Ah, What the Hell...Here's My Predictions for 2006

It's customary in the investment world to ring in the New Year by offering up one's predictions for the coming year. Granted it's just an exercise in onanism, but at the same time people really seem to like reading predictions, so it's kind of a crowd pleaser. Anyway, I thought I'd throw my own hat into the ring in that respect. The below speculations are a bit of a jumble, but I don't see any reason to clean them up since I'll be wrong on all but the most obvious predictions. Still, I rest easy knowing that all our attention spans have become so crippled that nobody one will remember this post by even the middle of next week.

The general image I have in my mind for 2006 is the opening tip-off in a basketball game. Certainly 2005 was a year of transition in a great many ways, but most of those ways were internalized. Because despite several obvious and striking "events" which served to bring critical problems and issues into the public consciousness, still for the majority of Americans those issues more or less only happened "in TV Land". Or in keeping with the basketball analogy, 2005 to me was the year the players finally got off the benches and began to line-up in their respective sides on the playing court, but no game had really started, per se. Still, the anticipation and tension is steadily mounting as we approach the official whistle-blow....

In this light I have to believe that very quickly into 2006 the tip-off is going to happen and the ball(s) will be in play. In other words, all these mounting tensions will start to become more "externalized", and the TV show will start to seem a lot more real to a whole lot more people. At the expense of sounding more dramatic than I really want to--because the game is only just getting started after all--I think 2006 is going to reveal an event of Katrina-like emotional impact, but one affecting the entire country. And ultimately, my guess is that 2006 will be labelled either the "Year of Peak Oil" or the "Year the U.S. Faltered as a Superpower". Probably both.

But first I want to point out that in the political sphere it's now make-or-break time. The major questions for 2006 will revolve around how the present administration can pursue an escalated war abroad while under intense political attack at home. For instance, there is a steadily mounting clamour for change at the top, whether it's real or illusory (by that I'm referring to my own subjective opinion that any 'change' that happens will likely only be a pretend shifting of players to appease public and world opinion, but ultimately only a superficial concession aimed at allowing the over-arching gameplan of globalization to continue for a little while longer). Yet at the same time there is really no time to be wasted in such diplomatic pandering--too many critical issues are teetering in the balance (which I'll outline in a moment). Now one "easy way out" that many other pundits are bandying about would be another major "terrorist" event on the homeland, but I'm leery of jumping to that conclusion just because it's such an obvious gambit. The door has been left wide-open to terrorism for years now and yet nothing has happened, which leads me to believe that the people who have the resolve to commit such an act are well-aware that it would only hurt their cause at this point. In fact the anti-American factions are actually holding the high-cards right now. With world opinion soundly turned against the NeoCon agenda, with the country teetering on bankruptcy trying to fund a war on the far side of the world, with American domestic opinion turning fiercely against that war, with the occupation of Iraq being lost even in the face of a heightened sabre-rattling against Iran, with the growing riches that oil-producing countries are raking in as oil prices rise while they enjoy a greatly increased status on the world stage via the increasingly urgent demand for those resources....well, all said, it would be ludicrous at this point for quote/unquote "the terrorists" to go and hand the NeoCons an ideological rifle to shoot them with. And I should add that I just don't buy the idea that such an "event" might be entirely engineered by the NeoCons--because while I suspect they've effectively been allowing for such and event to occur (and probably getting mightily irked that the fish aren't biting), I don't think they could orchestrate it--there's too much political in-fighting going on between them and the intelligence and special forces.

But anyway, to return to the original question....the globalist agenda is at a critical loggerhead: they're losing the oil-wars and they're losing popular support globally, but what else can they do? They have find an excuse to escalate things, and find one quickly. So my guess is that somehow in 2006 they're going to dig deep into their playbook for the imperialistic version of the Hail Mary (sorry for mixing sports metaphors). In fact I'll go way out on a limb--since nobody likes to read predictions that don't offer concrete statements of events--and say that before 2006 is out the ever-changing "War Agenda" will have shifted over to the frank announcement that "Alright folks...Peak Oil is coming up fast. And if we don't draft troops right now to secure those overseas reserves in our own name our country is going to collapse and you'll lose everything you have." I mean, think about it. It's honest enough, it's simple enough, and it would undoubtedly convince a lot of people.

