2012 - Things that will happen

Bruce Krasting's picture


Significant economic and political changes will make 2012 a historical year. The globe has experienced relative calm for the past 24 months. That stability won't last much longer. Events that are not on anyone's radar screen will matter the most. The following are the things that I think might happen, but it's the surprises that worry me.

-Silas Kiplagat will win the 1500-meter race at the Summer Olympics in London. The time will be 3:33:22.

-Obama will drop Joe Biden from the ticket. Obama will want a Veep that has a chance to be a viable presidential candidate. He will chose Hillary Clinton.

-Green Bay will beat Denver in the Super Bowl. (Millions of Christians will be disappointed).

-Mitt (the suit) Romney will be the Republican presidential candidate. The nomination will be a fight to the very end. Newt (the fool) Gingrich will come close, but will not get the nod. Romney will announce that his running mate will be South Carolina Governor, Nikki Haley. Her presence on the ticket will give Mitt a chance.

-Ron Paul will run as a third party candidate (Green) He will get 10% of the popular vote. He will upend any chance the Republicans have.

-The presidential election will go to Obama. Ending up with only 44% of the vote, he will not have a mandate.  The battleground states will be Pennsylvania and Ohio. Billions will be spent on getting the votes in those states. Pennsylvania will go to Obama. Ohio will go with Romney. The electoral vote margin will be very narrow as a result.

-The Kepler spacecraft (link) will identify a planet that has the capacity to sustain life (the ultimate safe haven). The scientists at CERN will confirm the observation  of particles exceeding the speed of light. These developments will result in significant rethinking by the scientific community.

-The Senate will be split evenly between Democrats and Republicans. The new VP will have deciding votes on several key issues.

-Republicans will retain their majority in the House. Gridlock will be the outcome. There will be no new legislation of significance in 2012. A lost year.

-Iran will attempt to disrupt sea traffic in the Straits of Hormuz. Naval exercises by NATO, USA and China will be required to escort tankers through troubled waters. There will be an incident culminating in shots being fired. It will scare the hell out of everyone, but full military action will be avoided.

-Iraq will fall into sectarian violence. Car bombings will beset the country. The Kurds, in the north, will attempt to separate themselves from Baghdad. Turkey will get involved as a result of border problems. In the south (Basra/oil ports), the local Shia government will ask neighboring Iran, to help bring stability. The Iranians will establish a police presence.

-Brent crude prices will swing between a low of $80 and a high of $155. The highest level will be reached in September.

-Australia will suffer from a significant economic slowdown. The A$ will fall to 90 versus the buck.

-Cyprus will make a significant new gas find. This will result in territorial claims by Turkey. The UN, lead by Russia, will get involved in the dispute.

-Europe’s economic problems will not be solved. Every effort will be made to kick the can down the road. Neither the can nor the road will collapse; that will happen in 2013. EU GDP will struggle to hold zero.

-It will be confirmed that Iran has nukes and the capacity to deliver them. Iran will successfully test fire a Shahab 3c missile. Israel will not attack Iran.

-The US housing market will stabilize. Rental costs will rise by 7%. This, coupled with extremely low debt costs, will increase the demand for homes. In addition, the costs of constructing new homes will soar due to rising costs of materials. Virtually everything used to build a home (from cement to shingles) will rise in price by 10%. Construction of new homes will remain muted as a result.

-During the year, the ECB will be forced to actively intervene in the EU bond market on multiple occasions. Ten-year yields for Italy will range from 5 to 8%. Spanish yields will rise to 10% at one point. French bonds will reach 7%. The enormous refinancing requirements of EU countries and banks will be a constant problem. The market will become obsessed with the weekly bond auctions. There will be many disappointing results.

-The EU banks will struggle, kept alive by LTROs and E150B of new equity injections into the banks (a la Tarp). Public assistance to the banks will exceed E1 Trillion. The EU banks will not adopt the Basel Core Tier 1 capital ratio of 9% in June; the planned recapitalization will be shelved for a year.  There will be much discussion about the scale of the government's involvement, which will be recognized as unsustainable. By year's end, the noose will be tighter and the financial options greatly diminished. By December 2012,  the Euro Zone won't be expected to survive another year.

