My 2023 Predictions

As usual every other prediction is a joke or fake.

1. 40% of Ukraine's electric grid has been destroyed. The destruction centers on substations which could, theoretically, be repaired quickly. No doubt Ukraine is constantly repairing as Russia constantly bombs. Mrs Zelensky in a BBC interview said that Ukrainians could go without electricity for three years. At the time I thought this was odd. But since there is a limited amount of spare parts stored for repair, and any additional repair equipment must be imported from Russia, this means that Ukraine might have to rebuild the electric system form the ground up. I doubt this could be done that quickly. No modern society can survive 3 years without electricity.

This leads to my first prediction. Unless the US intervenes Ukraine will no longer exist one year form now. At best it will be a powerless shadow of its former self.

2. US general Ben Hodges, former NATO commander, predicts the Ukraine will will the war this year. They have the big mo.

3. Oil is currently at $80 a barrel. I predict that it will hit 100 to $120 this year. The factors encouraging this is that sanctioned countries hold 40% of the world oil reserves and the Gulf Country's hold 40% and they control the marginal production.  In addition the ending of the covid restrictions in China will lead to more travel and economic growth.

4. Due to a recession Oil will drop $15 to $25 dollars a barrel. 

5. We are already in a recession and this will continue for a few years. Since inflation is under measured, we have been in one for over a year already. This was also masked by covid recovery stimulus.

6. There will be no recession in 2023

7. Inflation will continue in the 8 to 10% range even with rising oil prices as the recession reduces demand.

8. Experts tell us that Inflation will be 2.8% in 2023.

9. Biden will not be impeached. This is not to say he doesn't deserve it.  I can't think of a modern president that did not deserve it. Impeachment was always been political. What the crimes might have been is irrelevant. I doubt that with the slim majority the Republicans will have the votes.

10. Biden will be impeached.

In reality these predictions are on a sliding scale where each impacts the others in a feedback relationship.

I won't say which are mine and which are the fake ones. That way I can claim psychic powers no matter what happens like that old Twilight Zone episode.

Biden And Sunk Cost Fallacy

Sunk cost is a common error. From Wikipedia

In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered. Sunk costs are contrasted with prospective costs, which are future costs that may be avoided if action is taken. In other words, a sunk cost is a sum paid in the past that is no longer relevant to decisions about the future.

 

I suggest that Wikipedia add this photo to its definition of sunk costs. 

Federal Spending

A friend on Facebook pointed out the excessive spending and the approaching deficit in California. I thought I would do a little "back of envelope" calculations on the federal spending problem. This has been a concern of mine for decades. The chickens could come home to roost next Tuesday, or it could take 20 years. As Herb Stein said in the 70's, "If something can't continue, it won't." 

While these numbers are very suspect since we are on the crest of a recession and the covid spending is winding down, we can roughly do the numbers. What are the numbers?  

Spending is 6.2 trillion. This includes 1.2 trillion for social security and 760 million for Medicare. Naturally as I am 68 I would opposite cuts there. A joke, but still a true statement form me that shows the problem. Politically such cuts seem unlikely anyway. So other spending is 4.2 trillion. The estimated deficit is 1.3 trillion. So to balance the budget we need a 30% cut.

But I left something out. Interest of federal debt is 400 billion a year. This is headed up as interest rates rise. So assuming the US doesn't repudiate its debt the ratio is 3.8 trillion with a deficit of 1.3 trillion or a cut of 34%. 

We are doomed. I was going to use a different word, but this is a family blog. 

Inflation

For some reason I am thinking a lot about inflation. Yesterday's 20 cent increase in gas prices, I am sure, had nothing to do with it. I think it would be interesting to look at some prices for items that I or my extended family use.  

Minute Maid juice used to cost $1.89, then it was $2.09, then 2 for $4, now $2.29. So in the last year it has gone up 21%. So did we grin and bear it? No, we quit buying it. 

Biscuits and gravy at Casey's went from $2.49 to 2.99. A 20% increase. The family member that eats this did grin and bear it. Red Bull at Casey's was 3 for $5, competitive with Wall mart. Now it is 3 for $6. A 20% increase. In this case now this is purchased at WallMart. I would frequently buy Casey's ice tea for $1. Now it is $1.39. I no longer buy it. 

Arby's had a 2 for six special, now it is a 2 for $7. A 16% increase. They did add cheese to one sandwich, so let's say it is an 8% increase. 

You  can see the difficulty in measuring inflation. The consumer quits buying, they buy a substitute, or they do not change thier buying habits.  My guess is that the current method underestimates inflation. Inflation is roughly 8% by the current calculation. The old method used in the 70's, if it was still used, would peg inflation at 18%. This seems too high. You no doubt have heard that inflation is the highest in 40 years. This is false. Inflation now is higher it was in the late seventies, if the same method of measurement was used. Inflation is the highest it has been since the Civil War. 

Biden thinks that inflation is up hardly at all.

"put this in perspective" and that the inflation rate month-to-month was "up just an inch, hardly at all."

He is wrong. 

Well at least Lucky Strikes are 2 for $6.  I wish I smoked. 

Vaccine Madness

You can't really make an informed decision on vaccines for COVID because the data we are presented is suspect. Fauci said no masks, then masks, then double masks, then no masks if vaccinated, then masks again even if vaccinated. We were told that all we had to do was "flatten the curve" and all would be well. Now we are told it is semi permanent. We were told that the vaccines would prevent COVID. We were told it would reduce symptoms. We were told that the vaccine would solve everything. We were told that we need a booster every 6 months. We were told that the vaccine is effective against the new variations of the virus. We were told it doesn't.

Can you blame anyone not believing anything we are told?

As for the current vaccine mandate: we were told that postal workers are exempt; we are told they aren't. Biden promised to push aside any governor that opposed the mandate. The mandate is clearly unconstitutional, and yes I am aware of the case in the 30's. A fine is different than the destruction of a person's livelihood. Biden is clueless, but I am sure his handlers know that it is unconstitutional. But imagine the rhetoric one year from now when it becomes clear that vaccination is not working: "If only we were allowed to mandate the vaccine all would be well." 

What would the usual suspects say if Trump was doing this? 

https://youtube.com/watch?v=yLHGTJjHXLo&feature=share