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  • Mathieu Provencher

Predictions of the Year (and the next)

Hi again Guys! I'm back from Canada, which shows that people can indeed survive the harsh weather there (we got to -30 at one point... during the day).

I wanted to have a little post on two big events that may happen this year or the next. I mainly chose these two because of my interest in them but they would, if they conclude, have quite an impact on you guys as well.

Since they are very close to us in time (one or two years... or less), you guys will be able to see how my predictions fare with real-life... adoring my every words if I succeed and bashing my reputation to the ground if I fail. You can also realize that my predictions will be based on a number of stated assumptions (other people's predictions) that may or may not come to pass, which will obviously affect my results (that's the good thing about Social Sciences, you can always blame reality for interfering in our analysis).

These two events are in the context of very low crude oil price. As you guys may know, the price of crude oil has crashed lately. To put this in perspective, the price has been cut by more than half in a few months. This creates very deep problems for some countries (my first event) and some good opportunities for others (linked to my second event).

My first prediction, if we call it that, is that Venezuela's economy may generate hyperinflation this year or next year. This is something I was already expecting to happen but such low oil prices will most probably push Venezuela into it much faster than otherwise. Although it is very unlikely that oil prices stay as low as they are right now, they seem to be set to stay low enough for Venezuela to have very significant problems. I expect that Maduro or "Maduro-like" policies (the horrible kind) will continue for a while, which will mean that the Central bank of that country will be forced to start printing money very soon... and Voila!

My second prediction is not exactly that, it is a "counter-prediction" of sorts. I have heard a few times now that the USA is about to enter one of its deepest and most difficult crisis to date. Some estimates suggest that the American economy will fall as early as this February (yes, of 2015). My understanding is that this is NOT going to happen. The main arguments all seem to be based on the same concept: the loss of "reserve currency" status of the American currency. Although I said in class last semester that the Fed has already weakened the confidence international investors have in the USD, I don't foresee the demise of that currency yet. In my humble opinion (not too humble but still...), it will probably take more years for the USD to loose it's reserve currency status. The translation to other currencies (or commodities for that matter) has already started but I don't see it being significant enough to topple the current system... yet.

All right people! I hope you enjoyed reading a bit about some of the events that may come to pass (or not). As always, I would love to argue or explain anything related to these shocking revelations if you want me to. Stay informed guys, the world is changing really really fast!!!!

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