But regardless of whether any such "official statement" is issued, there are other reasons 2006 will go down in history as the "Year of Peak Oil". But more on that below....

In the economic sphere 2006 just has to be the year when the mainstream media finally runs out of things to cheerlead and has to suck it up and acknowledge that the U.S. is in fact in a recession. As I see things shaping up, the economic theme for 2006 will likely be: "Hey, Where Did All the Bull Markets Go?". Aside from watching the major currencies suck wind in 2005, and the housing downturn progressing along it's painfully glacial path, money has of late been flowing into the U.S. bond markets solely for want of anywhere else to go. So perhaps with the currency and real estate markets failing you'd logically assume the bond market would become the de facto last man standing. However in the investment world (unlike real estate) the obvious opportunity is always a suckers bet (just ask all those Euro-bulls of last year...).

All in all, if I was a still a player I'd be net short U.S. bonds in 2006. But the far more important question--what with currencies, real estate and bond markets all in decline--is "then what the hell do you buy?" Sure some of the money will flow into gold (the asset of last resort) but the gold market is like a drop of rain when compared to oceanic markets like bonds and real estate, and it can't even begin to contain all this liquidity the Fed has been producing the last few years. I have no idea where all that money can go, but if I'm right and the bond market finally begins to falter, there's going to be a global sea-change in store as the rich stop getting richer and start wondering how they're even going to stay afloat. But those concerns fall under the category of "Problems You Wish You Had"....for all of us little people, I still like modest gold investments for the long term, a decent supply of cash on hand for the short term, and good rural real estate for an all around "investment in your future" (although it may dip in value along with the rest of the real estate market over the short term).

On the entertainment front I see 2006 as a real breakthrough year for Vince Vaughn...his "star" is truly on the rise. Johnny Depp, however, is looking sooooo 2005. And Owen Wilson...? Why he spells Charisma with a capitol "NOT". Start looking for him on the bottom shelf of your local movie rental store.

But on the lighter side, what's all this about "The Year of Peak Oil"..."The Year the U.S. Faltered as a Superpower"? Well this arena is where I think the basketball game is going to be the most dramatic, and there are a couple of central reasons I believe this.

The first is that, judging by how quickly the thought-meme of Peak Oil moved into the mainstream during 2005, I have to believe it's about to erupt into a certified household subject during the next few months. I mean let's face it, Peak Oil--regardless whether you accept or deny it--is a godsend of a topic for the media. It's like "Lacy Peterson" x "missing girl in Aruba" x "Hurricane Katrina" x, like, infinity dude! And it's a story you can spin in any direction you choose, so it never gets old. The only drawback is that it isn't just happening to poor people in New Orleans and Mississippi....it's happening to poor people everywhere, which means any pretense to objectivity goes out the window as fear and sensationalism take root. And that's undoubtedly why it's been treated with kid gloves until now. But they simply won't be able to avoid the story for much longer, because we'll soon start seeing the countless domestic stories about natural gas shortages and delinquent energy bill payments, and the great oil grab is going to be the only obvious explanation for unfolding events on the world stage. In short, in 2006 it will become abundantly clear that present demand has outstripped present supply, and that situation will present so many issues that it will become the story in and of itself.

I should also note that once the media launches the issue into public consciousness--when the cat is finally out of the bag as they say--our future will become much more uncertain than it is even now. Peak Oil will be the cause du jour for anyone and everyone with an agenda to push. Politicians will tie it into every bill they sponsor and every issue they espouse. Corporations will blame all their troubles on it, while identifying whole new markets around it. The religions will proselytize around it, scholars will pontificate about it, self-proclaimed experts will magically spring up out of nowhere, and virtually everyone will begin to reconsider what their hopes and dreams have been based on up until now. But then again, these developments will probably extend further out, into 2007 and beyond....