-The Swiss National Bank will maintain the 1.20 peg to the Euro. By the end of the year, the talk will be about how much longer the peg will continue. The SNB will acknowledge that the peg was a temporary measure. The speculation will be about how long “temporary” actually is.

-The Euro will range from a high of 1.4 to a low of 1.15. The low for the year will occur in November.

-The Yen will (finally) weaken. The low for the USDYEN will be 76.5 the high will be 90. (It's a great short). The problem for Japan will be its 200% debt to GDP. Global investors will shun the Japanese bond markets. Ten-year yields will rise to over 2% as a result. While Japan has gotten away with its excessive debt for years and global investors always had reasons to park cash in Japanese Government Bonds (JGBs), there will be no reasons left in 2012.

-As the US's presence in Afghanistan winds down, the Taliban will retake the country. The chaotic US exit will be compared with the end of the Viet Nam war.

-The Syrian government will fall. The country will face an uncertain future. There will be sectarian violence in Libya. Sophisticated weapons, including SAM missiles will be used. In Egypt, Field Marshal Tantawi, will consolidate power.  Protests will continue throughout the region. The MENA economies will broadly suffer.

-The S&P will range from a low of 900 to a high of 1400. The high for the year will occur before June.

-The US GDP will languish. Growth will range from 1.5 to 2%. There will be clear evidence of a slowdown by mid-year. Unemployment will fall to as low as 8.5%, but will end the year back above 9%. The BLS will report 1.6mm of new jobs created during the year but the "birth/death" model will reduce that by 600,000. Labor force participation will continue to decline.

-Modest economic activity and core inflation above 2% will tie the Federal Reserve’s hands for the first part of the year. Politics will prevent it from acting prior to the election. In December of 2012, the Fed will be free to initiate another round of QE -  an $800 billion Large Scale Asset Purchase (LSAP) will follow. The Fed’s new POMO operations will be divided equally between Treasury bonds and Agency Mortgage paper.

-The Vix will be volatile. The average for the year will be 30. It will exceed 45 twice.

-Greece will continue pretending it wants to be in the EU and tied to the Euro, until July. Its deteriorating economy and inability to service its restructured debt will force Greece to leave the EU and re-establish the Drachma. The New Drachma will trade as high as 1,000 to the dollar (800/Euro). When the Drachma is brought back (over a weekend), the Greeks will formally default on their external debt. This won't be the crisis that everyone fears, but it will add to the instability in the other peripherals. Populations in Ireland and Portugal will protest that their countries should follow Greece’s steps.

- The Academy Award winners:

Best Movie                      War Horse
Best Director                   Steven Spielberg
Best Actor                       George Cloony
Best Actress                    Michelle Williams
Best Support. Actor       Christopher Plummer
Best Support. Actress    Jessica Chastain
Best Orig. Screenplay    The Tree of Life
Best Adapted  "              War Horse

-North Korea will be a problematic. Counter to expectations, Kim Jung-Un will not be the actual ruler. The generals will conspire with Kim’s uncle, Jan Song Taek, to take over leadership. There will be an occasional pop shot from north to south. The real trouble will come when NK boards and then sinks a S. Korean fishing vessel. This will bring US aircraft carriers off the shores of NK. China will hate this development. A nasty incident is the most likely outcome.

-The Miami Heat will fail to make the playoffs. LA will beat Boston. 

-Keynesian economic thinking will be further discredited in 2012. The pump-priming Keynesians had their day in the sun, and now people will want a different approach. Paul Krugman will write a total of 100 blogs decrying this development. Larry Summers will write an OpEd for the WSJ warning that the US faces a strategic crisis if it does not contain the trajectory of the national debt.

-Gold will be very volatile. It will fall to below $1400 at one point. It will end the year above $2000.

