All of this depends on the instability premium placed on oil bu the unrest in the Middle East...

If it abates, then your friend may well be right as consumer confidence grows.

If he instability increases, with Israel and Iran continuing to square up, then, I'm afraid your friend's predictions are on dangerous ground.

Whatever happens, I do think innovation will incrase drastically as we all look for more efficient ways of doing things.

Paul Carcone
www.carconeconsulting.com

posted July 8, 2008

Les,

Crude oil: Respectfully disagree.
Gasoline: Respectfully disagree. Here in the USA it will reach $5 a gallon this year.
Non-exotic mortgage interest rates: I agree.
Rally in real estate of national significance by Spring 2009: Respectfully disagree.
Non-collapse of the world financial system: I agree.
The verb "to explode" used metaphorically can mean either to expand or to disintegrate. I predict that innovation, broadly, has the potential to flourish but won't flourish spontaneously.

Predictably,

Lawrence

posted July 8, 2008

Les,

If one doesn't listen to the liberal media, this is about what most sensible intelligent people would conclude. We are not in recession.

Jamie

posted July 8, 2008

I agree - Americans suck wind -

They love to believe whatever the media throws at them - when will they learn - get a life and do some:

1. some research yourself - why - cause the media depends on you being lazy

2. Get your own opinions - lions and tigers and bear - oh my

3. Chill out - breathe and live a little -things will be okay- if you just stop listenig to all the noise -it is really is deafening - understand????

posted July 8, 2008

Let's See:

1. Oil - I think it will.
2. Gas - It might.
3. Mortgage rates - probably not. This will require a much stronger economy that I expect.
4. Real Estate - NOT A CHANCE!
5. World financial system - unlikely to happen, too many are invested.
6. Innovation - at some point . . . in the US, not until the economy is stronger and companies are willing to make the investment and/or individuals are not focused on daily concerns.

posted July 8, 2008

"They were really good predictions..."

On what basis? Do you mean they were *optimistic* predictions? Without having causal info, I have to regard these statements as lacking foundation.

Oil: Could easily hit $150.
Gas: Depends. Look how quickly it went from $3 to $4. Remember Mr. Bush standing like a deer in headlights when a reporter asked him about $4 gas at a press conference?
Mortgage: There are certainly 7% mortgages being offered already, so that prediction is already wrong.
Real estate: There's always an up-tick in spring. A rally? Hmm. The real estate market has been stale in many places since 2005, and really tanking since 2007. I would therefore expect two years of decreasing-staleness starting in spring 2009.
Financial collapse: Agree. Too many developing economies for collapse.
Innovation: Continues. It's only an "explosion" from the perspective of someone for whom it gets too complex.

posted July 8, 2008

"the sky is not falling" -- unless you own a farm near a river in Iowa, or worked for Bear Stearns.
"Oil will not hit $150 per barrel..." -- It's pretty close and the price has been very volatile, it could easily hit $150 but does not seem likely to remain at these elevated levels indefinitely. There's a lot of political pressure building to push oil prices down.
"gas will not hit $5 ..." --- probably not this year, at least regarding the national average for standard grade. next year? demand seems to be dropping and oil seems likely to either stabilize or decline over the next year, so probably no $5 gas next year either.
Mortgage rates at 7% --- conforming loans, not likely. Jumbos are already there.
Rally in real estate next spring --- you're lender is probably at least a year early on this one. Affordability indexes and consumer confidence need to make significant improvements before I would expect a real estate rally. If we slip (further?) into recession, not a chance of any real estate improvements for at least another two years (2010).
World financial system will not collapse -- agree, US and other gov't entities will step in to stabilize if necessary.
Innovation will explode --- isn't it already? tough times breed creative solutions.
The sun will come out tomorrow -- yes, even in Seattle.

posted July 8, 2008

To take the points in order:

"the sky is not falling.” I agree.

“Oil will not hit $150 a barrel this year.” As I write it is about $135 and the highest this year was $146, so I think that oil could easily hit $150 / barrel.

“ Gas will not reach $5 a gallon this year, or next year.” Gas prices are currently just over $4 / gallon. They would need to rise by about another 25% so I think it unlikely that they will reach $5 / gallon.

“Mortgage rates will not hit 7% this year or next year.” I think that this is correct.

“By spring of next year there will be a significant, noticeable rally in real estate.” Unlikely.

“The world financial system will not collapse.” Is unlikely that the financial system will collapse.

“Innovation will explode." I doubt that it will “explode” but I think it unlikely that the rate of innovation will slow down. Higher energy and commodity prices as well as concern about climate change are going to spur innovation into developing more efficient ways to use these commodities and into alternatives.

posted July 9, 2008

Predictions, of any kind, have, by nature, the same probability of being right or wrong than the toss of a coin.
Calling a prediction a "good" one, can be done only AFTER it has become reality, and has therefore lost any predicting value.

I can agree on the sky is NOT falling...the rest is fortunetellers work.
If you are looking to predictions for comfort in humanity good and bright future...good on ya, we say here (NZ).
If you are lookig to predictions as an investment yardstick, you are unlikely to make much money...toss a coin, same chances.

posted July 9, 2008

In the best case scenario, we are one to two years away from an unqualified uptrend.

Internationally speaking, follow: Iran-Israel-NATO, the ability and willingness of the Chinese to maintain growth in today's terms.

In the US, follow: elections, war(s) cost/debt, interest rates vs. inflation, policy, institutional restructuring, immigration.

Upon deciding which way the above variables are likely to swing, the particular answers to your questions come closer to one's reach. Right now, it is not the intrinsic state of any one economy that creates as much problem as the general level of uncertainty.

posted July 9, 2008

Hi Les,

$150 oil: could happen, but I think will stabilize in the $120-140 range for the remainder of the year.

$5 gas in the U.S: diesel is already there, but I think we're about at the crest otherwise (at least for now)

7% mortgages: unlikely...they should stay between 5.5 and 6.5% for the next 24 months

Significant real estate rally by next Spring: Spring of 2010 maybe, but even then not significant, more like broad stabilization. In hard hit markets it'll be 2011, in those areas that never got hit too bad it might be late this year or early next.

The world financial system will not and, I think, cannot collapse barring a major natural disaster (meteor hit, Yellowstone blowing up, etc.)

Innovation is already happening at a rapid pace, so not sure what an explosion would look like -- the last 120 years would probably qualify in the historical context. Big things to come in alternative fuels, communications, medicine in the next 20 years, including, I'd bet, another bubble or two around the green/alternative fuels and possibly medical innovations.

Richard

posted July 9, 2008

I've heard similar things, although honestly at the moment I can't remember the source

posted July 10, 2008

I believe it will hit $5 a gallon this year but maybe not here in Utah, but for sure in my native So California.
As for mortgage rates, I don't believe they will hit 7%.

posted July 13, 2008