FUTURECASTS:

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  After an absence of 13 years, the publisher got back into the forecasting game in 1998 with FUTURECASTS online magazine. It is, of course, too early to tell about most of the longer term forecasts, but some of them, by now, can be at least tentatively evaluated. The Near Futurecasts, of course, can also be evaluated, as can many of the shorter term forecasts.
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  And, we can start with an amazing success!

Vol. 1, No. 1, 8/1/98:

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"21st Century Futurecast"

  "The Gods of Baseball will at last remove their pitiless curse from the Boston Red Sox. They will cease devising malign punishments for its fans, grant forgiveness for its original sin (trading the Babe), and permit Boston to win a World Series." (BINGO TO THE MAX!)

  On an eve when the moon disappeared in an eclipse, Boston was permitted to complete its miracle triumph without malign intervention from the Gods.

"Economic Futurecast"

  "While continuing to benefit from great scientific strides, heavy and increasing government involvement will make health care the most troublesome sector of our economy. Expenses will continue to rise at rates substantially in excess of inflation."

"International Futurecast."

  "With the exception of elite units, the conventional armed forces of the NATO powers, including the United States, steadily deteriorate as the Cold War fades further into history. There will come a time early in the 21st century when this weakness will prove dangerous." (BINGO TO THE MAX!)

  The weakness showed up most prominently in the intelligence services - suffering from a quarter century of intense Congressional effort to undermine their effectiveness. A decade of reductions left the U.S. military with an inability to put sufficient "boots on the ground" that proved costly in both Afghanistan and Iraq. The counterinsurgency capabilities of the regular army had been practically eliminated - a weakness that caused considerable trouble in Iraq. The anti-defense actions of the two decades of liberal Democratic Congresses after the Vietnam War have already cost many lives. See, Who Is To Blame?
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  Reliance on multilateral agencies looks more futile than ever. As of the Fall of 2004, NATO was still not able to come up with even 10,000 men for service in Afghanistan, and many of those that are provided come with a multitude of national restrictions on how they can be used. Except for British and American units, most NATO units in Kosovo were deplorably ineffective in dealing with a recent upsurge in ethnic cleansing directed against Serbs. Thousands die in Darfur while the United Nations dithers and Arab nations block action.
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  Only the United States provides any significant capacity to deal with any substantial trouble spots that afflict the world. When the world dials 911 (the emergency number in the United States), if the U.S. doesn't respond the odds are that nobody will.
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  The United States remains the essential nation for progress and stability in a still dangerous world. Even with all the hard fought gains of a bloody 20th century, the United States remains the last best hope for mankind.

Vol. 1, No. 2, 9/1/98:

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  "Except for glaring weaknesses in tax policy, the government's economic policies are currently rational and sound. We subscribe to the "Golden Straitjacket," a natural discipline that permits long term prosperity for capitalist nations that balance their budgets and maintain the value of their currencies. This has restored tremendous reserve strength to the federal government and its central bank. The dollar is once again the unquestioned reserve hard currency throughout the world, providing the Federal Reserve Bank with the financial power to deal with any crisis, or even a substantial (but not limitless) series of crises. The mighty dollar remains the most powerful, the most decisive strategic weapon in international affairs."
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  "The recession should be shallow, no more severe than in 1990-1992. Declining interest rates and, hopefully, some substantial tax relief, should be enough to take much of the sting out of it. Despite worldwide economic problems, a return of the Great Depression is not in the cards. Indeed, we may suffer little more than a growth slowdown accompanied by a short bear stock market." (BINGO)

  The impact of the Asian Contagion on the U.S. economy was very modest indeed - certainly not sufficient to justify the alarums of such supposedly knowledgeable authorities as Paul Krugman and Pres. Clinton.

