Time, once again, to engage in my annual predictions and prognostication. This year The Economist has unofficially endorsed my brand of futurology--relatively short term and thematically focused. But first, as usual, a review of how my 2007 predictions panned out:
I didn't get Iraq right--I predicted that the draw-down would begin, whereas in reality there was a "surge." I guess I'm still able to underestimate the incompetence of the Democratic Party. Mental note not to make that mistake again. I won't discuss my thoughts on the surge (e.g. the arming of the Sunni tribes for the future clash with the Shi'a establishment over oil revenues after the inevitable US withdrawal) now, but suffice to say I didn't get it right in '07. For what it's worth, I did get the "no war" call on Iran right.
I'll give myself kudos, however, for nailing the oil prediction. I said that oil would break 90 and flirt with 100, and that "peak oil" would officially break into the mainstream media. Right on all counts, not that I claim any kind of secret formula--it was just an "educated" guess based on what I see as obvious trends. The only area you could quibble was with my prediction that Russian oil production would fall--that isn't entirely clear.
I generally missed the credit crunch and was mildly wrong on housing woes and the Euro. And I overstated the problems facing Mexico--while there were some worrying pipeline attacks, the economy didn't "collapse" as I had predicted. So my 2007 predictions were poor with the notable exception of oil prices. Will this result in an overly cautious outlook for 2008? Yes and no. Yes in the sense that, considering that I fundamentally agree with the long term predictions of the "end is nigh" crowd, I think 2008 will fail to meet their expectations by far (hopes?). No in the sense that, given my fundamental agreement with "them" on the long term direction of our planet, I'm firmly bucking the trend of expecting immediate economic collapse followed by mass starvation by calling for the appearance of normalcy. Emphasis on appearance.
So what will 2008 hold? Let me consult my crystal ball...
Oil Prices: we'll break $100 firmly at some point, but won't hit any sky-high territory in '08 (that looks to be in '09, but now I'm breaking The Economists' rule of only predicting one year out). I think that we'll essentially plateau in production--maybe a small fall or small gain globally--and that increased demand in India and China will be met with efficiency efforts that clear off the low hanging fruit. Basically, I think we'll set ourselves up for a fall by doing the easy efficiency measures (but none of the tough and ultimately necessary ones) and pat ourselves roundly on the backs as production doesn't drop off a cliff and prices don't spike. This, of course, leaves only the hard and slow-to-pay-off efficiency measures remaining just in time for significant global production spikes and "export land" effects to really bring trouble in '09.
Iran & Iraq: slow news year. No troop draw-down of any significance (though possibly something symbolic in August-September time frame to give the appearance of "victory"). No war with Iran. No uptick in violence--in fact, the surge will continue "working" (as long as you define working as laying the groundwork for future bloody civil war).
The most significant story of the year: the economy won't crash. What the hell, I'll go out on a limb--we won't even have a "recession" as officially defined. On an earnest note, there is a lot more resiliency in the American and Global economies than is often accounted for, and there are many "low hanging fruit" measures to stave off the energy and credit wolves for another year. And if those real measures are too politically difficult, there is plenty of appetite for the fiction that the economy is resilient and recovering, as well as people in power who will benefit from the appearance of normalcy through the '08 elections. I'm not talking about Bilderberger/Bavarian Illuminati fairy dust, but rather simple and obvious things that can be done by the current Bush administration to ensure that it doesn't appear that a Republican administration is bad for the economy. So this time next year we'll still be listening with rapt attention to news reports tallying the Christmas shopping season and the resiliency of the American consumer. Unlike oil prices, I don't see this economic stability as a temporary reprieve before we go off the cliff. I think that media and public perception of our economy, as well as our actual economy itself, is already a matter of fiction and wizardry. This wizardry can continue, unabated, for quite some time. I agree with Ran Prieur's version of the "slow crash." That is, we're already crashing. This is what collapse looks like. The middle class gradually shrinks, the value of our pensions and investments gradually declines, things get gradually less affordable--and if it is executed properly this all happens just below the rate at which it reaches the public consciousness. A really sharp cliff in oil production could change this, but I think if we do our realistic best at mitigation efforts in energy use, this, too, will keep just under the "crisis radar." Diesel prices equivalent to $300/barrel oil haven't stemmed the commuting or truck transport industry in Europe, so I don't see why $300/barrel oil by 2010 or 2012 won't be anything more than another contributor to the slow crash. We are evolutionarily adapted to recognize and respond to surprise, short-duration crises, but we aren't evolved to be very good at even recognizing the slow, gradual ones that are visible at a distance.
One more thing--Rudy will win the 2008 presidential election. Why did I pick him? He's the worst possible result that I can think of, so it seems a nice balancing point the the appearance of optimism elsewhere in this post. Besides, none of the candidates will address the fundamental causes of the slow crash, so does it really matter in the long term? IF there was a candidate who could maximize our mitigation efforts, and IF there was a candidate who could slow the slow crash as much as possible, it still only seems that the result would be to push off the matter of dealing with the slow crash on later generations. My ultimate prediction is that we will never deal with our fundamental problems en mass, but rather will let them deal with us.