Ben Bernanke printed during the great panic days of 2008. The public was outraged and demanded an investigation of the Federal Reserve activist throughout the last 100 years. A special investigation was held and millions of pages where opened to public's eye reveling very close ties between the Federal Reserve and the financial elite of the United Stated dating back to 1913. A special committee of subprime court judges announces that part of the activities held by top fed officially where " criminal by no doubt"



7. The Dollar remains strong via foreign fiat currencies but loses to gold, eventually the United States and then the world goes back to a Gold Standard- First it was the collapse of the Euro, then the collapse of China, after came the crisis in the emerging world and the commodity producing nations, and finally civil unrest around the globe. In the second decade of the 21st century the world discovered that the United Stated, with all its problems and weaknesses is still the safest heaven there is. But against Gold it lost big time. Despite a weak economy gold and other commodities continued to trend high and when the public joined the trade it demanded a Gold Standard. The President, encouraged by Wall Street large bank tried to do the Roosevelt scheme, attempting to outlaw the ownership of gold on a large scale and halting the trading and selling of the precious metal. That was enough for the angry public which thanks to the internet revolution was much more informed than in the 1930's. A new president was elected in 2016 and a Gold Standard was established.



8. The internet moves to live broadcasting, TV stations and cable networks follow the fate of newspapers- During the second decade of the 21st century the technology of broadcasting the PC output on the flat screen TV created a whole new communication environment. Ten of thousands of broadcast where uploaded on the net on a daily basis allowing the web surfers to choose between thousands of news programs, financial and economic broadcasts, home made reality show, and local sitcoms.



9. The United States Remains World's Strongest Economy- In the second decade of the 21st century the United States was suffering. The economy was stagnating and was bouncing in and out from recessions and depressions. The military was involved in countless wars, and the personal and economic cost became unbearable. Beside that, the country suffered from record high crime rates, social unrest and political turmoil. But, the rest of the world was far worst. Europe has disintegrated, China has collapse, Russia remained a corrupt and failed state and India remained a poor and corrupt country fighting terrorist group. The world discovered that without the U.S locomotive the world economy couldn't grow.



10. Japan's Government Bond Market Implodes- The Japanese government and economy got used to record low interest rate. But the combination of government debt reaching 230% of GDP and the ageing population cashing in via the pension funds on the government bonds cause a total implosion. In only 2 month the yield on 30 year government bond went up to 4% causing a panic selling and forcing the government to finally cut the deficit. The deficit cut where not enough, and Bank of Japan did what it knew best- printed money. Only this time, to there big surprise it resulted in inflation, and just ordinary inflation-hyperinflation. The markets discovered that they where worried about the wrong country. Japan became the first modern country in 21st century move towards hyperinflation



11. New Economic Term Developed, A Yo-Yo depression- Throughout first 15 years of the 21st century investors and economists where debating heavily upon the economic environment. Is it deflation, inflation, stagflation or hyperinflation? Eventually, a new term emerged- Yo-Yo depression which describes an economic environment in which the economy moves violently every year or so from inflation to deflation.



Posted by Israel's Financial Expert at 3:14 AM
Labels: predictions 2010

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