A Great Year

2005 was a very good year, but not perceived as such. There were many reasons. Most important was the pessimism of the media and the chattering classes in general. High gas prices were another drag. That is something people think about every day. But it was also just a simple lag time between the change in reality and its perception.

Next year will be even better. And this time people will notice. The Dow will certainly rise above to new record highs (maybe still this year). Unemployment will drop and remain below 5% (as good as it gets). And the price of gasoline will be down to $1.50 or less in most states. In Iraq it will become increasingly clear that we have achieved a reasonably secure and democratic result . Others in the benighted region will see that it can be done and want it in their home countries too. The dawn is coming even in the Middle East.

I am not being optimistic; I am being realistic. Check back with me next year. Those of you who can should invest in stocks. Otherwise you will regret it next year. I gave the same advice last year and I was right . I don’t say this to taunt the non-investors, but I always find people take predictions more seriously when they have their money involved. Otherwise not only is talk is cheap; it is free.

Speaking of money, we have postponed dealing with entitlements. GW Bush won’t touch it again and the next President will have to deal with SS, Medicare etc. Credit the Dems and AARP with the “victory.” We will pay later. The deficit will remain, although it will shrink as a percentage of GDP in the face of a growing economy and surging tax revenues. In other words it will be increasingly irrelevant. A down side will be a flat housing market. This will make everyone unhappy. Home owners will not be able to brag about their housing wealth increase, but the prices won’t drop to make new home buyers feel they are getting a bargain. But since most people don't move every year, this will have less an effect.

Republicans will hold on to both the House and the Senate. I would not mind if they took back the House so that they would have something useful to do, but that looks increasingly unlikely. That means that the left wing punditocracy will be in high rant.

So 2006 will be a great year. (Any year we are alive is a good one.)

Posted by Jack at December 3, 2005 6:02 PM