James Corbett reports on our upcoming year in the global economy for 2013, he says strap in, its going to be one hell of a ride, markets that arent in step with reality will rally this year, taxes up, Eurozone in a basket, R2P FTW, war in Syria, and much more.
In case you hadn't noticed, 'tis the season of holidays, merrymaking, and generally slow news in closed markets. So, in keeping with the time honored tradition of forecasters and prognosticators making bold predictions for the year ahead, I offer you my own best guesses for the next 12 months. Of course these guesses—like everyone else's—are simply that: guesses. But it is nonetheless helpful to stand back from time to time to take a look at the bigger picture and speculate on where things are heading. So with those provisos in mind I offer you 4 examples of trends for 2013 and my own bold predictions for the coming year.
Trend 1: Currency Wars
Unfortunately, the first volley of the currency war of 2013 has already been fired. This time the shot heard round the world was fired not in Lexington and Concord, but in Tokyo, where Shinzo Abe is preparing to take the helm as Japan's next Prime Minister. The catch is that he was elected on the back of his vow to open the BoJ spigots and let loose a tidal wave of yen-devaluing quantitative easing. Good news for Japan, or so the markets seem to believe. A weaker yen, after all, means a stronger export environment, which is music to the ears of an export-dependent economy that rang in 2012 with the news that it had just racked up its first trade deficit in 32 years. The Nikkei surge is destined to be short lived, however, as the market eventually has to ask what the yen is devaluing in comparison to. The US dollar? Let's keep in mind that the combined QE3 and QE4 are going to be pumping another trillion dollars of Fed funny money into the world economy over the next year. Then how about the currencies of Japan's Asian electronics export rivals? No such luck: the Bank of Korea has announced there will be yet more stimulus spending in the new year. South America is getting in on the act, with a recent analysis indicating that Brazil, Chile, Columbia and Peru have spent a combined $135 billion into the markets over the past two years to keep their currencies suppressed. Switzerland and Britain are even engaged with tit-for-tat devaluations of their own...a European front in the global currency war, if you will. So for the economies of the world, it seems there's no place to go but down, and the central bankers of the world seem only too happy to comply. Let the printing presses commence.
My bold prediction: The global hyperinflationary meltdown that one would expect from this tidal wave of stimulus spending will not arrive this year. Instead, the markets—now well and truly decoupled from any sense of economic reality from all of these central bank interventions—will stage a counterintuitive rally in the first half of the year. Stocks will soar on the promise of this wave of easy money. The hangover will not kick in until the second half of the year at the least. The QE3 purchases of Mortgage Backed Securities will continue to have its intended effect of artificially propping up the US housing market, which will continue its growth from last year. This will keep the US economy looking better than it is (with a lot of help from the book cookers at the BLS and the other government number-fudging agencies). The Eurozone will start to fall even further behind in the currency war because Germany will act as a brake on the stimulus function of the ECB. Thus the Euro will lose out as currencies around the world devalue against it, and Europeans (except perhaps for the Germans, who may be able to weather the storm) will suffer even more.
Trend 2: Taxes will increase
There's an old truism about death and taxes. Namely, that you can't escape either. Well, I don't know about death, but there's almost no way you'll be escaping higher taxes in the New Year. This is most straightforward in the American context, where no matter how the fiscal cliff/debt ceiling negotiations pan out in the coming days and weeks, higher taxes for Americans are already baked into the cake. Many of these taxes can be blamed on Obamacare, although the idea that this extra revenue for the government will actually be used to pay for medical care is laughable at best. There will be a new 3.8% levy on investment income for those earning over $200,000 a year, for instance. It's being labeled a “Medicare contribution” but will go directly into the government's general funds where it can be used for anything from bombing children in foreign countries to funding the purchase of DHS spy drones over American skies. And in non-Obamacare news, the freshly-minted fiscal cliff deal will see 77% of American households paying higher taxes than last year, with an average increase of $1,635 weighted toward the higher end of the pay scale. In short: tens of millions will be paying more to Uncle Sam at the end of the year.
This is not just an American phenomenon, of course. In belt-tightening Japan, for example, withholding taxes will be going up 2.1%, payroll taxes will be up a quarter of a percent, and personal income taxes will be raised for those earning over 15 million Yen per year, all of which will will serve as curtain-raiser to the sales tax doubling that is slated to take place in increments over the next two years. Israelis are dealing with a range of tax increases that kicked in as the clock struck midnight to ring in the New Year, including an increase in personal income taxes, capital gains taxes, land appreciation taxes, and national insurance payments for employers, after a VAT tax increase that kicked in last September. Embattled Nova Scotians will be seeing higher income taxes and lower CPP and EI deductions this year. Portugal has just passed a new budget that will see a 4% increase in personal income taxes in order to meet its bankster-obligated bailout austerity conditions. In fact, taxes are going up just about everywhere...except, bizarrely enough, in socialist France, where the country's Constitutional Court has overturned Hollande's proposed 75% upper tax bracket for the mega-wealthy, a tax that had already seen Gerard Depardieu and other Frenchmen of the caviar / jetsetting class threatening to move to Belgium in order to escape it.
My bold prediction: This first wave of Obamacare/fiscal cliff tax increases in the U.S. will only set the stage for a broader national conversation on the need for higher taxes across the board in the face of the national debt crisis. The media conversation will focus heavily on the idea that these taxes are meant for the “wealthy” who will be defined as anyone earning over $250,000. By the time the taxes are hardwired into law, the meaning of “wealthy” will have been vastly downgraded (evenutally meaning anyone earning over $75,000). Look for Obama to float a plan for a VAT tax and some form of carbon tax or cap-and-trade scheme in this critical first year of his lame duck session.
