Predictions for 2011

Predictions are fun, but rarely useful. They tell you what someone thinks is happening now, and attempts to extrapolate them into the future.

Nonetheless, here are my predictions for 2011.

1) Kick-the-can-down-the-roadism, the predominant philosophy of our time, and which claims equal numbers of believers on both the right and the left, remains in full force. Budget problems will not be addressed, imbalances in Europe and Chimerica will be ignored and grow increasingly unstable. Liquidity is such that these problems are not likely to be resolved this year.

2) There are two events I foresee that could cause a return to recession in the US: 1) Problems in the bond market that force Spain to seek foreign assistance to meet its funding needs and 2) increased pressure on the Japanese bond markets force it to seek international assistance or drastically lower the value of its currency. Current trends make the former seem more likely than the latter, but the latter would be far more destabilizing to the world economy.

3) Without exogenous shocks, the US will not return to recession in 2011, unless Congress aggressively attempts to reduce the budget deficit (very unlikely).

4) Even if they do not finish the season with the best record, the Miami Heat will win the NBA title this year. Easily.

5) Social tensions will rise, as the gap between wealth owned the top fraction of 1% and the rest grows. Local and state governments will cut budgets; business will reduce perks for all but the highest revenue producers. For all but the best entrepreneurs and executives, standards of living will be reduced, even if only marginally.

6) Opportunities for entrepreneurs remain great. Those who take control of their own professional destiny and meet relevant demands in the market will be rewarded. Anyone who tries to earn a living as a wage-earner or salary earner in a standard environment will see increased pressure on their standard of living, as high unemployment and increased mobility and fungibility of service workers allows employers to save money and cut costs.

7) Streaming television continues to grow in popularity and significance, with Netflix facing strong competition from Amazon, Google, Comcast, and others. A la carte cable will start to become a reality.

8) Dave Chappelle makes a comeback (I hope).