So as I mentioned, power-plays on the global stage--which are already starting to get a little hairy--are only going to get hairier. For the past several years there has been this delicately balanced diplomatic and economic tug-of-war between the U.S. vs. China / East Asia (which, if I may toot my own horn, I was talking about here at deconsumption long before it became popularly recognized). What has kept that tug-of-war in the proverbial Mexican Standoff is simply that no significant "third force" has come along to upset the balance. But I believe that third force is coming in 2006, and it's the second reason that I believe this will be the Year of Peak Oil.

A lot of attention has been given to the massive profits that oil companies have been making over the past couple years, but the real story is the massive profits the oil producing nations have been making. Almost across the board they're sitting on rapidly growing piles of cash, and that cash has to be invested somewhere. However (unlike China) these countries aren't interested in buying U.S. bonds. They're selling their oil dollars as fast as they can to concentrate on infrastructure investments, arms deals, negotiating trade agreements, and (as with Venezuela) paying off their national debts. In short, they've gotten hip to the tricks of globalism, they know they're literally sitting on a "black-gold mine", and they're getting lean and mean and eager to begin flexing their muscles on the global chess board. Oh, and did I mention they really, really don't like America? Well as the old saying goes, common enemies make for common friends. And these friends--undoubtedly including China--will be working together to exclude U.S. interests from their lives.

So all in all the U.S. is very rapidly losing it's clout with these oil producing nations as they become financially independent and morally indignant against Western imperialism, and most of the rest of the world is scrambling to take advantage of this. No, they can't just shut off the taps altogether. But even if oil prices do no more than hold steady in 2006 they're going to be in a damn good position to hold the U.S. hostage to their demands.

So my biggest prediction for the coming year is that we'll experience a new version of the Cuban Missile Crisis in that some collusion of oil producing countries will issue the U.S. a blackmail ultimatum: do what we want or we'll start squeezing your oil tube. Of course such an ultimatum might be difficult to recognize because it may not happen in the public media, perhaps just through a few phone calls to the White House. But nevertheless the timing for this type of gambit is soon, since U.S. will be over a(n oil) barrel as winter draws on because of our already greatly depleted strategic reserves in the wake of Katrina, not to mention our hyper-precarious economic situation and the failing occupation of Iraq. And it's more than abundantly clear that there is no longer any margin of error in the supply pipeline.

So in closing, I no longer believe that this administration is going to be able to launch an attack against Iran because that will undoubtedly be one of the demands that will be thrown down. However at the same time the parallel to the Cuban Missile Crisis is apt, because the danger in this kind of face-down is that the NeoCons may in fact be every bit the egocentric control freaks they appear, and might not hesitate to call their nuclear bluff.

But at this point my crystal ball gets a little fuzzy, so I'd do better to just leave off for now.

Comments

In fact I'll go way out on a limb--since nobody likes to read predictions that don't offer concrete statements of events--and say that before 2006 is out the ever-changing "War Agenda" will have shifted over to the frank announcement that "Alright folks...Peak Oil is coming up fast. And if we don't draft troops right now to secure those overseas reserves in our own name our country is going to collapse and you'll lose everything you have." I mean, think about it. It's honest enough, it's simple enough, and it would undoubtedly convince a lot of people.

I'm surprised this hasn't been the message from the get-go. Or is it too honest in the face of American tendency towards denial and wishful thinking?

It's the only argument that convinces me Iraq may have been a necessary evil (and yes, I realize it is very evil.) Of course, the neocons totally fucked it up, so it's a net loss for "our side".

Not having a lot of spare cash to invest in rural real-estate, my long-term strategy involves investing in rosary beads. Because, as Jason Godesky says, "Banking on miracles may not sound like a solid bet to many of you, but at this point, it's really all we have left."

[slomo]

Forgot to sign my name to the above comment. Sorry.

[Steven Lagavulin]

slomo, you're right...but I think the reason this wasn't "the message from the get-go" is simply because Peak Oil was an unmentionable subject. That's why I think 2006 will be such a pivotal year, because I think Peak Oil will come to dominate the headlines. And when that happens, everyone will embrace it as an excuse for anything at all...but most of all, escalating the oil war.

[montysano]

Great post, Steven.

You may have already seen this article, but just in case: The Real Reason Why Iran Is The Next Target. The gist of the article is that not only is the war in Iraq a war for remaining resources, but it's also a war to keep the international oil market trading in dollars. Apparently, i 2006 Iran plans to compete on the world oil market, trading in euros.

