Karl, or Mann....do you guys know if Japans manufacturing base has been eviscerated over the last 15 years like that of USA?

China simply can not (at this time) produce anything other than Mobo's....worth a ****.

We do not have the physical machine tools (on a large scale), nor a younger generation who knows WTF they're doing regarding manufacturing.

Someone' gonna have to make stuff 3-5 years out. Who will it be?

I'm just curious where this dependency will land.

Duc888, the western civilizations owe the banks a lot of money. That money can only be paid by westerners. China or the rest of the labor pools will need to be tariffed or economicly strangled in order for bankers to get their money back from western civilization. Bankers control western government.

I for one never thought we could survive 2011 without it all coming apart. The world follows the USA and I could not see how you can borrow 1.5 trillion dollars a year and not have it blow up in your face. But they are getting away with it and the game just keeps going along.
I am starting to believe that they can keep this game up for a lot longer than is even seemingly mathematically possible. Hell i believe they went past that point long ago.
What appears to be in there favor is that money still flows by the **** load back to america every time a crises is foreseen overseas. So they will create these problems to keep the game going. Pull liquidity from Europe push the yields back down stick save. repeat repeat.

Gen, not a bad score for 2011, just off on timing IMO.

I think your forecast of civil unrest developing in 2012 is spot on.

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The members of the Simpson-Bowles deficit commission had their own private estimates of "how soon." None believe we have more than two years left. I think that's about right, and we may not get that far. History says that these walls always are closer than they appear.

Most of your 2012 expectations appear to be solid and I'll go out on a limb here and forecast we hit the 'wall' on or about Spring Solstice 2013.

Any 3rd party candidate getting more than a few percent of the vote will effectively put the current POTUS back into office. Expect martial law if the polls numbers go against him in a big way and go long on FEMA camps.

Karl, I think it would be interesting to see how your predictions turn out after a few years. When I have some time, I plan on re-reading a few of your annual tickers from before 2010.

Go long Handbaskets because they are going to be in big demand in 2012. You might want to even consider buying a handbasket factory and thus keeping 100% of the profits for yourself.

Here is a real prediction:
One large American bank goes BK this year.

Flap

Karl, Can you clarify your prediction about a shooting war in the Middle East? Would a civil war like what just occurred in Libya or what is happening now in yemen and syria count? Or does it have to be a conflict between two different Nation-states.

I'll be watching events between Iran/Israel very carefully. I'm just curious to see who's gonna bluff first.

Civil war unassisted does not count.

Flap:

Forget it. Too lucrative. Handbasket factories are destined to be nationalized like Gov-Motors. Why would TPTB miss the opportunity to make us pay for the privilege of providing our own transportation to the place they are intent on sending us to?

The fact that you don't score 1/2 points for being "not wrong, just early" really adds to the credibility of your annual ticker. I, for one, look forward to reading them and appreciate your accurate scoring of them. If anything, you err to the side of underscoring them and that makes them more honest. I just wish you'd use a "skull****" in one of em someday.

Israel/Iran sounds like the best bet, but the Middle East is always full of surprises.

We haven't seen "Saudi Spring" yet. That could be where the wheels really come off.

Doom and gloom is all we have to look forward to. Downright depressing.

With all these "Springs" going on in oil producing nations anyone care to guess where the price of oil will go? You got that effect balancing out against what is likey going to be a drop in global mfg production output (demand for oil). Should be a volatile year for oil again.

I dont think you'll get a viable third party, an interest rate hike, or a recognized recession by the end of the year (altho i think you might get it on an after the fact correction/recognition some time early in 2013).

Ill add some of my predictions to the mix:

You will see a large collapse in "For Profit" "Universities" places like university of phoenix will see a large enrollment decline. I dont see failure of any of the reputable schools yet but the degree mills will go down in flames.

I would expect to see continued weakness in the airline industry. With additional bankruptcies and consolidations. Expect at least 2 Bankruptcies/Mergers this year.

Expect big pharma to consolidate even more this year. There arent any real new drugs in the pipeline so expect them to divest from R&D in order to preserve profits and appear viable. A large merger would be quite likely.

I expect this is going to be the year for housing collapse in both Australia and China. 20% Haircuts in china at least 10% in Australia.

I expect at least 1 large dumb blue chip fortune 50 company to move their headquarters to china (also expect spectacular failure as a result).

Im going to make a bold prediction and say that the average price of a new video game is going to come down about 10$ in stores. The competition from amazon and online retailers is getting way too intense for B&M retailers. They will have to match prices.

I expect an resurgence of the occupy movement come spring but despite that voter turn out to be incredibly low in next years election.

"Democracy" is going to show its true face in Europe. With some incredibly unpopular political desiscions. Followed by mass rioting (Greek Style) in some of the larger nations.