-There is a significant risk of a big economic hiccup at the end of the year. The election has deferred dozens of tax/spending issues to 1/1/13. There is enough deflationary firepower built into the system to trigger a big slowdown. Post election, there will be just weeks to sort it out, or face the music. The drama and the pain of the just completed election will make it impossible to avoid a conflict.

-Japan will confront two divergent issues. Debates regarding the future development of nuclear energy for civilian use will arise as the true costs of the disaster at Fukushima are realized. Significant portions of the country will have to be abandoned. Costs of encapsulating and cleaning up will exceed $50 billion. At the same time, a growing force within the country will push to develop tactical nuclear weapons. The US's mandatory budget cuts for its military will elicit an extraordinary change which will take years to play out. Japan will lose confidence that its "protector" will be able to protect it.

-India will surprise everyone. GDP growth will fall from 9% to 3% (well under stall speed). Inflation will exceed 10%. The trade and current account deficit will rise. The Rupee will hit 60 per dollar.

-China’s GDP will fall to 4%. China has already overspent in infrastructure development. The buildout of empty cities will slow and unemployment will rise rapidly. This will stress the country and lead to political protests in many cities.

-Tiger Woods will win a major. 

-China will continue to fund the west. It will allocate more capital to the core countries of Europe. China will get trade deals in exchange for its willingness to buy bonds. The holdings of US treasury debt will decline modestly for the year. The Chinese will react to the ongoing pressure from the US to force the Yuan to appreciate by doing precisely the opposite. The CHY will be worth the same next year as it is today.

-Bank of America will be forced to pare down its asset base. The stock will spend most of the year under $5. The subordinated debt will trade cheap.

-Goldman Sachs will go private. There will be many layoffs. The Squid will end up stronger than ever.

-The San Francisco Giants will win the World Series. The Yanks will be the loser.

-In March, it will finally be determined that MF Global used re-hypothecation to fund its operations. The customer losses will be attributed to this activity. Realized customer losses will exceed $1B. JPM will be identified as one of the banks that grabbed MFG assets in the final days. Customers will file civil claims against JPM, but those will be dismissed. Criminal charges  will not be filed against MFG, Corzine nor JPM. The flaws in the system will be attributed to Reg. T. The Fed will promise a thorough review of the country’s margin rules. Nothing will be completed until 2013.

-AAPL will trade as high as $450. It will end the year under $350. The company will come out with a TV that won't be much of a success. Apple will lose out to Amazon (and others) in the "Cloud". This will prove to be a strategic error.

-The cost of solar panels will fall to a level where large scale, privately funded solar farms become viable. The debt for these farms will be functionally secured by a public utility and will be repackaged with shorter maturities that have a AAA rating. The lowest tranches of debt will have returns as high as 20%. Wall Street will love it and so will investors. Some utility stocks will do well as they have secured a source of renewable energy that meets the recently legislated requirements (RECs).

-Boeing’s shares will fall to $55. There will be problems with the Dream Liner.

-Dividend stocks will underperform the broad averages. The observation will (finally) be made that this is a very crowded trade and 2% does not compensate investors for their risks.

-Creative Cause (son of Giant's Causeway) will win the Kentucky Derby. 

-The Chevy volt will suffer from numerous battery problems. There will be fires that result in serious injuries. The future of GM’s electric car will come into question. The stock will fall to the teens. Tesla’s outlook will become uncertain. Obama’s investment in Tesla will be a campaign issue.

-La Nina conditions will persist for the first six months of the year, bringing a series of big storms to Asia. Substantial new flooding will occur in the Philippines and Thailand. West Texas will have another dry year, the central states will have above average rain, and the North East will have a very bad winter.

-Silver will follow gold up and down. It will underperform gold. It won't hit $50.

-Narco violence in Mexico will escalate. There will be gun play on the border. Mexico will reiterate its position that the problem is the demand from the gringos, not the supply from Mexico. This thinking will lead to renewed discussion on legalization of Marijuana. Phillip Morris’s stock will rise above $90 in anticipation.

