2008 is rapidly winding down. If it seems like it’s been a long year, it’s because it has been.
Those eager to put 2008 behind them will have to hold their good-byes for just a moment this New Year’s Eve.
The world’s official timekeepers have added a “leap second” to the last day of the year on Wednesday, to help match clocks to the Earth’s slowing spin on its axis, which takes place at ever-changing rates affected by tides and other factors.
The U.S. Naval Observatory, keeper of the Pentagon’s master clock, said it would add the extra second on Wednesday in coordination with the world’s atomic clocks at 23 hours, 59 minutes and 59 seconds Coordinated Universal Time, or UTC.
That corresponds to 6:59:59 p.m. EST (23:59:59 GMT), when an extra second will tick by — the 24th to be added to UTC since 1972, when the practice began.
The first leap second was introduced into UTC on June 30, 1972. The last was added on December 31, 2005.
Five Themes For 2009
Please take more than an extra second to ponder Five Themes You Need to Know for 2009.
Before we get to 2009, first, think back to a year ago. Deflation was barely on the radar of mainstream economists and financial media. Most viewed it as an impossibility, focusing instead on what was supposed to be the resurrection of the commodities bull market.
Even today, while paying deflation minor lip service here and there, the vast majority of economists and financial media are ill-prepared for just how severe this ongoing deflationary credit contraction and debt unwind is going to be.
Consequently, if there is one theme that stands above all else in 2009, it will be this: The despair that unfolds as the point of recognition emphasizes the “de-” in deflation. The fat is in the fire.
2. Putting the “De-” In Deflation
As declining risk appetites manifest in nearly everything in 2009, from our collective views on financial risk to our tastes in culture, music, film and fashion, we will see a focus on declines, destruction and devaluation. Perhaps nowhere will this be more obvious than in the disintegration of large-scale social networks into smaller, more focused and intimate groups.
While peak social mood helped propel the movement toward increasingly open social networking platforms and large scale interactions, the rush to disassociate from the crowd will inevitably manifest as a reduction in broad network exposure and a preference for close-knit, tighter communities. Beneficiaries of this movement will be families, small groups and, to an extent, neighborhoods.
5. Markets: Gold Declines, Dollar Rises, Interest Rates Hover at Unimaginable Lows
I recently covered in the article, “Bear Markets Ain’t Over ‘Til They’re Over,” the reasons why I believe probabilities favor dramatic new stock market lows in 2009, but what about the other asset classes, gold, currencies and bonds?
It is no secret that in a deflationary debt unwind all asset classes suffer absolute declines. In a relative sense some asset classes may fare better than others, but the problem remains that you can’t spend negative relative outperformance.
As for commodities and precious metals, look for 2009 to begin optimistically with commodities retracing some of their disastrous declines this year. Gold is also in the late stages of another attempt at cracking the $1,000 level. Unfortunately, the purpose of deflationary debt unwinds is to crush the spirits (and speculative juices) of all who attempt to participate in financial markets. The point of recognition for this deflationary debt unwind will culminate in another wave of intense selling pressure as the last speculators standing give up.
There has been no shortage of top callers in the bond market of late. From a technical standpoint bonds certainly begin the year with the rubber band stretched painfully to the upside. But do not underestimate the power of deflationary forces to keep a floor under bond prices as interest rates hover at lows that, as recently as a year ago, seemed unimaginable.
So there you have it. Only 366 days until 2010. That’s the good news. When all is said and done, perhaps the best thing that will be said of 2009 is that it only lasted a year.
Kevin Depew is always a great read. I encourage you to read the above article in entirety. There’s three more points well worth reading. You may even wish to consider bookmarking him. I have.
However, I would be remiss if I did not point out the following: 2009 will be one day and an additional second shorter than 2008. We can all be thankful for that.
Mike “Mish” Shedlock
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