Vol. 1, No. 4, 1/1/98:

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  "Nevertheless, these Asian Tiger economies have a great deal going for them. There is no need to fear a Great Depression in Asia. Already, exports are booming, currencies have stabilized, stock markets have recovered somewhat. International investment funds are anxious to get back into Asia, fearful of missing the train when it leaves the station.
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  "Unless the United States slips into a fairly deep recession, by this time next year, those Asian Tigers that have made any reasonable effort at structural reform should be well on their way to recovery." (BINGO)

Vol. 1, No. 8, 3/1/99:

  "Accounting is too nebulous an art to provide accurate and comparable economic statistics."

"[Accounting] is essential for economic management at all levels, and for all manner of economic analysis, but the users must keep its limitations in mind and cannot abdicate their responsibility to understand fully and interpret properly the data provided."

  "Accounting is too nebulous an art to provide accurate and comparable economic statistics. At best, business statistics must all be individually evaluated in light of the unique characteristics of each business and its accounting methods."

  That "accounting is one of man's more nebulous practical arts" was explained in some detail in this article.

  "Efforts, legitimate and otherwise, to minimize taxes and/or influence regulatory oversight seriously distort corporate financial reports." 
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  "The financial statements of each enterprise or government entity must be evaluated in light of its individual peculiarities."
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  "[Accounting] is essential for economic management at all levels, and for all manner of economic analysis, but the users must keep its limitations in mind and cannot abdicate their responsibility to understand fully and interpret properly the data provided."

  The limitations of accounting reports would be starkly revealed by the scandals of the 2000 - 2001 recession as the recession accomplished one of its essential tasks - collapsing the many houses of cards erected during the previous lengthy decade of prosperity.

Vol. 1, No. 11, 6/1/99:

"Nothing invites war like the perception of weakness."

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  "Nothing invites war like the perception of weakness. Every significant conflict that the United States has been involved in in the last 70 years has been initiated because despots coveted weak neighbors and sensed weakness among the great Western democracies." (BINGO - unfortunately)

  To the list of conflicts from WW-II to the Serbian conflicts in this category, we can now add attacks by the theocratic would-be despots of al Qaeda after years of weak responses by the Clinton administration.
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"It remains true even today that only the grunt on the ground can take objectives, hold ground, and achieve military victory on land."

  "For the deterrence of petty despots around the world, or for dealing with the conflicts that they may start, the big carriers are essential."
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  "For the foreseeable future, the United States will be heavily dependent on its big carriers to project the kind of force needed to protect its world wide commerce and diplomatic interests."

  The importance of what is now called "boots on the ground" was also emphasized.

  "It remains true even today that only the grunt on the ground can take objectives, hold ground, and achieve military victory on land." (BINGO)
 [
  "The commitment [in the Yugoslav region] will have to be long term. The hatreds reinvigorated by this conflict will put off for perhaps 80 years the time when the peoples of this region accept the need to live in peace with each other." (Notions that the needed commitments would last for just a few years were obviously ludicrous.) "[The West] will ultimately have to commit substantial ground forces to maintain the peace for decades to come."

Vol. 2, No. 2, 9/1/99:

"The government's capacity for stupidity should not be underestimated. Prudence always dictates that we be prepared for a recession as bad as that of 1980-1982."

  "However, events around the world have forcefully reminded us that the business cycle has not been repealed."
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  "A return of the Great Depression is not in the cards, despite worldwide economic  problems. Indeed, as long as the dollar remains strong, we may suffer little more than periodic growth slowdowns or, at worst, short and shallow recessions, accompanied by bear stock markets.
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  "However, the government's capacity for stupidity should not be underestimated. The longer a recession is put off, the worse it gets. Prudence always dictates that we be prepared for a recession as bad as that of 1980-1982."

  If certain "dot coms" had taken such advice and included the possibility of a recession in their business plans, more of them would have been able to survive the carnage on the NASDAQ.

"As long as the dollar is strong, there should be no substantial recession in the United States. The next substantial recession should not occur until chronic weakness in the dollar forces the Fed to choose the austere policies needed to restore dollar strength." (Emphasis in original.)

  "As long as the dollar is strong, there should be no substantial recession in the United States. The next substantial recession should not occur until chronic weakness in the dollar forces the Fed to choose the austere policies needed to restore dollar strength." (Emphasis in original.)