-BRIC investments will continue to underperform. Several big hitters will repudiate this investment strategy. That will mark the bottom of these markets on a comparative basis.

-Global food inflation will continue to be a problem. Global growth will advance by 2%, the cost of feeding ourselves will increase by 5%. Asia/India will bear the biggest brunt of the increasing cost of food. Wheat prices will rise 12%.

-US inflation will remain on the high side. Core will average 2.5% (1/2% above the Fed’s target). CPI will come in at 3.8%. Real inflation will be much higher. Treasury Tips will underperform. The Ten-Year Tips/Coupon spread will widen to 2.75%.


-Few countries will avoid social protests and demonstrations. Many will turn violent. America will not be spared. The angst of the people will be directed at their leaders, their lenders and the IMF. A redo of 2011.


-The election will spur debate on the future of America’s entitlement programs. There will be broad based agreement that the time has come to address the problems with Social Security, Medicare and Medicaid. Politicians will try to divert the focus away from Social Security by pointing fingers at the Disability Insurance side of SSA. While it’s correct that this program is a complete disaster, the DI Fund is not the problem.  The Retirement Fund is the real problem. The attention that DI will get is just a diversion from what is actually wrong with America’s favorite entitlement program. This will be a “young” versus “old” fight. Both sides will come to understand this.

-The summer of 2012 will bring the largest polar ice melt in history. The Mayan calendar will end with no consequence.


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i.pagnottella's picture

Bruce you should run  the article from last year together with this post, you got it 90% right on which is excellent! http://www.zerohedge.com/article/2011-whats-coming

i.pagnottella's picture

Bruce, you should run the one from last year together with this post. You got it 90% right which is excellent: http://www.zerohedge.com/article/2011-whats-coming  



LoneuhRanger's picture

If the world don't end in 2012, we're still in big trouble.

Bruce Krasting's picture

I took some heat with all my far out predictions. We shall see. Two days after posting this two things have already happened that are on my list.

Iran is making a mess of the Straights of Hormuz and this from Robert Reich this morning re Hillary Clinton and Obama:


Trust me, I really, really can see into the future.....



sickray's picture

another article where some guy says stuff

AndrewCostello's picture

i suspect that they will try to kick the can down the road further and cause the biggest economic crisis in history.




vast-dom's picture

SILVER to $55. OIL to $145.



The Heart's picture


Iowa GOP Moving Vote-Count to Secret Location


virgilcaine's picture

"China GDP @ 4%" would mean a global "D".  May be Why Jim R is looking a little worn.  The great china growth story he talks about comes to an end.  Mandarin lessons a waste.


davepowers's picture

-The San Francisco Giants will win the World Series. The Yanks will be the loser.


far out... if the world's gonna end that's a good way for it to go out  :)

The Man in Room Five's picture

The scientists at CERN will confirm the observation  of particles exceeding the speed of light. 

No way. This FTL neutino bullshit will get corrected in 2012. If neutrinos really travelled faster than light, then we would be able to detect the neutrinos emitted from supernovas before the light got here. That doesn't happen, so we know there must be a mistake in the CERN measurement.

leerees's picture

Good call but how exactly do you identify the source of the neutrinos in the first place?

Aren't neutrino's basically everywhere and travelling in all directions?

I know with light it has a frequency and using that we can easily observe where it came from, but a neutrino is a neutrino.

I do 100% agree with you, faster than light isn't possible. If it was we would have been wiped out by Aliens 1000's of years ago.

bobbydelgreco's picture

bruce 3 you got wrong for sure: 1. giants will have worst hitting outfield in mlb and never make the ws 2.ron likes being congressman & won't give it up for a 3rd party run 3. ben qe's before the election to keep from having go back to jersey 1 sure right no one convicted for mf global  

Dr. Gonzo's picture

I'll bet you $10,000 that Ron Paul beats out Mitt Romney for the GOP nomination. 

thatguy's picture

Can I handle all the bets? Paul will be third party spoiler running with the teabaggers, the wing nut militias and the palinista crowd. August will see lots of armed threats, sabar rattling and general right wing beligerence, as they realize that they are looking foolish and losing.The average American doesn't give a shit anymore, he wants his "home from college since 2010" kids out of the house and finally working and he wants a new job as well,screw taxes and debt.

