I spent the last part of 2008 out of the country without internet access or even much news.  It was nice to get away from America’s problems, but it was also a time of reflection about 2008 and contemplation on 2009.

America is in a Depression, right now — without a doubt.  Many people miss this point because it is not like the Depression of the 1930s.  In fact, there will never be another Depression like the 1930s because of laws that were put in place after then.  For example, the FDIC prevents there ever being a 1930s-like run on the banks.  However, it doesn’t prevent banks from being technically insolvent which occurred on a wide scale in 2008.  Many banks are still technically insolvent but efforts are being made to change accounting standards to hide this fact.

Even though America is in a Depression right now, many would dispute this.  However, as 2009 gets started and rolls along more and more people will start using the word and there will be no doubt by the end of 2009.  In many ways, 2009 will be even worse as optimism is drained away.

Here are a few predictions that I have for 2009:

1. Obama will enjoy a brief three month honeymoon with America before his approval ratings start to plummet.  Obama will attempt to walk a middle road but this will fail.
2. The stock market lows of late 2008 will be shattered and many people will disavow investing in the market “forever”.
3. Crude oil will see $25 per barrel but probably hit $50 first.
4. The U.S. dollar will be crushed as Federal Funds rate will  remain at or near zero.
5. Ten of thousands of retail stores will close as big chains continue to scale back.
6. Unemployment will continue to increase but these increases will be hidden with the fraudulent “unemployment rate” that the government publishes monthly.
7. There will be more mortgage foreclosures as prime mortgages are reset and more people lose jobs.
8. The annual deficit will balloon to nearly $2 TRILLION as the government pours out money.  This will cause some growth but will only modestly stimulate national economic growth.
9. There will be continued money given to the U.S. auto makers but it will become more unpopular.  Two of the big three U.S. auto makers will fail this year.
10. Credit standards will tighten as most Americas lose their homes as perpetual piggy banks.  This evaporation of credit will usher in a long period of austerity that will take a long time for Americans to adjust to.
11. There will be considerable Democratic infighting over policy decisions and Obama will lose control of his agenda to Congress.
12. There will be some health care changes but no universal coverage and no single payer system.
13. Special interests and lobbyists will continue to have a vice-like grip on Congress.
14. The states will get considerable funding from the federal government.
15. There will be heated debate about the U.S. continued support of Israel.
16. There will be more reports of homeless tent communities and food shortages in the U.S.   This may include civil unrest and even selected rioting throughout the country.
17. There will be talk about the ultimate U.S. defaulting on its national debt.
18. There will be hints of inflation toward the end of the year after crushing deflation across all investment classes for most of 2009.
19. Lots of unrest throughout the world and Obama will continue to be in both wars at the end of 2009.
20. There will be proposals to restrict the total number of hours an employee can work to 36 hours per week but these won’t pass this year.

Overall, both liberals and conservatives will be upset about 2009.  Conservatives will blame the Democrats constantly for all the problems, calling it Obama’s Depression.  Republicans will falsely conclude the country is just not conservative enough and that America has to get back to fiscal constraint.

This is going to be a horrible year.

America is doomed.