It's that time of the year again, some people make their New Year's Resolutions, others make predictions for what 2010 will bring. I like predictions, not because I hold them up as a prophesy or other imperative of how things will turn out, rather, I see them as a distillation of an author's research over the past year or longer – and their thoughts on how the next year will pan out as a result of what has transpired.

James Howard Kunstler has made his predictions, some excerpts…

Bottom line for markets and money in 2010: so many things will be out of whack that making money work via the traditional routes of compound interest or dividends will be nearly impossible. There's money to be made in shorting and arbitrage and speculation, but that requires nerves of steel and lots and lots of luck.  Those dependent on income from regular investment will be hurt badly.  For most of us, capital preservation will be as good as it gets – and there's always the chance the dollar will enter the hyper-inflationary twilight zone and wipe out everything and everyone connected with it

Even with somewhat lower oil prices in 2009, the airlines still hemorrhaged losses in the billions, and if the oil price remains in the current zone some of them will fall back into bankruptcy in 2010. Oil prices may go down again in response to crippled economies, but then so will passengers looking to fly anywhere, especially the business fliers that the airlines have depended on to fill the higher-priced seats. I believe United will be the first one to go down in 2010, a hateful moron of a company that deserves to die.

As far as the USA is concerned, I think we have more to worry about from Mexico than Afghanistan. In 2009, the Mexican government slipped ever deeper into impotence against the giant criminal cartels there. As the Cantarell oil field waters out, revenue from Pemex to the national government will wither away and so will the government's ability to control anything there. The next president of Mexico may be an ambitious gangster straight out of the drug cartels, Pancho Villa on steroids.


The Long Emergency is officially underway.  Reality is telling us very clearly to prepare for a new way of life in the USA. We're in desperate need of decomplexifying, re-localizing, downscaling, and re-humanizing American life.  It doesn't mean that we will be a lesser people or that we will not recognize our own culture.  In some respects, I think it means we must return to some traditional American life-ways that we abandoned for the cheap oil life of convenience, comfort, obesity, and social atomization.

 The successful people in America moving forward will be those who attach themselves to cohesive local communities, places with integral local economies and sturdy social networks, especially places that can produce a significant amount of their own food. I don't think that we'll be living in a world without money, some medium of exchange above barter, but it may not come in the form of dollars. My guess is that for a while it may be gold and silver, or possibly certificates issued by bank-like institutions representing gold-on-hand. In any case, I doubt we'll arrive there this year. This is more likely to be the year of grand monetary disorders and continued shocking economic contraction.

Sharon Astyk assesses her 2009 predictions and released her new predictions for 2010, including:

3. The trend towards growing your own, small home livestock, and home food preservation will continue to grow and expand – people who never thought they would know the word "compost" or touch a chicken will do so – and love it. Local food producers, on the other hand, may find that people are starting to cut back on organic, more sustainable food due to budgetary constraints as the "jobless recovery" turns out to be "long term joblessness."

4. A basic conflict between generations will begin to emerge and simmer as younger people realize that the concentration of wealth in the baby boomer generation isn't going anytime soon, and youth joblessness rises, and people realize that their expectations are less than their parents'. I doubt that this conflict will emerge in any dramatic way in 2010, but I think its groundwork is being sown right now and this will shape the politics of the next decade.

John Laumer for Treehugger suggests, among other things, that

"Urban farming and aquaculture will enter a growth phase, with private investors linking up with the pioneers of these movements." 


Karl Denninger from the The Market Ticker reviews his 2009 predictions:

I count 14 "hits" (including half-points) out of 25, for a score of 56%.  That's not so good, especially compared to last year.

Ok, so where did I go wrong?

That's pretty simple: I dramatically underestimated the willingness and ability of "the criminal class" (that would be those in DC and on Wall Street) to lie, cheat, steal, paper over insolvency and get away with it – at least for a while.

Will this ultimately lead to an actual recovery?  No.  It mathematically can't.  A short-term bounce in various metrics, yes, just like an insolvent person can spend on his credit cards until they get cut off and look like they're improving.

and follows it up with some new ones for 2010, including:

  • The Canadian Real Estate Market will show signs of cracking – especially in places like Vancouver.  They may have another year before it all goes to hell, but the time approaches.  Beware.
  • The "revolting" call for last year was early – but not wrong.  There will be at least one major coup or other violent overthrow of a government in 2010 tied to economic instability – either directly or via a war it spawns.
  • A massive second wave of small business bankruptcies will sweep the nation.  We've seen the first part of it.  The second will be worse – far worse.  With long rates backing up and the 30% credit card sweeping the land those who have relied on credit to operate in the small and mid-sized business world will get relentlessly squeezed.  Many will fall.
  • Banks will "give up" on holding their real estate as rates start to backup and will dump their foreclosure inventories.  Why?  Because the regulators may let them to play games with alleged "values" when people can get mortgages at 4%, but at 7% there's just no way the numbers work and the fraud becomes too difficult to countenance.  There are rumors of major banks dumping hundreds of thousands of homes on the market next year – this is likely the backstory on "why."

My Predictions

I haven't condensed my thoughts down to predictions for this year, but these authors above bounce around the ideas that are brewing in my mind. 

Despite the Vancouver Olympics and the economic powerhouse that the Tar Sands developments represent, this part of Western Canada is not likely to see a recovery or green shoots or whatever you want to call it. Between diminishing pensions, an escalating infrastructure deficit, and the further debt caused by the attempted economic stimulus we are destined for a number of years of varied levels of hardship. Failures and upsets will come all too easily – the money to remedy them will not be so readily available.

Communities that thrive will be the ones who pull together around a common purpose, in this region there is talk of creating a local currency, and other initiatives spinning off existing local groups such as the Kootenay Food Strategy Society will make headway into community based sustainability. Local councils need to find common ground to support, and if nothing else, avoid hindering grassroots initiatives aiming for great community security and sustainability.

Have a great New Year!

Published by Mike Thomas

Mike Thomas P.Eng. ENV SP, is the author of and Director of Engineering at the City of Revelstoke in the Interior of British Columbia, Canada.