  The importance of a strong dollar has been emphasized by FUTURECASTS since its inception. The outbreak of war and similar major catastrophes is always reasonably an implicit exception for economic forecasts. Chronic dollar devaluation has always been explicitly tagged by FUTURECASTS as a threat to economic prospects.
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  The dollar had - by 2004 - entered a period of substantial weakness. FUTURECASTS short term economic outlook is thus no longer so benign. Economists who expect a weak currency to stimulate economic growth are admitting their total ignorance of their subject.
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  Two years of constant and substantial dollar devaluation has not made a dent in the nation's trade or payments deficits. No nation has ever prospered with a chronically weak currency.

Vol. 2, No. 4, 11/1/99:

"It is in the most profound interests of the United States, as the world's only superpower, to prevent fear and loathing of that power from becoming widespread. However, eschewing the advantages of military tactics and strategy - - - can enmesh us in futile and costly attrition warfare and permits the use of guerilla tactics against us."

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  "As set forth in the Military Futurecast article, - - - military tactics and strategy strives to multiply the effectiveness of military force by destroying or threatening the economic assets that support an opposing leadership and its military force, even if that means attacking and threatening targets in heavily populated areas.
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  "However, the political and diplomatic strategy practiced with spectacular success by the United States during the 20th century involves magnanimity towards old adversaries and good will towards peaceful nations. This essentially nonthreatening stance is obviously at odds with the level of ruthlessness often needed for the effective application of military force."
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  "It is in the most profound interests of the United States, as the world's only superpower, to prevent fear and loathing of that power from becoming widespread. However, eschewing the advantages of military tactics and strategy leaves only military forces and those transportation, communication, and economic assets that are exposed to military attack as targets. This can enmesh us in futile and costly attrition warfare and permits the use of guerilla tactics against us. The American people - rightly - will not long stand for this.
 [
  "If the United States is going to consciously reject any use of military force that might cause civilian casualties, it had better pick its battlefields and conflicts very carefully. It had better stay away from jungles, such as those in Africa and Columbia, where conflicts rage today. It had better stay out of cities where a substantial proportion of the civilian population might not be disposed to receive us in a welcoming manner."

  The feared insurrection has indeed arisen in Iraq. Guerilla attacks still occur occasionally in Afghanistan. It is thus up to the Iraqi  and Afghani peoples themselves as to whether they will secure or lose the benefits offered to them by the U.S. intervention - something that has always been true. The Iraqi and Afghani peoples will not be able to receive freedom as a free good from the U.S. They will have to earn it - with blood and treasure.

Vol. 2, No. 10, 5/1/00:

"Now that 'liberal' is a dirty word, - - - it is time to - - - understand why 20th century liberalism - even if by some other name - will continue to drive American political policies for the foreseeable future."

  "Now that 'liberal' is a dirty word, and politicians of both major parties are carefully occupying centrist territory, it is time to review the tremendous victory of liberal ideals during the past 100 years, and understand why 20th century liberalism - even if by some other name - will continue to drive American political policies for the foreseeable future." (BINGO)
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  "Although philosophical differences remain that are far from meaningless, both parties now vie to offer the electorate benefits from the public treasury."

  The Bush (II) administration, and state governments - most of which are in the hands of Republican governors - have presided over one of the most rapid increases in government domestic spending in the nation's history. Republicans as well as Democrats - they're all liberals now. Nevertheless, liberal voices are still raised in anguished demands for more. That is its fatal weakness. There can never be enough!

Vol. 2, No. 13, 8/1/00:

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  "A trillion dollars here, and a trillion dollars there - and pretty soon you're talking about real money."
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  "Thus, the federal government faces a real challenge. Can it possibly find ways to spend all that wealth and even overburden the economy sufficiently to threaten further economic growth?
 [
  "Well, of course it can. Easily! (This was so obvious it's not even worth a Bingo.)

