2009 Prediction Review...Oy!

It's the pretend start of a new decade (as opposed to the often argued January 1, 2011) and we decided to look back on the predictions we made last January at 2009's start. It was our first attempt at prognostication and apparently we are quite skilled at being bad at it.

Our seven predictions were that 1) Russia's economy would implode, 2) oil would stay below $50 per barrel, 3) interest rates would rise, 4) unemployment would hit 10%, 5) South American markets would deteriorate, 6) the dollar would weaken against the Euro with the Middle East creating a replacement currency and 7) Wall Street would reconstitute itself in its own image.

At approximately $80/barrel (NYMEX Crude), and up from a low of around $33 in February, oil prices moved higher in 2009. The firming up of prices made it easier for Russia to weather the difficult economic environment. Their economy contracted about 8%, and that included layoffs, factory closings and the loss of a chunk of their currency reserves. But all that was in line with the situation around the globe. Since Russia is bound to oil for revenue, it's no surprise that the two predictions went off the deep end together. Interest rates also did not rise in the United States and we were way off in thinking that people would pull money en masse out of the dollar, or that alternative currency parking schemes would develop. Wrong. Likewise there was no major negative activity in South America along the lines of what we thought might happen, and some of their investment markets faired well.

What did we get a bit right? The December unemployment number is not in, but it will probably stay in the 10% range, so we pretty much hit it on the head. Also, we would give ourselves some points for Wall Street emerging with its same old habits and tendencies intact. The predictions that somehow "everything has changed" proved, as always, nonsense. People in the middle of a storm see nothing but the storm. But human nature does not bend. People do not stop pursuing money in whatever method proves feasible. We also got the direction of the dollar against the Euro correct, with little action by any nations in the Mid East to create alternatives to existing currencies or reserve currencies.

Out of seven possible points, we give ourselves 2.5... right on unemployment, right on Wall Street, and right on the dollar, but not the alternative currency portion.

Hopefully we will do better with the 2010 guesses, which follow in a later post.