Weather Report: Going Into 2009 — Incertainty Mixed With Fear for 2009 — A Closer Eye On The Weather, What We See for 2009

GOING INTO 2009—UNCERTAINTY MIXED WITH FEAR : The world is in the greatest financial crisis since the Great Depression of 1929-1939.

In the U.S.: We have a budget deficit, existing and proposed, of roughly a trillion dollars each as we speak. We have bailed-out, loaned, given, bought, sold, and promised to various businesses, business sectors, and the public in general, more money than we have and probably more money than we can realistically hope to have in the foreseeable future. If this were not enough: states, counties, cities, and municipalities want some of the on-going dispersal and are positioning themselves for a place in the line. None of the foregoing spending comes with a guarantee of financial/economic renewal.

Continuing within the U.S.: just about 10% of Americans are now, at about 6.7% unemployment, on food stamps and we have a projected unemployment rate of anywhere from 7.5%-9% for 2009 depending on your expert (note: prize winning economist from Princeton, Paul Krugman says maybe as high as 10% by the end of ‘09’). That 7.5%-9% range closely parallels the projected rise in food prices for 2009. How concerned is the federal government? They’re concerned enough to station a combat brigade within the U.S. borders, under the recently formed North American Command, to aid in handling a terrorist attack or significant “civil unrest”. Civil unrest is considered a possibility if unemployment exceeds 10%. December consumer confidence has reached an all-time low.

In Iceland there’s already civil unrest in a country nearly destroyed financially from the worlds’ financial meltdown. They’re demonstrating in Reykjavik already.

In Greece, the extended demonstrations, ostensibly over the shooting of a 16 year old boy by the police, are considered to have economic undertones.

In China, unemployed factory workers are returning to the countryside following layoffs in the coastal cities’ factories. China needs a minimum of about a 7.5% growth rate in their economy in order to provide employment for their people and they’re just about there now. The Chinese government is concerned looking at the possible/probable economic slowdown to come.

In Russia, demonstrations over the effects of eight devaluations of the rouble against the euro this month coupled with workers protesting non-payment of wages and dismissals. Russia supposedly needs $70 a barrel oil in order to meet it’s budgetary requirements and oil is currently in the low $40 per barrel range.

In Britain, Ireland, and Spain, the economic conditions are those of a recession or near-recession.

A CLOSER EYE ON THE WEATHER: Beginning in 2009 PrudentHome will increase it’s blog postings from twice a week, Tuesday and Friday, to anytime conditions or situations warrant. We view 2009 as an especially pivotal year as regards events that may adversely effect our homes and families.

WHAT WE SEE FOR 2009: After reading a number of serious predictions of events and timelines for the a time period covering the next three years, here’s what we think:

1. The projected U.S. stimulus package will exceed one trillion $ to 1.5-3.0 trillion including 2010.
2. Unemployment for 2009 could end up above 10%: watch out.
3. Deflation will be followed by inflation by the end of 2011 at the latest, with areas of inflation, such as food, accompanying the deflationary period.
4. Unfortunately, civil unrest won’t wait and will begin in 2009/ labor and food.

We wish all a safe, prosperous, and prudent New Year. Keep your eyes on the horizon.