My financial acumen is way too underdeveloped to get my brain around this. What happens to us when the dollar is no longer the currency of choice? A future deconsumption post, perhaps?

[DigitalDjigit]

I am sorry, with that Owen Wilson remark you lose all credibility.

[Peter]

I have never been able to take the talk of an attack against Iran seriously. Think about who we've been attacking since the Vietnam War ended: Grenada, Panama, Iraq. (I may have missed a few of the smaller ones.) These are all 4th or 5th rate military powers. Iran is capable of putting up a good defense. Morever, it could stop all tanker traffic in the Gulf if it wanted to do so.

Not even the Neo-Cons are foolish enough to attack Iran.

[Cornfed]

"I'm surprised this hasn't been the message from the get-go"

It probably hasn't because, notwithstanding the fact that the American economy produces very little of value, most Americans seem to want to pretend that they are gainfully employed and productive. The realization that they are useless parasites and that their rapidly diminishing wealth is based on common stealing would be harmful to their infantile psyches.

"It's the only argument that convinces me Iraq may have been a necessary evil (and yes, I realize it is very evil.)"

Necessary evil? I don't see why it is necessary. Sure, if the Washington regime is to keep their corrupt and bankrupt system going for a few more years then it will be necessary for them to loot the rest of the world to an even greater extent than they previously have been, but keeping the system going is neither necessary nor desirable. To facilitate a worthless parasitical elite leeching off others would be reprehensible even if it didn't involve mass-murder.

[slomo]

Cornfed, I think you misunderstand me (or at least, I did not articulate my point very well).

The fact that Americans now produce nothing of value is precisely why the attack on Iraq was "necessary". Of course in a more just and sensible world, we would have used our capital to scale down our oil-dependence while creating a more meaningful economy. But since we didn't do that, the only survival option now appears to be to continue our parasitic behavior at the expense of others less fortunate. This is not a long-term strategy, since it dooms us to an ugly end, but I guess it's all we have.

I'm not sure who to blame. The elites who put us in this mess in the first place? Or the general American public, wit its fragile and infantile psyche?

[Cornfed]

Yes, I understood the point that most Americans must either continue robbing others or starve to death. I'd just prefer them to take the latter option.

[crz53]

Cornfed,
I'll admit, there's a big part of me that eagerly wants to sit back and say "I told you so" when Peak Oil has its inevitably disasterous effect on our current "Clusterfuck Nation" (to quote James Howard Kunstler). It will be very interesting to see how the U.S. handles the next 5 years or so and compare it with how Cuba handled their "special period" immediatley following the collapse of the USSR. They've given us a window into how a successful post-Peak transition can work. I am, however, very doubtful as to whether or not our self-absorbed, materialistic, capitalist society is capable of making those same type of adjustments.
- Mike Lorenz

[nulinegvgv]

i do not think most americans are willing to except endless war as the price for continued "prosperity". there will be some, perhaps many that will say we should fight to the death over oil, that "the american way of life is non-negotiable". but i think faced with the honestly explained prospect of sending our future generations to fight for our right to drive will strike the majority of americans as insanely stupid.

to back me up i've got to bet that karl rove and friends has checked into this honest approach and figured out that it won't work. this is why they've so far come up with other reasons to set up camp at the last remaining gas station. it's no wonder we haven't found osama yet. bush needs him badly as a reason to keep fighting.

[montysano]

crz53:

Glad you mentioned Cuba's Special Period. If you search the Web, you can certainly find the Special Period referred to as a time of great privation and difficulty. In many ways, however, Cubans rose to the occasion to create a more progressive and sustainable society.

As Bill Clinton recently noted, the tragedy of the current situation is that, nested within all the potential problems, there is also the possibility of tremendous economic opportunity in the retooling of the Clusterfuck Nation. That, however, would require leadership of tremendous courage and vision...........

nulinegvgv said:

i think faced with the honestly explained prospect of sending our future generations to fight for our right to drive will strike the majority of americans as insanely stupid. Unfortunately, nuline, we'll never get that honest explanation. Instead, we get fear. And you're right: Osama will likely never be captured. He's straight out of 1984, the Goldstein of our times. BTW, if any of ya'll haven't re-read 1984 lately, do so. It now read like a user's manual.