Vol. 3, No. 1, 1/1/01:

"The 'asset inflation' that currently constitutes one of the most serious financial bubbles is, in part, a response to those powerful noxious incentives in the tax code. Managers are forced to provide a return on investment in the form of asset appreciation rather than income. Dangerous levels of debt are routinely incurred by our corporations in response to the 'double taxation' of dividends."

  (From Vol. 1, No. 1, 8/1/98) "The 'asset inflation' that currently constitutes one of the most serious financial bubbles is, in part, a response to those powerful noxious incentives in the tax code. Managers are forced to provide a return on investment in the form of asset appreciation rather than income. Dangerous levels of debt are routinely incurred by our corporations in response to the 'double taxation' of dividends." (BINGO)

   The dangers of high p/e ratios and increasing financial leverage and the waste in futile efforts at growth became manifest during the 2000 recession.

  (From 1/1/01) "In 2000, we saw the impact of [the noxious] tax incentives. Stock markets continue to reward rapidly growing companies with dangerously high price/earnings ratios - punish severely each disappointment - and continue to grossly undervalue good profitable companies that aren't in a position to enjoy consistent rapid growth. Aside from the costs of market volatility - vast sums that should more efficiently be distributed to shareholders as dividends are instead often being wasted in futile efforts to achieve rapid growth."

"This means that 'rule of law' will increasingly be replaced by 'rule of men' for politically controversial rulings. Public respect for the Judiciary - for the unelected 'Philosopher Kings' on the bench - will decline sharply."

  "Efforts at campaign reform will - of course - fail to stem the [influence peddling] tide."

  This was such an obvious slam dunk that it's not even worth a "bingo." Was anybody really stupid enough to believe that the recent campaign finance reforms would do anything but make matters worse? 

  (From Vol. 1, No. 1, 8/1/98) "The courts will become increasingly recognized as just another political organ of government, control over which various interests must struggle."
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  "This means that 'rule of law' will increasingly be replaced by 'rule of men' for politically controversial rulings. Public respect for the Judiciary - for the unelected 'Philosopher Kings' on the bench - will decline sharply." (BINGO TO THE MAX!)

  This futurecast came on like Gang Busters - for Democrats as it had been for Republicans - when their ox was Gored (or their Gore was oxed) in the 2000 election. Now, even the Democrats scream about judicial disregard for the rule of law. Indeed, both the Florida Supreme Court and the U.S. Supreme Court are widely viewed as having disregarded the rule of law in their election 2000 decisions. Whether the rulings were correct or not as a matter of law, they were clearly partisan.

Vol. 3, No. 2, 2/1/01:

"Now, the economy is experiencing that slowdown - and perhaps even a short and shallow recession - accompanied by a bear stock market. This is good - because it is essential for the long term health of the economy."

"As long as the dollar remains strong, - - - all market declines should be viewed as excellent buying opportunities."

"Even if the market sinks to new lows in the next few months, by the end of 2002 - if not sooner - all the major averages will be considerably higher than today."

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  "Now, the economy is experiencing that slowdown - and perhaps even a short and shallow recession - accompanied by a bear stock market. This is good - because it is essential for the long term health of the economy."

  The recession of 2000 was indeed short and shallow - just three quarter-year periods of decline that were so shallow that the growth in the first quarter was enough to prevent any economic decline for the year as a whole.

  "As long as the dollar remains strong, - - - all market declines should be viewed as excellent buying opportunities."
 [
  "Even if the market sinks to new lows in the next few months, by the end of 2002 - if not sooner - all the major averages will be considerably higher than today." (BOOO)

  Yes, there were the scandals - the terrorist attack on 9/11/01 - and most importantly the dollar continued to weaken. Yes, it is far better to be too early in predicting a market turn than to be too late. The delay just provided additional opportunity to accumulate equities. However, the market turn expected for 2002 didn't come until 2003 - a full year later - so this is a definite miss. But not a total miss.