Lost Wages's picture

$10,000 isn't enough. I want a 3x ETF that says you are wrong. Election will be Obama vs. Romney. But there is no way in hell Ron Paul will run as a Green. If Ron Paul followers are good at one thing, it's wishful thinking.

Dr. Gonzo's picture

I was ridiculing billionaire Mitt Romney's debate performance. It wasn't a serious bet...But Ron Paul will will the GOP nomination. No one is going to be inspired to go to the polls for Mitt or Newt.

thatguy's picture

stop it...this line of thinking will give you insomnia....

Lost Wages's picture

P.S. Obama will "win." If they open that NADEX exchange next year, go long on Obama. It's the only sure thing in the past 100 years. Bank money and electoral votes are the only things that matter. Not regular voters.

pavman's picture

I think that Ron Paul will start to shine and then Trump will come in to give the win back to Obama by splitting the vote when he runs third party.  Can't fight the Bildeberg! or the Bernank!

ChasVoice's picture
How the Iowa GOP Plans a Rigged Election - Watch the Vote 2012 !!

This is big time criminal fraud my friends, and your responsible action now in these primary states could save the American democratic system.

Joseph Jones's picture

Super Bowl 9ers over Pats by 2.

Bruce: Vegas welcomes every penny you can scrounge to bet Denver makes the SB.  Do not, I repeat, do not hold your breath!    

AGuy's picture

"Keynesian economic thinking will be further discredited in 2012. "

AGUY believes just the opposite. A European bank run will force the ECB to take action and print in the Trillions to stablize the economy. The US will do at least one new QE program in 2012. US needs a another QE just for the expected $1.2 Trillion Budget Deficit. European Bank Run/Panic and a slow down in the Asia/Pacific region. Gold will rise back up to at least $1900 USD. The Euro will take a tumble, perhaps back to Parity with the Dollar, EU economic issues take a turn for the worse.

RP will not make a Third Party Run. RP will will get the majority of the Popular votes, but at the Republican National Conference, he will not be nominated. Romney or Newt gets Nominated instead. Because of the weak Republican candidate, Obama will win by a close election, which recounts in several states. Hillary will NOT be Obama's VP.

Steaming_Wookie_Doo's picture

Yeah, Bummer wouldn't pick Hilary to be Veep unless he planned to step down, or unless he's so coked up that he thinks he's bulletproof (literally). His chances of finishing out that term will go to zero either way.

falak pema's picture

BK must be having a good laugh. He is looking into the crystal ball and playing with us all. 

Good try anyways. It'll piss off all those who don't like his sports picks. Its always on the unessential that passions are strongest. I've often remarked when lightning strikes a house the greatest conversation piece amongst the neighbours is what happened to the doghouse on the lawn. Not to the house.

savagegoose's picture

ahh activate the GMTFOOH drive

Heyoka Bianco's picture

Nailed-on gaurantee for 2012 (and 20-whatevers for decades to come): folks'll fuck around as much as they fuck up, but will not be doing near as much actual fucking as they claim.

In other words, go long porn and short common sense. Same as it ever was.


Predicting the Oscars? Really Bruce?

financial apocalyptic contagion's picture

who the fuck is this faggot for predicting 2012 the aliens will strike on jan1 for all we know

Nozza's picture

Thanks for all your posts this year Bruce - they're always worth reading



eddiebe's picture

Another big flu scare will cause the majority of the worlds population to get 'immunized' and be loaded up with various nanobots to help move along the planned complete dumbing down and 'sheepalization' of the masses. These bots will have capabilities (among others) to act on various centers of the brain to stimulate seratonin releases on cues sent over the various media and also to stimulate centers that cause fear and panic. They will also have the capability to track various activities of the subjects to allow the 'handlers' to trigger the different centers of the brain that cause the subjects to selfdestruct through various mechanisms like 'accidents. The scare will be so compelling that in some nations the immunisation will be mandatory for national security reasons. 

