Monday, December 25, 2006

2007: Trending

Well, it's time again for my yearly predictions. First, let's see how my 2006 predictions panned out: I predicted no major Bird Flu outbreak was likely and--pretty safe prediction--none occurred. I'll stick with that for 2007--no major outbreak is likely, but it's certainly possible. It's really just a matter of probabilities at this point, with a pandemic in any given year very likely, but with occurrence at some point in the next 20 pretty probable. I similarly predicted no major terroist attack in '06, and was on the money--but again, this was a pretty safe prediction. I still don't think that it really serves the interests of most islamic extremist groups to waste effort with attacks in the US when that effort can be so much more effectively applied within the Islamic world at this point--though "Islamic Extremism" is by no means a monolithic movement, so the possibilitiy of a "lone-wolf-group" attack is always present. I was pretty close on target with oil prices--I said that they would oscillate around $60/barrel ending the year around $70. As I write this they're just over $62, but there is certainly correlative data that suggests price manipulation around the election (though we must be careful to distinguish correlation and causation). Finally, I was pretty far off the mark with Iraq. I accurately predicted that the Iraqis would realize that the election and "democracy" will not solve their problems, and that those problems would get worse. However, I was not able to accurately forecast the degree of incompetence on the part of the Bush administration, so my prediction that troop levels would be effectively drawn down (re-deployed in theater to provide a theater strike force) never materialized.


So what will this year bring? I've titled this year's predictions "Trending" after what I see as the overarching theme in the coming months: the continuation of existing trends that will create a "trend line" so clear as to increasingly become obvious. It will no longer be possible to hide the facts or to explain them away as some kind of "blip."

Iraq, Iran, and the Great Game: With Niyazov's death, Turkmenistan enters the "toss-up" category and we will see the geopolitical chess match for control in the Middle East acclerate. However, while violence in Iraq will continue to escalate, and the too-late attempts to force a "Battle of Baghdad" by the current administration will fail, we will see the clear emergence of the trend that has already begun to surface: the de-facto division of Iraq into secular enclaves. US forces will finally begin a draw down, though confusion and disagreement is so rife within US policy circles on this topic that we will even fail to effectively chart this course of action in the coming year. Iran will continue to play pragmatist, balancing their own internal politics with nuclear development, bi-lateral energy deals with China, and a careful tightrope dance with the UN Security Council. No war on Iran this year.

Oil Prices: Here's where the trend becomes clear. I'll resist the temptation to "play it safe" and predict an $80 close at the end of '07. Instead, I'll tell you what I think will really happen. "Peak oil" will become a word that is frequently heard on newscasts as it becomes clear that Saudi Production is dropping (no longer hidden behind a veil of "OPEC cuts"). Russian production will also fall, as will Norway, UK, Venezuela, US, Iran, and Mexico (more on that later). As this trend becomes clear, oil prices will quickly reach $90, and may even flirt with $100 before the year is out. It will be impossible to cover these stories as the media blitz surrounding the '08 elections begins to pick up steam, and the media listens to the various politicians who need to emphasize the problem before they can win points with their "solution." Even though the suggested solutions of Ethanol or Hydrogen or drilling of the Pacific Coast don't hold water, they all have the common theme of being more valuable to their respective candidates the worse that the current oil supply situation seems to be. As a result, "peak oil" will officially "tip."

Economy: Housing prices will level off and stagnate in most areas. But it will be with the "fictional economy" of derivatives that we will continue to see growth. The economy will sustain itself as a whole--driven largely by accelerating gains in the energy sector and among the "super rich" that offset the decline in just about everything else. However the most remarkable phenomenon will be the clear trend towards a division between rich an poor. A new, de-facto aristocracy will begin to make its presence felt as the super rich get richer, and the Median American wage gets lower. The dollar will slowly continue to slide, but I don't see a cliff in '07--we'll probably close out the year around $1.42 per Euro.

