The People's Bank of China is widely expected to lower its requirement for the amount of cash banks must hold as reserves to let lenders inject more credit into the economy to fight headwinds from Europe's debt crisis and sluggish U.S. demand.In other words, "Double, double, toil and trouble/ Fire burn and cauldron BUBBLE" They will increase spending on public housing and other unnecessary "infrastructure" projects -- a typical command economy response, see "bridges to nowhere". Now, of course, China does not have our debt problem -- well, they do, just the other end of it. They may be able to take in wash for one another for a good long while, but it is still a bubble in the end. Acknowledged inflation in China has slowed from the reported 6.5% earlier in the year.
Reduction of the Eurozone/Collapse of the euro. The euro has come off its low against the dollar and is trading, at the moment, in a range from 1.29 to 1.295 -- down considerably from its 52-week high around 1.49. Our illustrious Fed Chair is attempting to stabilize the European banks and the euro with currency swaps, otherwise, I suspect we would see the euro really go off the edge. Greece is going to leave the Eurozone sometime in the next twelve months, I would almost bet (not a prediction, just a likely outcome). If Greece goes, it will probably make sense for the Italians to go. A bite-the-bullet realignment is the only way to save any kind of United Northern Europe. It could get really ugly really fast if they try to keep it as it is.
North Korea. Who cares? OK, my prediction is that we'll see an opening in relations with South Korea. I have no particular reason to think that except that the Nork military brass might like to get out of their old Lincolns and into some sporty new Hyundais.
Iran. This monument to Jimmy Carter's dumbassery will have to be dealt with at some point in some way. I suspect the U.S. and/or the Israelis have been and possibly are operating under the radar around Iranian nuclear facilities. I suspect we have a great deal of intelligence about their military capability. It was stupid of Obama not to support the post-election uprisings in 2009 and 2010. There are good people in Iran, just as there are in North Korea. I do not doubt that there are Iranians who are collaborating with western powers, hoping to overthrow the mullahs and establish a secular Persian republic. Unfortunately, they are probably going to be busy trying to stay alive when Iran begins to strong-arm its way into Iraq. If a major war breaks out anywhere in the next twelve months, it's about 2 to 1 that Iran is involved.
Speaking of war. If you are an individual who can't pay your bills, are in debt to your eyeballs, and behind on the rent, one traditional solution is to load up your belongings in the middle of the night and head for another state. The national equivalent is to inflate the currency to worthlessness then start a war with somebody. I mean this in all seriousness, I am praying that Barack Obama survives until November. I would rather have him re-elected, as horrific as that will be, than to see him assassinated. I say the same for all the world leaders. Beware of an Archduke Ferdinand incident. The world is filled with gullible and easily manipulated idiots like Timothy McVeigh who can be convinced to do something "heroic" for a "cause". It might be an assassination. It might be a dirty bomb. It might be some scenario that we can't imagine at the moment. It may happen in the U.S., in Jerusalem, in the Straits of Hormuz, Berlin, Seoul, or somewhere else. One thing is for certain, it will be, as they say, bravo sierra - a mere excuse for another military intervention to draw attention away from the economic conditions in the countries involved.
Elections. Conservatives, aka, Classical Liberals need to embrace the Doctrine of Incrementalism in politics. We are not going to be able to return to a sound Constitutional footing in one swell RonPaul. It just ain't going to happen. Actually, the best suggestion I have heard is the one from Rick Perry, that Congress spend less time in Washington. Congress is always passing one stupid law or another to prove that they are "doing something." Never mind that 95% of the time what they are doing is useless if not outright detrimental. Elections should be used to put pressure on elected representatives and force them to be accountable to their constituents. Never be afraid to vote against an incumbent in the primary. Incumbents should fear for their jobs. In general elections we are obligated to vote for the less of two or three evils, but we can use the primaries to make the lesser really lesser.
Preps. I think you will see a window of opportunity for buying precious metals over the next few months. The prudent thing is not to go all-in on a dip and not to freak out over fluctuations but to cost-average purchases of gold and silver -- that is, buy a little along, maybe a little more on a drop. I would think a few ounces of junk silver coins it probably affordable for most of us and should be held at a minimum. However, if a person has debt, it would be a good idea to get rid of that before buying a lot of metal.
Make a New Year's resolution to try growing at least a little of your own food if you have not done that before. Also, if you don't have a pressure cooker, consider investing in canning equipment for your own produce or for what you can pick up at local farmers' markets.
Make friends. Create relationships. Find people who are skilled, trustworthy, and honest. Churches are sometimes good places to start looking.
Think about what it would take to rebuild a financially, politically, and morally bankrupt society from the ground up. Examine both yourself and your current community. If you are not up to the task, start working on yourself -- most of us need to do that anyway, especially me. If you honestly believe the problem is your community, it might be good to start looking for a new one.
Happy New Year!