I'll say that my prediction(s) entail a full on collapse, a separation and / or polarization of thought(s). The fight has begun and each individual will be forced to pick a side. As the year progresses there will be no middle ground. You will either move forward or regress and ultimately the choice between which direction you will gravitate towards will be yours and yours alone. There will be no fence sitting or watching from the sidelines, lest you be swept up in a wave of fear and "follow" the wrong path. Cowards will not fare well. Those with clear thinking conviction tempered by compassion will ultimately fare better. Increasingly as the monetary system deteriorates to the point of no return, those who can learn to throw off those shackles and ADAPT and be FLEXIBLE will make it through the storm, scarred but intact. All of life is just lessons.

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A real shooting conflict breaks out in the middle east

With all of the sanctions being thrown around, impact on Iranian Central Bank, we can rest assured that Iran will be in the middle of it all. This is the biggest untold story of the last 3 months and will soon be "The Story of 2012".

If you could go back to 2008 and someone would have predicted that the budget deficit + national debt would have grown as much as they have would anyone have believed it? I would bet that most would say it couldn't happen. Nations the world over will continue to put it on future generations credit card and there's little difference in borrowing what you know can't be repaid and naked printing. Drowning in all the newly created money why would the stock and commodity markets not continue to rise until it all blows up?

Love to read theese end of the year score cards. Reminds me of bowling. All the pins must fall at some point. Others fall but get put back up again but the whole pin-set never returns up as it was.

Accuracy? One cant always get strikes especialy with the harder rules. 12 months is not much game time in this particular art.

btw Democracy in Europe is going to be under serious attack in 2012. Expect this to be played welll by local politicans. The True Finn victory in finland should fade by now but the attacks by Jean-Claude Juncker et Co will renew their victory. I personaly give a quite big chance to this due to the brush fire in EU.

Interesting development...

http://money.cnn.com/2011/12/27/markets/....

I'm expecting that our returning soldiers will be unimpressed by what they're returning to. They're among the few people who are still admired, and whomever they decide to support politically will do well.

I wonder if the MSM will notice and acknowledge that the upper middle class is disappearing. That is, the house rich. It's a slow slog, but as ridiculously high house prices continue down, this group of people will suddenly realize that the amount of actual money that they have is trivial, and that they have a house and a lifestyle they can't support.

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Even the vaunted Ron Paul who claims to be "Dr. No" in his voting record in fact does not honor that when it comes to earmarks -- he lambastes them on the floor but when it comes to vote he pushes for, votes for and accepts them for his own district!

I always see this attack on Paul. I think it's unjustified. Here are a few things to understand regarding the earmark debate.

Congressional "earmarks" are designated pockets of money in appropriations bills used to fund public projects all around the nation. If the appropriations bill is passed and signed into law, the money therein appropriated will be spent. The "earmarks" are what determine where that money goes, how it is spent, if and when the appropriations bill passes.

Ron Paul votes against all of this appropriated spending. The spending is the problem. But if taxpayer money is going to be spent, even though he always objects to it being spent, it is only reasonable to direct that money to the taxpayers he represents, and that is what Ron Paul, and every other congressperson, does.

It is as if the Congress is going to irresponsibly throw hundred-dollar bills off of a float into the crowd at a parade. Even if you think they shouldn't do that, is it unreasonable to gather up as much money as you can and bring it to those you represent? Someone is going to get that money and spend it whether you like it or not.

Those, like John McCain, who pontificate about eliminating earmarks are not talking about eliminating wasteful spending whatsoever. Remember, earmarks only direct where the money being appropriated for spending is going to be spent. What McCain and others like him are proposing is that when the appropriations bill is passed, the money, instead of being earmarked by Representatives of the taxpayers to projects in their congressional districts, will rather be handed over to the executive branch to be spent by the President, his cabinet secretaries, and agency directors.

What John McCain and those like him are proposing by campaigning for the elimination of congressional earmarks is nothing more than a transfer of power, control, and responsibility from the legislative branch to the executive branch of the U.S. government. That's it. They are very clever in disguising it as a stance for fiscal prudence though. Few Americans understand how government spends money, so it's very easy to deceive them in this regard. The most likely motivating factor for the position of eliminating congressional earmarks is it will then be politically easy for the congress to direct blame for all pork projects to the President instead of to their own profligate spending habits. Another factor could be that those seasoned congresspeople skilled in insider hobnobbing and in kissing the President's ring will have the most funds directed to the pet projects in their home districts.

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Ron Paul votes against all of this appropriated spending. The spending is the problem. But if taxpayer money is going to be spent, even though he always objects to it being spent, it is only reasonable to direct that money to the taxpayers he represents, and that is what Ron Paul, and every other congressperson, does.

"I didn't want him to die. But the ******* over there WAS going to shoot, and once he did, well, the bullet was loose, so since someone had to get hit by it in the crowd, I pushed him in front of it."

Sorry, but the hypocrisy is what it is.

I'll add one:

There will be more MF Globals out there in 2012

That's all I have on that. We are still trying to get our cash out of this one.

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Could you expand on your Middle East shooting prediction? Will this be a shootout involving the USA?

Probably. It'll be either Lebanon or Syria or Iran or Gaza or a few/all at once.

If there are any more MF Globals the whole exchange could collapse rather rapidly.