Saturday, December 31, 2005

It's time for ICBW's annual prediction review and update. First, last year's predictions....
  • There will be a major effort to rejuvenate the Middle East peace process, following the upcoming Palestinian Authority elections. The effort will come to absolutely nothing, and attempted Palestinian terrorist attacks and Israeli military incursions into Palestinian towns will be roughly as frequent at the end of 2005 as they are today.
  • I'll score myself "correct" on this one. Although I obviously didn't expect the Gaza withdrawal, it doesn't appear to have had much effect.
  • The coming election in Iraq will completely change the characterization--though not the actual character--of the American involvement there. A new Iraqi government, dominated by the Shiite slate, will assume power, and invite the US military to remain to continue its reconstitution and training of the Iraqi army and security forces, and to help protect the country from "insurgent groups", who will increasingly be labeled as foreign-supported and even foreign-staffed. Syria will be the main target of this rhetoric, because it's much weaker than Iran. But no action beyond diplomatic and economic sanctions will be taken, partly because the US is loath to expand its military burden, and partly because maintaining the Syrian fig leaf will be too useful for both the US and the new Iraqi government as an excuse to support the continued presence of US troops.
  • Mostly right, but the "Syrian fig leaf" was largely unnecessary, in retrospect, as blaming the local Al Qaeda forces was enough of an excuse for the Americans to remain.
  • Messrs. Chavez, Khamenei and Kim will remain in power yet another year, barring natural or accidental death. Likewise, Kofi Annan will survive the oil-for-food imbroglio and remain UN Secretary General.
  • An easy gimme, as it is every year.
  • The US stock markets will decline overall in 2005. The real estate market will (finally) peak and decline. Inflation will be kept under control by lower oil prices and rising interest rates, but the dollar will continue to fall--though somewhat less precipitously--and economic growth will slow accordingly as interest rates, the drop in the markets, and the ripple effects of the slowdown in China all take their toll.
  • This one wasn't exactly spot on, I'm afraid. The main stock market indices closed virtually unchanged from the beginning of the year. The real estate market has indeed shown signs of peaking late this past year--almost exactly at the moment when I bought into it, in fact (friends can confirm that I privately predicted that outcome). Likewise, oil prices peaked in the third quarter and have declined since, easing inflation fears. However, both markets unquestionably ended 2005 above their final 2004 levels. Inflation was, indeed, kept under control, but the US dollar staged a stunning rally throughout the year, and economic growth remained strong both in the US and China.
  • An event will occur in 2005 that will blossom into a huge, crippling scandal for US president Bush--though possibly not until 2006.
  • I don't think the various Iraq- or surveillance-related scandals qualify--overzealous conduct of the War on Terror is what the public expects from the Bush administration, and he's therefore unlikely to be blamed for it. A corruption scandal, on the other hand--possibly related to the Abramoff affair--is a possibility in the coming year.
  • A scandal will also damage the career of television psychologist "Dr. Phil" McGraw.
  • Right on schedule....

    Now for my nothing-much-changes predictions for 2006....

  • The focus in Iraq will turn to the corruption and ineffectuality of the newly elected government. The US will reduce its troop presence in the country, claiming as its justification the improving order-keeping capability of the Iraqi armed forces and police. But the insurgency will continue, public safety will be roughly as poor as it is today, the economy will weaken, and dissatisfaction with the squabbling, dealmaking and embezzlement of their elected politicians will sour the Iraqi public on democracy. Iraq will likely be in for a few more years of the same before eventually finding a Saddam-lite/Vladimir Putin-equivalent to de-democratize and restore order.

  • There will be neither a military strike at Iran's nuclear facilities (recent reports notwithstanding), nor a test of an Iranian nuclear weapon. By the end of 2006, things will be as they are today--Iran apparently barrelling towards nuclear capability, and the West hemming and hawing over what to do about it.

  • Some kind of joint Hamas-Fatah government will be established in the territories controlled by the Palestinian Authority. It will be about as effective as the current government--that is to say, not at all--at battling the chaos that reigns there. A small-but-steady stream of rockets and mortars will rain down on the areas of Israel bordering on Gaza. Israel will respond with regular incursions. Terrorists will continue to attempt to infiltrate into Israel, and will occasionally succeed. Further Israeli withdrawals, if they occur, will have as little effect as the Gaza withdrawal.

  • President Bush's popularity will continue to strengthen during the first part of the year, but will nose-dive thereafter in response to the scandal referred to in my aforementioned prediction for 2005. The Republicans will lose ground, though not control, in both houses of Congress in the November elections.

  • Interest rates will rise a little, then decline as economic growth slows. The US dollar will resume its descent after its 2005 rally. The housing market will continue to cool. Oil prices will be down slightly, and inflation will remain under control. The major stock market indices will end the year down modestly from their current levels.

  • The Conservatives will form the next Canadian government.

  • The usual suspects--Chavez, Khamenei and Kim--will remain in power, barring natural or accidental death. Kofi Annan will remain UN Secretary-General until his term expires at the end of 2006. And despite signs of trouble, Syrian president Bashar al-Assad will also remain in power through the coming year.

  • The controversial surprise popular culture hit of the year will be a fictional work (film, television broadcast, play, novel, song, or perhaps some other form) that dares to vividly depict Islamist terrorists of Middle Eastern origin as evil villains.

  • As always, these predictions were arrived at by an untrained unprofessional with a closed mind. Don't try this at home, if you value your reputation and dignity.

    4 comments:

    EKR said...

    I was gratified to see that you'd invested in real estate. That said, given that you were already buying a house, predicting a market decline shortly thereafter seems like a good hedging strategy: if you're right, you get to say I told you so which softens the loss. If you're wrong, at least your property value is up.

    Dan Simon said...

    "Invested" is perhaps the wrong term--I'd go with "was compelled by domestic circumstances to dump a bunch of ill-timed money into, knowing full well that a hefty chunk of it would soon evaporate". As for my prediction being a hedging strategy, the evidence shows I've been predicting, with my trademark badly-jumping-the-gun timing, the popping of the real estate bubble for far longer than the few months I've been house-shopping. I hence consider the near-perfect coincidence of my involuntary foray into home ownership with the very peak of the market as something of a perverse-yet-rather-clever joke of fate.

    Nicholas Weaver said...

    One question: How long can you remain? Even at insanely overvalued, if you can be static for >7 years (to start seriously amortizing down the loan and therefore start paying a lot less interest fractionally), it will end up paying off.

    Dan Simon said...

    Yes, that's what they were saying in Japan, back in 1990...