Mexico: Here's what I'll say is the most sigificant development in '07--the Mexican economy will collapse. Inflation will go on a tear. Cantarell will drop off a cliff (no real surprise here) and Calderon will leverage what little credit Mexico has left investing billions in new development in the Gulf that will never come to fruition--but that will create the same kind of debt crisis in the coming years that we have seen in other South American countries. With oil revenues essentially 0 (when you factor in the increased exploratory spending and borrowing to "develop"), the federal revenues will fall through the floor. When you account for higher airfare due to fuel costs, tourism dollars will dry up as well. As a result, Mexico will go into a tailspin. The full impact of this will not be felt in '07, but the trend towards this fate will become clear. This will also set in motion forces that will begin to tear (further) apart the illusory fabric of the American nation-state: decentralization in Mexico will lead to increasing cross-border "illicit" activity, from human smuggling to drug smuggling to organized crime to black market activites focused around the death of "intellectual property." Not a good year for Mexico, but it will increasinly become clear that this is also a very bad sign for the US, and for the Nation-State as a concept.

2007 - Year of the Trend. Next up, Breakout.


Tom Konrad said...

Bold predictions... especially on Mexico. I see the pieces you point to there, but I'd still expect more of a wimper than a bang. I'm with you on oil and the dollar, although I'd expect the dollar to fall more, and oil to spike a lot higher than $80...

When the dollar declines, it;s most likely to be a lot more dramatic against Asian and commodity currencies such as the Austrailian $ than against the Euro... Euroland has its own problems.

Whatever happens, it's going to be interesting. And there's one thing I'm always willing to say has a 100% chance: we're going to be surprised... if only we knew about what...

Jeff Vail said...

I wasn't very clear about my oil price prediction: just to clarify, I am predicting a $90 close at the end of 2007.

Theo_musher said...

I see a lot of connection between this
"New" aristocracy you speak of and the collapse of the Mexican economy and the dissolution of the US Mexican border and therefore US sovereignty.

First of all why are you characterizing this emerging aristocracy as new?

Its not new to me, its not new to more right wing/libertarian conspiracy writers. Its not new to small groups of academics conducting what they call "power structure research."

The connection between the American Aristocracy and the types of people who rule Latin America and Mexico is not new.

This connection can easily be seen in the Bush administration and immigration policy on elite centers of the Right and Left.

The Bush dynasty is three generations old at least. Its old money eastern seabord origins aren't new. The Skull and bones and by extension the CIA isn't new.
Jeb's choice of a wife isn't new.

So I have to wonder how new any of this is and what you base your predictions on.

What you blog makes up what percentage of what you know? Your predictions sound more like elite plans.

Theo_musher said...

I guess I have a hard time figuring out where you are coming from and reconciling your various posts.

Ran Prieur mentioned on his blog you helped him with his 911 faq by telling him about "operation Northwoods."

So now you talk about why you didn't predict any more lone wolf attacks by radical islamicists against the US. Like which ones? September 11?

That was Islamicists?

You mention US incompetence in Iraq. In an earlier post you wrote about "intentional instability" as a model of US exploitation in the tradition of the Bristish Empire.

So which is it? Is the US led by a bunch of incompetent goofballs that can't handle Islamicists neither at home nor abroad, or is it part of a plan to continue to exploit the world through "intentional instability?"

So who is this "new defacto aristocracy" that is soon to make its presence felt, if not the same people that have benefited most by exploiting the world through intentional instability?

Come on, doesn't everyone know who these people are? DeNiro just made a movie about them called "the Good shepherd."

There is intentional instibility going on in the United States with elites playing minority groups against each other. The thing with Mexico merging with the US has been in the works for a long time too.

But see just a bunch of conspiracy websites half of its probably bullshit. I try to read between the lines and sort out the god from the bad. You have some good intell. Where do you get it?

Theo_musher said...

Edit: That last paragraph should read:

But see I just read a bunch of conspiracy websites half of its probably bullshit. I try to read between the lines and sort out the god from the bad. You have some good intell. Where do you get it?

Theo_musher said...

Ok one more thing and hopefully you will respond to at least some of my points.

You say there are bad trends ahead for the US and the concept of the nation state. But you think this is a bankrupt concept anyway.

So do you think it is good?

The Bush dynasty seems to agree That Mexico and the US should basically merge. The Bush administration policies on imigration bear this out, they have close ties to corrupt Mexican aristocrats.

So are you in agreement with Bush on this? That the US borders basically be disolved and hoards of Mexicans come into the US?

That would sure facilitate lower wages more inequality and instability and the emergence of an Aristocracy.

