2010 Predictions...

We are seven days into the New Year, and celebrating Christmas (if Orthodox), so it seems a jolly good day to do this year's predictions.  We noted that our predictions last year were a bit off, with us scoring about a 2.5 out of a possible 7. We were accurate on unemployment, interest rates and the ability of Wall Street to continue to function like a mirror of itself. We were wrong in suggesting general economic mayhem leading to riots or collapse in places like Russia and South America. If anything we see evidence of that decoupling that so many people have talked of in the past, where the economic conditions in the United States are not automatically replicated (and enlarged) in other places. There is more variation now, and other nations are better prepared and more invested in the system, and managing it to their own benefit.

Our predictions:

• Unemployment in the United States will drop to 8% by year's end, and GDP growth will average around 2.5% for the year. 

• Leading up to the elections, Republicans will focus on terrorism and what they are not, while obscuring the economic improvement. They will not gain control of the Congress despite the recent Democratic retirement announcements.

• Healthcare reform legislation will pass and be signed into law; but the opposition will continue to attack the bill, hoping to win political points off the gradated implementation of the plan. 

• At least one state will need a Federal bailout. We have long felt that the focus of stimulus  money should have been in direct grants to states to plug budgets over a two year period. Officials at the state level are better at determining what they need. We can't see New York or California working their way out, but we think New York is the more capable of the two.

• Markets around the world--namely in South America and Asia--will do quite well, with 20% stock appreciation.   

• Obama will tackle illegal immigration and Republicans will be caught in the crossfire on this one. Democrats will be hoping to construct legislation that makes Hispanics happy (a vote grab) and Republicans will be caught between the devil (businesses) and the deep blue sea (hard right conservatives) and try to delay any votes for after November.                  
  

• I change something.