Tuesday, February 13, 2018

The first ICBW podcast of 2018 is now available--we discuss "the memo" in part 1, Aziz Ansari's very bad date in part 2, and the Bitcoin/blockchain bubble in part 3.  Listeners are, as always, encouraged to respond via comments (although, to be fair, merely listening is a formidable achievement in itself)...

Monday, January 01, 2018

The year having seemingly flown by with astonishing speed, we find ourselves once again at the moment when the world celebrates its collective act of metaphorical rebirth:  I'm referring, of course, to the publishing of our annual ICBW predictions post.  As always, we begin with last year's reckless prognostications:
  •  All that stuff I predicted about last year's economy will apply this year.  (Or next year--see above.)  If you object that such a prediction is non-actionable, keep in mind Bernard Baruch's (possibly apocryphal) aphorism:  "I made my money by selling too soon"...
To clarify, I predicted "a new recession in the 2016-2018 timeframe" at the beginning of 2015.  Obviously, this prediction hasn't yet panned out, but I remain optimistic, so to speak (see below).
  • The right-wing resurgence in Europe will continue in 2017, with several more countries electing new nationalist, anti-immigration governments.  Brexit negotiations will begin in earnest, but will not complete this year.  Continuing sporadic terror attacks will be joined by increasingly frequent and more severe incidents of nativist violence against immigrants.
Not a difficult prediction, of course, but pretty darned accurate.
  • Donald Trump's first year in office will be very similar to his predecessor's:  lots of "I won" bluster, but very few legislative accomplishments, apart from one or two bipartisan ones driven by Congress with Democratic cooperation.  (The Republicans will not abolish the Senate filibuster, although they'll keep the limitations on it instituted by the previous Democratic Senate.)  Neither Obamacare nor immigration will be addressed legislatively, although many of the Obama administration's executive actions in these areas will be reversed.  Reaction to Trump's usual bombastic pronouncements will be overwhelmingly partisan, and his approval ratings will therefore track his partisan support, which will hover within the 40-50-percent range. 
Mostly accurate, except for a couple of details: the recent tax bill appears to have done away with the Obamacare individual mandate, and Trump's support has consistently dipped below 40 percent.  
  • Trump's foreign policy will sound radically different from his predecessor's, but will in practice be similarly quiescent and timid, at least militarily--although thankfully without the open courtship of avowed enemies (with the exception of Putin's Russia) and sabotage against pro-US friends.  For example, despite the new pro-Israel tone, US reaction to the recent anti-Israel UN resolution will be much more muted than the current torrent of threats suggests.  Any funding cuts or formal status changes to the US' UN membership will be confined to ineffective token gestures, and the US embassy will end up not moving to Jerusalem this year.
The Trump administration has actually been mildly more assertive in foreign policy than this prediction anticipated, driving a UN budget cut, at least announcing an intent to move the US embassy to Jerusalem, courting Saudi Arabia, adopting a more aggressive posture towards enemies such as Russia and North Korea, and speaking out in support of the Iranian protesters.  It will be interesting to see whether it will be able to sustain this assertiveness in the coming years, and apply it to more challenging cases such as Turkey (see below).
  • Both ISIS and the Syrian rebellion will continue to weaken, but will not yet disappear by the end of 2017.  As the Assad regime consolidates its hold, pro-Iranian proxies will be freed up for increased attacks on Israel, and Sunni radicals as well, seeking a less ruthless target, will start turning towards Israel in earnest.  Some minor attacks will occur, to which Israel will respond harshly.  Meanwhile, the corruption investigation against Bibi Netanyahu will take many months to complete, and likely won't be completed by the end of this year.  In any event, ultimately no charges will be laid.
The Bibi prediction has held up so far.  Some have claimed full victory against ISIS, although the completeness of its obliteration is as yet unclear.  The most interesting deviation from this prediction, though, is the formation of a moderate Sunni anti-Iran bloc that at the very least prefers to downplay conflict with Israel as a distraction.  Iranian proxies such as Hezbollah, meanwhile, so far looked far more interested in mopping up and consolidating their control of Syria this past year, presumably postponing their confrontation with Israel until that task is complete.
  • Venezuela will collapse further into failed-state status in the Zimbabwe mold, with a corrupt and incompetent government using brute force to suppress opposition amid continuing economic collapse.  Meanwhile, the American opening to Cuba will do nothing for its population's destitution, and economic failure will lead to significant popular unrest in Russia, Iran and Egypt.
The Venezuela and Cuba predictions were easy.  There was only a tiny bit of anti-Putin noise in Russia, and Egypt looked pretty quiet this year, but the people of Iran, ever keen to avoid embarrassing this blog, came through in the end.  
  • The next Star Wars film will not be named either "The Force Gets Dressed" or "Rogue Two".
Perhaps it should have been...