Nice to see a PO blogger from the South, nuline. I'm down the road in north Alabama.

[Shep]

So in closing, I no longer believe that this administration is going to be able to launch an attack against Iran because that will undoubtedly be one of the demands that will be thrown down.

This statement couldn't be more incorrect, as has already been noted. The attack against Iran will happen, and sooner than people think. We aren't privvy to the workings of the inner-elite circle but things must be pretty desperate by now. Its plain to see that the entire world is lining up agains the US and the only way the idiots in charge know how to deal with such a cicumstance is to bomb and bomb and bomb.

So much for humanity's progress. In fact the biggest story of the year might not be Peak Oil itself, but the collective regression of the entire world industrial society. Once the nuclear bombs start dropping anywhere in the world, all bets are off and humanity will lose, big-time, no matter what happens afterwards.

[Aaron]

Scott Ritter had some comments to make about Iran earlier last year. He said the inside word was that the war on Iran would start in the middle of the year. He also pointed out that the war against Iraq actually started a long time before Bush declared that they would attack. There were a lot of preparations to make including those ever popular bombing runs before the troops crossed the border as well as more covert activities. I don't remember the details but no one was really aware of this stuff beforehand then and it's entirely possible that some kind of preparatory work is going on right now.

This doesn't necessarily mean I think it will happen but it's definitely worth considering

[Steven Lagavulin]

Let me just throw into the conversation that I've been anticipating the attack on Iran for at least a year now (I think I first mentioned the Iranian oil bourse as a catalyst at the end of 2004 when it was still difficult to find any information on it). So I'm not arguing what the NeoCon's intentions are.

The only point I'm bringing up here is that--the way I see things as they stand now--the NeoCons no longer hold the cards to call the shots the way they did going into the Iraqi debacle. The oil-producing nations now have a unifying cause, which is to stop the NeoCons imperialistic actions. But more important is that they also now have the "weapons" to do it: they are now very strong fiscally, while America is very precarious economically--especially where the flow of oil is concerned. America can't take another oil shock...and the oil-producing countries could deliver a targeted one directly to America, without affecting other nations.

A concerted threat to slow exports to America would rock our economy and throw the NeoCons many failures in their faces before the whole country. I firmly believe the population would turn on them, and not the "attackers". And it would likely be accepted (if not applauded) by much of the world as a "noble" attack (as opposed to resorting to violence). So as I see it, this is the action they HAVE to take, if they can manage to arrange it properly.

But most importantly, I think that before they would resort to such an economic "attack", they would first take a more moderate stance (if only to test their strength) by blackmailing the NeoCons..."Do this or we'll do this..." And I think this blackmail card would have to be played in the next couple months, before the U.S. attacks Iran.

That's my take on the situation. We'll find out soon enough.

But of course there is always the risk that the NeoCons will play the nuclear trump card....

[crz53]

I see Steven's point about the current American regime not having the political capital that they once possessed. And he's right that Iran really is in kind of a position to screw with us some. That being said, the Neocons basically told the rest of the free world, including a significant chunk of their own population, to fuck off when we invaded Iraq. I think a lot of these guys have big enough egos and small enough brains to pick a fight with Iran even when it's blindingly obvious that it's a bad idea. About the only thing I see that might hold them off is if they come to the realization that such an action would seriously threaten their power. Remember, for this bunch, self-preservation is priority #1.
With regard to what Aaron wrote about the US military operating in Iraq before the war was officially declared, that reminded me of an interview I heard a few months ago on Democracy Now! with Seymore Hersch. He was talking about reports of covert ops going in Iran. Could it be that our next misadventure in the Middle East is already underway, and wejust don't know it yet?
- Mike Lorenz

[Aaron]

Mike wrote:

"I think a lot of these guys have big enough egos and small enough brains to pick a fight with Iran even when it's blindingly obvious that it's a bad idea."

They also seem to surround themselves with yes-men so it's quite possible that no one has even told them it's a bad idea yet.