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Always the optimist...
1. Hyperinflation and the collapse of the dollar. The trillions President-elect Obama plans on spending to "cure" [.pdf] our economic malaise will prove poisonous to the dollar, with hyperinflation an inevitability. Whether this reaches Weimar levels remains to be seen, but one can easily imagine all sorts of unpleasant, Weimar-like consequences.
2. A barrage of legislation that aims to stop capital flight, including draconian economic controls on the movement of money across borders and the erection of a steep tariff wall in the name of "national economic security." By the end of the year, we will have so many economic czars, each in charge of their own economic fiefdom, that Obama will have to appoint a czar-of-czars.
3. More Israeli aggression. The Israeli offensive in Gaza is but a prelude to a series of IDF military actions, possibly including a third Lebanon blitz and an attack on Syria, the weakest link in the chain of pro-Palestinian regional actors. The whole point of this extended exercise is to involve the U.S. militarily. This will lead logically to the fourth not-so-great expectation.
4. The return of military Keynesianism. To hear Paul Krugman and the other left-liberal economic gurus tell it, all we have to do is spend our way out of the doldrums, and that will do the trick. It doesn't matter what we spend it on – it could be pyramid-building, for all they care – just as long as we "jump-start" the economy with a "stimulus" of freshly-printed greenbacks. That's the ticket! And in the meantime, there will be plenty of jobs in Washington for ambitious young "planners" and other disciples of Saint Keynes, whose purview will be devising imaginative methods of expanding the ranks of government workers. As Pat Buchanan pointed out, this is the dreaded "earmarks" raised to a way of life. Inevitably, this orgy of spending will include – and perhaps even come to be dominated by – increased military appropriations. After all, there are only so many bridges one can build across the same river, and the accompanying rash of corruption sure to ensue is going to put a cap on this kind of spending. One can always cloak cronyism and $200 wrenches under the general rubric of economic collateral damage, a regrettable but necessary byproduct of ensuring the national security.
5. War. Preparations for war usually result in war, and there are several candidates for 2009. The first is Iran, which will undergo a prolonged diplomatic, political, and economic assault before facing the prospect of American bombs falling on its cities. This, however, may not turn out to be the main theater of American aggression in the coming year: Afghanistan and Pakistan will see major efforts by the U.S. to complete a mission that has already failed and that no one is quite clear about any longer. The U.S.-Indian relationship will grow, perhaps formalized by a pact and, in all likelihood, a visit by Hillary Clinton – not Obama – to the region.
