December 28, 2012

2012: Five Inevitable Things That Did Not Happen

Patrick Marren
Partner

Whoops, experts (and sometimes even we scenario planning people) were wrong again.

Five things that were "bound to occur," away from which we rashly predict the media will moonwalk at warp speed in 2013:

5. "Hyperinflation and/or high interest rates will destroy America because of our deficits."

Many have made this prediction ever since the first trillion-dollar deficit made its appearance after George W. Bush signed the bank bailout into law in October 2008. In response, inflation has remained at historically low levels, and interest rates, far from spiking, have in some cases shriveled to below zero after expected inflation is taken into account. Sure, it all could go to heck tomorrow. But if anything, with the "Fiscal Cliff" possibly set to hit in a few days, the economy should tend to slow further in early 2013, possibly tipping us toward deflation, and forcing the Fed to keep interest rates near zero.

4. "Greece cannot possibly stay in the euro."

Here I quote from some idiot at "futuresstrategygroup.com," one P. Marren, back in May. "So good luck to Mr. Samaras, the new prime minister. He will need it. Because he is very likely to preside over the exit of Greece from the euro. ...A Syriza victory would probably have meant a swift exit from the euro. But a [Samaras] victory may only delay that exit slightly." It still could happen. But it looks far less likely than it did back in June. Spain and Italy and France could all follow in Greece’s tracks in 2013, posing truly existential risks to the euro (if not the EU); but to date the direst predictions have yet to come true even for tiny Greece.

3. "No president can be re-elected with a 7.5% or higher unemployment rate/lower than 50% approval/60% ‘wrong-track’ rating/[insert your favorite damning statistic here]."

A sample (from Don Keko of the Examiner in late 2011): "Barack Obama's presidency is over and he is now a lame duck. ...Voters have tuned him out. His popularity continues to decline and no president in history has ever been re-elected with an approval rating as low as Obama's so late in his presidency. ...His disapproval hit 53%. Since World War II, no president has ever sunk so low in the polls and won re-election." Later, the punditocracy seemed to bifurcate into separate realities, with most mainstream outlets calling it a tie and those identified with conservative interests increasingly favoring Mitt Romney. Meanwhile, baseball and poker expert and statistician Nate Silver calmly and quietly stuck to his own model, and ended up calling 50 out of 50 states correctly. At no time during the second half of 2012 did Silver give Obama less than a 60% chance of winning, despite taking a hellacious pounding from conservatives who thought he was skewing his polls to show Obama winning (question: wouldn’t he skew it to show Obama being behind by a handful of votes in every state if he wanted to maximize Democratic turnout?). Ironically, he was also attacked by outraged liberal-leaning pundits who felt he was poaching on their turf. (It now appears that they were the ones poaching on his.)

2. "The Citizens United SuperPACs will determine the 2012 elections."

"Conservative" SuperPACs spent some $400 million on the 2012 elections, about double what "liberal" SuperPACs spent, according to preliminary reports. Despite this massive advantage, the "conservative" side lost almost every election in which they invested large sums of money. This result confounds not only the conservatives who made those bad investments, but also liberal doomsayers who insisted that democracy itself had possibly become a sham and that corporations and billionaires now were able to simply buy the American political system.

1. "The Roberts Court will strike down Obamacare."

There were two phases to this expert stumble. At first, practically no legal experts at all could be found who thought that the Supreme Court would NOT uphold the Affordable Care Act. Intrade, the on-line trading site where people could bet on various events, opened trading in early 2011 at below 50% (that the law would be struck down) and oscillated between 30% and 50% until March 26-27, 2012, when oral arguments were heard. Then came Phase 2: the Intrade index shot up to over 60% instantly as soon as the public heard Justice Scalia's scornful statements about "broccoli" during oral argument. Then, after sliding a bit, the Intrade odds of a strikedown steadily climbed until they reached the high 70s, by which point many "legal experts" had come around to believing that the law would indeed be struck down. Then in a matter of a minute or two on June 27, as the ruling was read, the price of the Intrade instrument plummeted by some 75 points. (Though some were prescient. National Review Senior Editor Ramesh Ponnuru told a gathering of Princeton alumni on June 2 that he had heard that Chief Justice Roberts had "gone wobbly" and might vote to uphold, which turned out to be pretty accurate. And a number of "liberal" commentators remained sanguine - Robert Reich, Lawrence Tribe, and Walter Dellinger, e.g. - that what they thought was precedent would prevail.)

What inevitable things will fail to occur in 2013?

Well, aside from the Chicago Cubs failing to win the World Series, which will DEFINITELY occur, we remain professionally agnostic. Feel free to add your favorites to our list in the Comments section.

Comments  | 

pioop
#5 the world did not end

Thoughts?