Trend 3: Regional governmental structures will continue to expand and consolidate power
We all know that the Eurozone is a basketcase. We all know that in a rational universe it not only should have gone bust last year, but it should never have been created in the first place. A single monetary instrument administered by a single central authority forming the backbone of economies as radically diverse as Malta, Germany, Portugal and Ireland (to name but a few) is absolute madness. As we've pointed out many times before, it was always designed to fail. The key question is not whether this failure will take place but how that failure is framed. If and when the ECB admits the fundamental flaw in its plan it will frame it as a lack of power: “if only the central bank had more power to directly intervene in each Eurozone member's country, everything would be better!” We've already seen this idea tentatively introduced to the public, but the continuation of austerity pain and anti-austerity protests in the new year will “force” the banksters into the brier patch of their ready-and-waiting beefed-up ECB, or at least the next phase of it.
Meanwhile, consolidation of other regional governmental institutions will continue apace this year. This is not a bold prediction so much as an acknowledgement of a decades-long, accelerating trend. In the Asia-Pacific region, the globalists have already revealed their intention to promote ASEAN as the regional counterbalance to growing Chinese naval strength and assertiveness. In South America, where plans to extend the globalist neoliberal agenda have been stalled for years behind a wave of popular socialist opposition, the vultures are already circling around rumors of Chavez' ailing health. Perhaps Rockefeller will live long enough to see his Free Trade Area of the Americas (or some rebranded version of it) passed after all.
About the only areas that will likely buck this trend are the very areas where the NATO empire is sticking to its old divide-and-conquer strategies. The African Union is still an empty shell of an organization, united by little and with key northern members Libya and Egypt still embroiled in turmoil from the NATO-backed destabilizations of recent years. Look for it to continue to do little if anything in 2013. Likewise in the middle east, where organizations like the Arab League are only called upon as needed to lend “legitimacy” to outside intervention and ad hoc formations like the “Friends of Syria” similarly come and go from the world stage as needed. Look for the Saudis, Qataris, Iranians, Turks and others to continue to squabble over regional dominance, with Americans, Israelis and others playing the various groups off each other as usual.
My bold prediction: European anti-austerity protests will reach a crescendo in late spring / early summer, and a new set of emergency measures will be rolled out by the ECB on the condition that the bank be given more power to unilaterally intervene in individual economies. Sold to the public by a mouthpiece media, most will go along with it willingly. In Asia, the failure of last year's ASEAN talks will lead to increased pressure to form a united front on the South China Sea issue. Accordingly, a meaningless, toothless code of conduct for the waterways will be issued and pushed at this year's summit. (Meanwhile, behind the scenes, American defense contractors will continue raking in the billions from the de facto military answer to China's presumed naval aggressions.) In hilariously hypocritical fashion, however, the same establishment mouthpiece media that obediently touts every globalist initiative will do their best to ignore (or ridicule) the BRICS development bank, which will get off the ground at the upcoming BRICS summit in Durban in March.
Trend 4: OMG R2P FTW
The United Nations' much-ballyhooed “responsibility to protect” doctrine will continue to act as a driving force in identifying (and bombing to smithereens) the world's geopolitical hotspots in 2013. For those who missed the drill, “responsibility to protect” or “R2P” is the doctrine that the international community is obligated to intervene in situations where a state is causing mass atrocities among its own citizenry. Of course, we have to use the doublespeak decoder to understand that “the international community” means the core NATO countries and their allies, “intervene” means bomb the hell out of, and “mass atrocities” can be pretty much any cover story for an invasion of the latest geopolitical target of the week.
R2P, for example, served as the basis for the justification of the humanitarian love bombing of Libya in 2011, which was supposedly in response to Gaddafi's alleged bombing of his own population (which almost certainly did not happen) and feeding Viagra to his troops so they could rape the opposition's women (which admittedly did not happen). The same chickenhawks also attempted to use R2P to justify a carpet bombing of Syria, back when that was still a discussion the globalists were having amongst themselves...But for some reason no one was as keen on letting the humanitarian bombs reign down on Damascus when it was pointed out that Syria has the world's fifth best anti-air defenses. Still, “R2P” is a handy card up the sleeve of the globalists and we should expect them to whip it out whenever it serves their interests. The flip side of this, of course, is that atrocities committed on civilian populations by allies are to be ignored because they're allies (see: Bahrain) and atrocities committed on civilian populations in non-oil producing, non-strategic countries are to be ignored because they're not important.
My bold prediction: The R2P card may yet be played in Syria, depending how the conflict plays out. If and when it looks like intervention is back on the table, expect the “international community” to once again start making the case that a “no fly zone” (i.e. bombing campaign) in the name of “protecting Syrians” is just what the doctor ordered. Meanwhile, a political crisis in Africa (perhaps in Yemen or Sudan) will create similar calls for foreign military intervention...and provide a convenient excuse for AFRICOM to continue squeezing its foot through the door into the African continent.
A final word
Once again, it's important to note that my predictions are almost guaranteed to be wrong in their specifics, but the overall trends will more than likely hold. Other ominous trends for the coming months can be guessed with similar ease: an increasingly intense battle for internet freedoms; the continuing erosion of civil liberties in the so-called free world; the continued consolidation of the global economy in fewer hands. However, it is also important to note that at the end of the day, the future is what we make it (however much that might sound like a greeting card platitude) and there are still things we can do to effect positive change in the world. As this is traditionally a time of making resolutions, perhaps we can all use this moment to once again commit ourselves to protecting our loved ones and those around us with renewed vigor in the New Year. Whether it be planting a garden, committing to supporting local businesses, creating a local organization for sharing and discussing this information, or however else you choose to improve your life this year, we all have a part to play in creating a better financial, social, intellectual and spiritual situation for ourselves and our community in 2013.
In short: strap in. It's going to be one hell of a ride.