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  • Nilas ice
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2015 New Years Predictions - Pony Up!
« on: January 01, 2015, 05:14:34 PM »
Here is my prediction for the New Year.  Pony up your's.

The story of 2015 will be ALL about Global Economics

I'm going to go out on a limb here and make a call.  One is usually wrong when they do this as events which are inevitable often have a way of teetering on the precipice for a long time before they fall.  But I think the time is now.  But then again maybe not if we sign the taxpayers up for another round of 10 trillion in corporate bailouts.    We will see and you can have fun poking me in the ribs this time next year :)

The biggest story of 2015 will NOT be about Climate Change, renewable energy, melting ice caps, rising temperatures, or any of a host of other sundry topics floated constantly by the main stream media to entertain us.  Nope.  It is time for the next set of chickens to come home to roost - as the saying goes.

It is time for our next step down in the early days of our march towards the collapse horizon.  In other words the latest financial bubble is going to burst and the fallout from this necessary and unavoidable event will bring home to many what has been explained to them many times and that which they have not been able to get their heads around.  Namely that the game of buying our way out of this crises is not possible.  We are more than broke.  We are living on our children's future earnings to keep this ship afloat.  Almost nothing requiring massive expenditures in the future will be affordable barring a hardnosed decision (the triage thing) to let another part of the global civilization die.

So my prediction is that we will enter the next global financial crises this year and it has a good probability of equaling our last one.  The dominos are going to fall.  All of the Euro countries are heading for hard times with the Southern band of Greece to Portugal suffering the worst.  France and Germany will not be immune.  Great Britain will see serious problems.  Russia and Eastern Europe will suffer significant recession/deflationary events.  China will slow dramatically as well as Japan.  The Emerging market countries are going to get absolutely hammered. It will take time but this will bleed back to the US which is going to be in the process of dealing with the mess caused by plummeting oil and gas prices.

Some very interesting reading on the state of global finance's.

he US dollar will keep rising more or less in and of itself, simply because the Fed has ‘tapered QE’, and much of what happened in global credit markets, especially in emerging markets, was based on cheap and easily available dollars. There’s now $85 billion less of that each month than before the taper took it away in $10 billion monthly increments. The core is simple.

This is not primarily government debt, it’s corporate debt. But it’s still huge, and it has not just kept emerging economies alive since 2008, it’s given them the aura of growth. Which was temporary, and illusionary, all along. Just like in the rest of the world, Japan, EU, US. And, since countries can’t – or won’t – let their major companies fail, down the line it becomes public debt.

One major difference from the last emerging markets blow-up, in the late 20th century, is size: emerging markets today are half the world economy. And they’re about to be blown to smithereens. Sure, oil will play a part. But mostly it will be the greenback. And you know, we can all imagine what happens when you blow up half the global economy …

But as I’ve discussed many times already, oil is just the spark that sets the world ablaze. The fuel is energy credit, junk bonds, leveraged loans, collateralized loan obligations. And it will spread to adjacent instruments, and then to just about everything, because shorts and losses will have to be covered with any asset that can be sold, loans called in, margin calls issued, etc. Many of these items will end up being valued at 20-30 cents on the dollar at best, and since the whole edifice was built on leveraged credit, those valuations will in many cases mean a death in the family.

Oil has become the new housing bubble:

The same thing that happened to the housing market in 2000 to 2006 has happened to the oil market from 2009 to 2014, contends well-known trader Rob Raymond of RCH Energy. And he believes that just as we witnessed the popping of the housing bubble, we are in the midst of the popping of the energy bubble. “It’s the outcome of a zero interest rate policy from the Federal Reserve. What’s happened from 2009 to 2014 is, the energy industry has outspent its cash flow by $350 billion to go drill all these wells, and create this supply ‘miracle,’ if you will, in the United States.”

“The issue with this has become, what were houses in Florida and Arizona in 2000 to 2006 became oil wells in North Dakota and Texas in 2009 to 2014, and most of that was funded in the high-yield market and by private equity.”

The Oil story is being misinterpreted by many investors. When it comes to Oil, OPEC matters, as does Oil Shale, production cuts, geopolitical risk, etc. However, the reality is that all of these are minor issues against the MAIN STORY: the $9 TRILLION US Dollar carry trade. Drilling for Oil, producing Oil, transporting Oil… all of these are extremely expensive processes. Which means… unless you have hundreds of millions (if not billions) of Dollars in cash lying around… you’re going to have to borrow money.

Borrowing US Dollars is the equivalent of shorting the US dollar. If the US Dollar rallies, then your debt becomes more and more expensive to finance on a relative basis. There is a lot of talk of the “Death of the Petrodollar,” but for now, Oil is priced in US Dollars. In this scheme, a US Dollar rally is Oil negative. Oil’s collapse is predicated by one major event: the explosion of the US Dollar carry trade. Worldwide, there is over $9 TRILLION in borrowed US Dollars that has been ploughed into risk assets.

