How Well Did I Predict the Future? Ten Political and Economic Predictions for Year 2012

12/27/2012
A year ago I made ten predictions in economics and politics. How did I do? I'm disappointed--six out of ten correct. This is good enough to win in investing but I expected better. I give myself a grade of passing. Please see the links analyzing the results below.

12/31/2011
Each of these predictions will be graded a year from now as correct or incorrect. No hedging is allowed. I will grade the list next year as 60 percent, passing; 70 percent, fair; 80 percent, good; and 90 percent excellent. You may or may not like the predicted outcomes. This is how I read the trends.

1. California will pass a ballot measure that raises taxes. CORRECT: prop 31 passed
2. White flight out of California will accelerate. CORRECT link 1 2 3
3.  Liberals will decry corporate control of politics, but neither Barack Obama nor the Republican nominee will seek public financing for the 2012 general election, in order to avoid fundraising limits. CORRECT
4. Inflation will rise over 2011 levels. No, the economy slowed.
5. Obama's health care bill will be ruled unconstitutional by the Supreme Court. No, shockingly SCOTUS ruled that Obamacare is a tax and therefore legal..
6. Participation in food stamps and long term unemployment will decrease only slightly, by one percent or less. CORRECT Food stamp participation continues to skyrocket. link 1 2 3
7. A rating agency will further downgrade U.S. debt. CORRECT link
8. The House of Representatives will remain in Republican hands. CORRECT
9. The Republicans will capture the Senate.No. The Republican turnout was poor.
10. Gold will go down to $1400 per ounce. No. Gold is up again!

Crime and the End of Cheap Food

Please see the PDF document "foodprices," Crime and the Price of Wheat in 14th-Century Norfolk, England here. The linked chart is from Sherman et al., World Civilizations, Sources, Images and Interpretations, V.I, 4th ed., McGraw-Hill, New York, 2006. It shows a strong correlation between the price of wheat and number of crimes committed in Norfolk.

If we make the reasonable proposition that human nature has not changed much in 700 years, we have much to worry about.

Michael Pollan has inferred that low food prices have kept the American middle class from revolting against the politicians, since middle class incomes have stagnated over the last decade. (See The Food Movement, Rising here.) In fact, he claims that cheap food is at least partly responsible for low wages.

Well, the cheap food party is over. The nanny state looks to raise prices by taxing what it considers "unhealthy." (See my satirical post on the subject here.) Additionally, global food prices are being pressured upward by voracious demand from Asia. Produce and cereal prices have risen astronomically in the last few years, and I see few reasons for that long-term trend to change. As we move past peak oil and energy and fertilizer prices increase, it costs more to grow food. Lastly, national US debt has swollen 40 percent higher over the last three years, (see the link here) and that will lead eventually to higher inflation and higher food prices. Unfortunately, desperate times lead to desperate people in both the 14th and 21st centuries.

I'm not the only one that senses impending problems.

A chain of three stores that sells survival food and gear reports a jump in sales to people who are getting prepared for the “possible collapse” of society.

See the article here.