  "However, the current slowdown has not yet been severe enough to liquidate a significant proportion of the excess financial leverage in the economy, and many equity valuations remain dangerously high. The average price/earnings ratio for the S&P 500 is currently above 23 - still substantially above its historic average of about 18."

  The recession performed its essential tasks - forcing widespread rationalization of business plans, squeezing out the financially overextended and collapsing the multitude of houses of cards that had accumulated worldwide during the previous prosperous decade - as FUTURECASTS has been explaining. However, recovery was also slow - hindered by the extent of the capital asset bubble that FUTURECASTS has been warning about, by the scandals, and by the onset of war - which has always been one of those contingencies that qualify the economic forecasts of FUTURECASTS as well as those of other forecasters.
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  And the continuing weakness in the dollar diminishes economic prospects for as long as it continues - exactly as FUTURECASTS has frequently explained.

"In short, the sharp spike in energy prices in 2000 demonstrates that - for the short term - worldwide economic growth has hit a fundamental limiting factor that will remain in place for as long as it takes to reinvigorate the supply side of the energy market."

  "Now, the current tightness in the supply side of the energy market imposes a new limiting factor on the economic growth of the next few years. While energy prices have recently declined - and will probably remain weak during the current economic slowdown - already forcing OPEC to take some production off line - that excess capacity will be quickly drawn upon when economic growth again begins to surge. The first decade of the 21st century will be a prosperous one - but it will be no repeat of the last 'gay nineties' decade of the 20th century."
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  "With oil prices resting well below $15 per barrel for an extended period of time, the supply side of the energy market has atrophied."
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  "The supply curve for energy is very inelastic in the short run."
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  "In short, the sharp spike in energy prices in 2000 demonstrates that - for the short term - worldwide economic growth has hit a fundamental limiting factor that will remain in place for as long as it takes to reinvigorate the supply side of the energy market." (BINGO)

  The sharp upwards spike in energy prices so soon after worldwide recovery began quickly validated this forecast. For the next few years, worldwide growth was limited to the rate of productivity increase in the use and production of energy.
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  However, these several years of rising prices have had their expected impact, and energy supplies and demand conservation are now responding vigorously to those prices. Usage of wind power, liquid natural gas, and especially coal, is expanding vigorously - reducing the constraints imposed on growth by energy supplies. Serious levels of production of hybrid vehicles has begun. The next time significant levels of recession spread across the world's markets, nations that are overly dependent on oil exports will face difficult times. 

Vol. 3, No. 6, 6/1/01:

  "Like an association of professional ghouls, the Keynesian economists calmly await the next substantial recession. They need a recession to rescue them from their current deserved banishment from the corridors of economic policy making."  - - -
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  "However, when the business cycle again turns down - as it inevitably must - the Keynesians will crawl out of the woodwork and back into the thick of the policy debate. They will probably succeed in again rising into positions of considerable influence, for they have much to offer.
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  The basic economic policy concern of most political leaders is generally not the long term welfare of the nation. Their basic concern is to assure the appearance of prosperous economic conditions until after their regime is over or, in democracies, until after the next election, no matter what the long term costs may be
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  For this and similar purposes, governments have historically resorted to clipping the coinage - running the monetary printing presses - and running chronic budgetary deficits. They resort to these policies because these policies always work to bring temporary relief from budgetary constraints and provide the appearance of prosperity. That's why political leaders have always been tempted to use them." (BINGO)

  The Bush administration pulled out all the Keynesian stops - the most Keynesian administration since that of Jimmy Carter - to deal with a mild and short recession that - because of the mistakes of public policy and private practice accumulated during a decade of prosperity - could not be avoided. Even so, the Democrats have demagogued the issue by claiming that more should have been done. As it is, the nation will now pay - in currency devaluation, in inflation, in a more volatile business cycle, and perhaps in a return to stagflation - for this recent Keynesian effort.

Vol. 3, No. 10, 10/1/01:

"Like most of the 20th century adversaries faced by the U.S. and its allies, [the terrorists] admit to no moral limitations on their actions. Although they remain tactically pitifully weak, this gives them tremendous strategic advantages that must be recognized."