I think these are all bad trends do you?

Jeff Vail said...

Hed Ted-

I'll try to answer your comments in order, and then finish with a few overarching thoughts (hopefully of interest to everyone because your comments pointed out parts of my "predictions" that weren't very clear...)

I'll agree that the "new aristocracy" is by no means new, and I think that it is--to varying degrees of intentionatlity and happenstance--the result of elite plans. However, what I think is significant for 2007 will be the degre to which this very "not new" phenomenon becomes so clear cut (the "trend" so obvious) that it breaks onto the main stage from the conspiracy-theory side acts...

As for "intentional instability" vs incompetence in Iraq, I think that the elite establishment is far less monolithic than as it is often portrayed (haven't seen Good Shepherd yet, so I can't comment on that portrayal). However, I think that both are at work at once--I think that Bush & much of Company are incompetent, but that this isn't mutually exclusive with the other part of "& Company" waging intentional instability. For as much of a cluster as the Iraq war has been from one perspective, it is being marvelously successful from the perspective of grabbing a leverage point in the Middle East with which to respond to future uncertainties regarding our need for energy. As for 9/11--I'm always willing to consider a conspiracy theory, but I don't buy the vast majority of it surrounding that day. I also talked to Ran about a person who worked for me at the time at Langley AFB, who was temporarily assigned to the base security forces and was guarding the "alert" F-16's that (the ones that were scrambled to protect D.C.). He told me--and I tend to believe him because he was an otherwise trustworthy airman, though I have no other support to this--that one of the F-16s departed with two AIM-9X (infra-red air to air missiles) and returned carrying only one. In all fairness, the things do sometimes just fall off.

As for the decline of the nation state, I have written an essay on that topic:

I don't think it's really "good" or "bad" so much as it is an inevitability. However, it will lead to either a "good" future characterized by decentralization, localization, and networked independence, or a "bad" future characterized by the "market state" and a new feudalism of very rich and poor masses. On a grander thematic level, this dichotomy of futures is essentially why I write this blog. I think that the elites are very consciously pushing for the "market state" led by a de-facto aristocracy. I definitely see that as a "bad trend" but the catalyst behind it--the decline of the Nation State--is really just a historical outcome, the result of all the cumulative forces of history to this point. How we react to it is what is important, and I think that there is a very real opportunity to turn it into a positive trend--the rise of rhizome. But more ont that in the above essay "the New Map."

Hope that clears my thinking up a bit. I've been pretty remiss about responding to comments lately--it really depends on whether my free time and the times that my daughter is sleeping coincide...

HoosierDaddy said...

"However, while violence in Iraq will continue to escalate, and the too-late attempts to force a "Battle of Baghdad" by the current administration will fail, we will see the clear emergence of the trend that has already begun to surface: the de-facto division of Iraq into secular enclaves."

Do you mean sectarian enclaves? As in Sunni, Shia, and Kurd enclaves(Probably more than one of each)? Or do you mean there is a secular trend toward enclaves? As in a permanent, or at least very long duration, trend. Both could be apropos, but for second choice "secular" would make more sense modifying "trend" than "enclaves"

Jeff Vail said...

I actually meant to write "sectarian," but I think that you have a good point there with "secular." I think that what we're reall seeing is, in fact, a form of (essentially secular) "primary loyalties" in effect. The distinction between Shi'a and Sunni is, in my opinion, much like the one between Catholicism and Protestantism--very much a distinction of power, which later grew into a "significant" distinction of theology. Without betraying my woeful ignorance on the topic of christian theologies, I've been told that "Sunni" and "Shi'a" are really quite diverse themselves, and that there are some factions from the opposing sides that are theologically far closer than others--like say Anglicans and Catholics are.

Theo_musher said...

I thought you meant something similar to "capitalist enclaves"

Anonymous said...

I think you're right about peak oil hitting the mainstream. But that'll be because it's a convenient cover-up for the US economy going into hyper-inflation. In fact, the central bank crashed the economy with its usurious issuing of money. This may drag Mexico down, as a side effect. They'll use this to plug the Amero unique currency as a "solution"...

I see the same people promoting "terrorism" and "peak oil" -- so I'm dubious. Probably both myths!

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