And now for this year's crop of predictions:
  • The long-awaited stock market crash and resulting recession (or at least one quarter of negative growth) will finally arrive this year.  The main market indices will end up below their levels of January 2017, thereby retroactively validating my prediction for this past year.  Real estate and oil prices will fall as well, although not by as much, since their markets aren't nearly as frothy.  And there will be no massive financial near-meltdown this time, since stock market asset ownership isn't particularly highly leveraged.
  • In addition, blockchain-based monetary instruments will completely collapse, never to recover (although more bubbles in similarly worthless ad hoc quasi-currencies will no doubt occur at some point in the future).  Megan McArdle has written a nice pair of summaries of why Bitcoin and its imitators are doomed to fail, whether as payment systems or as currencies.  I would add only some history: these technologies are actually the hybrid offspring of two previous failed ones--anonymous "e-cash" of the 1980s and peer-to-peer ("P2P") distributed data storage systems of the 2000s.  Both of these predecessors fooled a shocking number of advocates into believing in the viability of systems whose only remotely plausible attraction was the promise of evading government regulation and law enforcement, and that are otherwise in every way inferior to more mainstream alternatives.  Blockchain-based currencies have merely followed in their footsteps.
  • Donald Trump's popularity will bounce around (or just below) the 40% level throughout the year, defying predictions of inevitable collapse but nevertheless staying well below the break-even point.  Parallel investigations into both the current and previous administrations' alleged interference with law enforcement investigations will result in either bombshell revelations of scandalous malfeasance or overhyped non-issues, depending on one's partisan allegiance; in any event, neither will generate consequences of any legal significance. However, a political consequence will be a massive defeat for the president's party in the November midterm elections, similar to those experienced by his predecessor:  Democrats will take both houses of Congress by small margins--gaining hugely in the House, and narrowly in the Senate despite having far more seats up for election in the latter chamber.  This will of course intensify legislative gridlock, which in any event will have existed since at least the first midterm election of the previous administration.  (A possible exception is an immigration compromise this year, in which a limited amnesty is traded for enhanced border enforcement.)
  • The Iranian regime will suppress the domestic protests against it within weeks using ruthless violence, but the extent of the unrest will push the regime to restrain its foreign adventures somewhat in order to focus on internal security.  For example, the mop-up operations in Syria will continue and be largely complete by the end of the year, but the shift towards anti-Israel (and anti-Jordan) activity will be put off for this year at least.  Hamas, on the other hand, will try mightily to instigate conflict with Israel, without enough success to ignite another full-scale "grass-mowing" operation.
  • Meanwhile, North Korea will quickly fade back into irrelevant obscurity, as will the Jerusalem embassy move, which will make leisurely progress without being officially completed by the end of the year.  Instead, attention will shift to the conflict between Turkey and the various Kurdish entities along its borders, with the US increasingly aligning itself against an increasingly assertive, belligerent and anti-Western Turkey.
  • Concern about academia will shift from its toxic politics and chaotic environment to its dire financial straits, as the economic downturn causes a collapse in enrollment, particularly at expensive private colleges, with alternatives such as community college, apprenticeship and online education beginning to look comparatively far more attractive to prospective students.
  • The NFL will experience a bounce-back season in the fall, with attendance and viewership recovering markedly despite (or perhaps partly because of) the difficult economic situation.
As always, readers are invited to dispute these predictions, or propose their own alternatives.  But keep in mind the old Danish saying:  "It's difficult to make predictions--especially about the future"...