2015 Predictions

[l33tminion]

It's the new year, and that means one things to all the futurists and wanna-be futurists out there: Time for predictions!

Kunstler's annual predictions post is as dramatic as ever. The guy seems to be playing doomer Martingale: If your pessimistic predictions turn out to be overly so, make your predictions next year twice as pessimistic, you're

Comments

[peristaltor]

Me? I'm leaning toward at least one of the shale/tar sands producers losing the game of financial chicken and starting a cascading failure of junk bond defaults this year instead of later.

I believe that's why the derivatives legislation was passed in the Cromnibus, the one that had Elizabeth Warren so outraged; it was to protect the over-exposed futures holders caught between their contracts and a slump in demand that is this weird low fuel price environment.

Whether or not that blows into a full-on crisis this year is impossible to say, given how far down the line the can that was the housing crisis managed to get kicked.

Still? Saving up for an electric. Have to replace Ol' Red soon, anyway. 260K is a bit much mileage for a non-mechanic to drive!

[l33tminion]

At least oil-company junk-bonds aren't the same level of threat to the economy that mortgage-backed derivatives were in 2007, they haven't faked the same aura of "safe investment". On the other hand, the economy is more fragile, it might be enough to spark a full financial crisis anyways.

[peristaltor]

The public in general isn't as invested in this junk, no, not as much as they were in 2008. That said, with the repeal of the Dodd-Frank prohibition on using depository banks to keep this junk, and the bail-in provisions of what to do in the case of a bank problem-ie., the depositors money is essentially seized (over and above the $250K FDIC insurance threshold, ala Cyprus-this crisis, should it happen, has the potential to really break the economy in ways 2008 didn't.

Then again, if the bail-in happens, perhaps we will get true financial regulation, maybe even a return to Glass-Steagall!