Mr.Kowalski's picture

I put up my predictions yesterday, and a lot of the same as Bruces, but I think Romney will win and I think an attack on Iran is likely:


indio007's picture

2012 will witness the death of defense in the NFL.

Green Bay & Patriots Superbowl

61-56 Final

Pats will win on a BS penalty against Charles Woodson for hitting a (allegedly) defense receiver on the last play.

RichardENixon's picture

Defense has been dead in the NFL for years,which is why you see quarterbacks like Drew Brees throwing for 5,000 yards and competing 70 percent of his passes.

Joseph Jones's picture

NFL is solely an entertainment industry masquerading as a sport.  Toward satisfying the plebe's insatiable apetite for TD's, and to increase safety, the NFL continually change the rules to weaken the defense's ability to do its job,

the grateful unemployed's picture

I think Nader has an idea to nationalize the NFL, which might be a good idea

akak's picture

All professional sports are nothing but the 21st century "opiate of the masses" --- fuck religion, that is SO 19th century! (Except in the troglodytic bible belt.)

Harbourcity's picture

Hey Bruce!  I enjoy your posts.  I found your 2012 predictions to be a little... timid but I guess the status quo has shown it still has tricks and can pull it off another year.

CrashisOptimistic's picture

The OP does not understand oil and thus can safely be ignored.

With $155 Brent for any significant period of time, there will be no civilization and thus no predictions can mean anything.

tom's picture

Interesting predictions. You'll score about 50-50, I guess.

My biggest argument with you is about Japan. There are lots of reasonsfor the yen to trend stronger, and none of them have to do with foreigners parking money in Yen bonds (~5% of JGBs are foreign-owned and even that low number is falling). The Japanese government needs to fund its ever-growing deficit and with savings rates declining the only way it can do that is to pressure various Japanese institutions that have been investing in carry trades (fund in Japan, invest abroad) to bring that money home. This is a huge factor putting upward pressure on the Yen and will only get stronger before it finally, and probably rather suddenly, breaks. Another factor is that Japan is likely to face a growing current account deficit in 2012, forcing it to sell FX reserves, which drives up the Yen.

And I see Gingrich beating Romney and Obama. Loathsome character but a skilled campaigner with two lightweight targets.



Cpl Hicks's picture

Hey Bruce,

Aren't you going to repeat your 2011 prediction that Boeing will fail to deliver a single 787 Dreamliner in 2012?

Roger Knights's picture

"The summer of 2012 will bring the largest polar ice melt in history."

Except in the south. 

(You'll be able to bet on this on Intrade.)

RichardENixon's picture

When the North Pole ice cap melts the imbalance with the South Pole will cause the earth to flip over in its orbit, thereby rendering most of these predictions obsolete.

Syrin's picture

No mention of EMP, solar flares or revolution.  You're more optimistic than myself.

dpr10's picture

great job putting together the list...but some of the stuff just does not make any sense..like french yields at 7% but italian yields at 5-8% while spanish yields spike to 10%...what??I guess you were being sarcastic..and euro only down to 1.15 and that is the end of the year while french yields are at a whopping %7??haha..and sports or politics predictions dont come close either..

by the way Bruce, sorry but do you have a problem with math??for drahmas; 800 to the euro, I guess you are being sarcastic again!!maybe after years of high inflation bud..

General Debility's picture

Lloyd Blankfein and Jamie Dimon will swallow buckets of oxytocin and then mend their ways. They will go to GA meetings and make full confessions on Fox News. They will bestow their considerable fortunes on projects for the betterment of the human species.

They will become Buddhists and wander the streets in robes with begging bowls and William Banzai 7 will be speechless for the first time in his life.