Energy projects, particularly Oil Shale in the US, are one of the prime spots for this. But it is not the only one. Emerging markets are another. Just about everything will be hit as well. Most of the “recovery” of the last five years has been fueled by cheap borrowed Dollars. Now that the US Dollar has broken out of a multi-year range, you’re going to see more and more “risk assets” (read: projects or investments fueled by borrowed Dollars) blow up. Oil is just the beginning, not a standalone story.

If things really pick up steam, there’s over $9 TRILLION worth of potential explosions waiting in the wings. Imagine if the entire economies of both Germany and Japan exploded and you’ve got a decent idea of the size of the potential impact on the financial system. And that’s assuming NO increased leverage from derivative usage. The story here is not Oil; it’s about a massive bubble in risk assets fueled by borrowed Dollars blowing up.

The last time around it was a housing bubble. This time it’s an EVERYTHING bubble. And Oil is just the canary in the coalmine.

So.  A global financial crises similar in scope and scale to the circa 2008 mess.  Government defaults abounding, banks and too-big-to-fail companies getting bailed out on the taxpayers backs, a large rise in unemployment globally, deflation in some locations, etc.  All the fun stuff.

In the face of this type of crises dealing with climate change will take a back seat.  It will be all about the politics of finding a path back to economic growth.

Anyway that is my take on the next year.  What is your's???
We do not err because truth is difficult to see. It is visible at a glance. We err because this is more comfortable. Alexander Solzhenitsyn

How is it conceivable that all our technological progress - our very civilization - is like the axe in the hand of the pathological criminal? Albert Einstein


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Re: 2015 New Years Predictions - Pony Up!
« Reply #1 on: January 01, 2015, 06:01:52 PM »
Hang onto your hat, JimD:  I agree with you... halfway!

I've personally projected for several years that the US stock market will crash in 2015. But that was because 2015 is seven years since 2008, and the US stock market frequently crashes at approximately seven year intervals. (Just long enough for us to recover, get exuberant, forget what happens when we are exuberant, and then crash again.)  So I have already prepared for that eventuality, as best I could.  And, judging by the amount of money poured into fixed income funds this year, many others have taken to a safe financial haven, as well. 

I have posted articles in the Oil and Gas issues thread discussing the fossil fuel debt crisis.  So, no surprise there.  Plus: divestment from fossil fuels continues to be a thing.

But a crash in 2015 could simply be a seven-year crash. Not necessarily a sign that the end of the world is near.  Certainly not necessarily a global catastrophe -- too much new tech and cheap renewables waiting in the wings.  So don't paint up your "The End is Nigh" placards just yet.   ;)
People who say it cannot be done should not interrupt those who are doing it.


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Re: 2015 New Years Predictions - Pony Up!
« Reply #2 on: January 01, 2015, 06:55:50 PM »
The following linked article discusses the risks of assuming that the dollar will rise steadily in 2015:
“It is not the strongest or the most intelligent who will survive but those who can best manage change.”
― Leon C. Megginson


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Re: 2015 New Years Predictions - Pony Up!
« Reply #3 on: January 01, 2015, 07:29:08 PM »

What will be of 2015? Will we finally change course to avert catastrophe?

Most humans will still be pre-occupied unfortunately...

Meanwhile, the Global Plutocracy's totalitarian grip will be completed this year with passage of trade agreements such as TPP / TTIP / TISA / RCEP, effectively establishing secret international tribunals with the power to override national labor & environmental laws that effect corporate profits.

... while Methane levels keep rising, and potential sources increasing...

... and consequences keep accelerating...

The big question that humanity faces from 2015 is whether we will succeed in avoiding 4C?


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Re: 2015 New Years Predictions - Pony Up!
« Reply #4 on: January 01, 2015, 08:56:55 PM »
I predict a return to low summer ice levels across the Arctic basin .

 I do not think we can see 3 years of similar retention/low export without it indicating a major shift from what we have been seeing for over 30yrs and personally I can see no reason why we should see such a seed change when the forcing driving loss is stronger now than ever before?

I'm agreeing with the UK MetO in that 2015 will be a record warm global year. This is mainly due to a faltering/switching of the naturals that have been burying heat in the oceans for over 15yrs. We have already seen this over 2014 with many months pushing global records.

The last time we saw just how powerful the energy imbalance was we had less CO2 aloft and a near normal Arctic ice cover over summer ( shedding some of that energy before it appeared in a form that CO2 could trap) and did not have an ocean stuffed full of heat near the surface.

Should near Nino conditions persist into 2015 ( and even unleash a powerful Nino event?) this will further push temps but maybe enough energy/heat will be being interfaced with the atmosphere across swathes of the worlds Oceans to make this a mere augmentation to the temps?

This warming will drive more extreme weather events across both north and south of the planet.

Data from this period will alert nations to the impacts that a 'flip' in naturals will drive in coming years. Asia will continue to clean up its energy act and this will further impact warming as global dimming falls back to levels last seen in the 90's and adding in more heat for enhanced GHG levels to hold onto.

All in all 2015 will prove an even more interesting one than those that placed us all on a forum like this!

ko.yaa.nis.katsi (from the Hopi language), n. 1. crazy life. 2. life in turmoil. 3. life disintegrating. 4. life out of balance. 5. a state of life that calls for another way of living.