"As a result of their recent success, the basic risk/reward ratio of Western economies has shifted adversely. - - - The productivity of the entire Western world has thus been adversely impacted."

"If the terrorists fail to maintain a sustained campaign, the adverse economic impacts of the recent attack will slowly lessen - with sufficient time, to near the vanishing point."

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  "Of course, there has been over a decade of advances in military technology since the Gulf War. The initial bombardment in the 'first war of the 21st century' should be very interesting. There have also been massive advances in battlefield surveillance and weapons aiming technologies. However, ultimately, brave men will have to go in on the ground if victory is to be secured. There will be times when some or all of these men will have to come from the U.S. (BINGO - unfortunately)

  Even in Afghanistan, there was only so much that could be accomplished using indigenous forces. U.S. "boots on the ground" inevitably bear the brunt of the conflict in Iraq.

  "The terrorists are, in fact, effectively attacking strategically significant targets - with substantial impacts on the economic strength of the United States and the rest of the developed world - and on the Third World and Arab nations, too. Like most of the 20th century adversaries faced by the U.S. and its allies, they admit to no moral limitations on their actions. Although they remain tactically pitifully weak, this gives them tremendous strategic advantages that must be recognized.
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  "As a result of their recent success, the basic risk/reward ratio of Western economies has shifted adversely. The 'risk premium' between Treasury Notes and other investments has widened. The capital markets will reflect this by fluctuating around lower price/earnings multiples than before. The sharply lower levels of stock market prices reflect this fact. This increases the cost of capital. The cost of insurance is also increased. With a long conflict, a substantial growth in government spending will inevitably squeeze the private sector. The productivity of the entire Western world has thus been adversely impacted. There are also, of course, the immediate costs of the attack and the significantly higher costs of heightened security to take into account, but the greatest damage is from the system wide impacts.
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  "Nevertheless, the ability of the terrorists to mount a sustained campaign has yet to be demonstrated. It took them a long time to launch the recent attack, and they may in the future have trouble coming close to their recent spectacular success. The world has been shrugging off lesser acts of terrorism for some time, and at least now is mounting an active defense.
 [
  "If the terrorists fail to maintain a sustained campaign, the adverse economic impacts of the recent attack will slowly lessen - with sufficient time, to near the vanishing point." (BINGO)

  It is astounding that, more than three years after 9/11/01, and despite the toppling of the regimes in Afghanistan and Iraq, the Muslim militants have not yet succeeded in mounting another attack on the U.S. Of course, eventually they must succeed in some attack. The U.S. is too easy a target. Nevertheless, this is a dramatic demonstration of the actual tactical weakness of the Muslim militants.
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  It is also a tribute to the much maligned intelligence services of the U.S., acting in cooperation with foreign intelligence services. Now that Congressional shackles have been removed, they can at last do their jobs.

"Above all, it would be a mistake to believe that the terrorists are ten feet tall. They have many weaknesses, and the West has many strengths. Most important, however, is the will to act - without which defeat is certain."

  "The economic prospects of the whole world have been adversely affected by the attack - something that will tend to support allied efforts to gain widespread cooperation and alliance against the terrorists."

  Every time the militants blow up a bomb in another country, their tactical victory proves to be a strategic defeat. Bombs are bad for business. Nations have no choice but to repress the militants as best they can.

  "Conflict always sets all things in flux, and many of the impacts of even successful military efforts will be unpredictable. The dogs of war have indeed been loosed. However, conflict has been thrust upon the nations of the civilized world, and they must act with confidence in their ability to handle the problems that will arise. Inevitably, most of the burden must be borne by the U.S.
 [
  "Above all, it would be a mistake to believe that the terrorists are ten feet tall. They have many weaknesses, and the West has many strengths. Most important, however, is the will to act - without which defeat is certain."

  All too often, the United Nations, the major powers of continental Europe, and even NATO, exhibit not the slightest "will to act." Their contributions are very important, but are limited to minor theaters or the securing of established peace arrangements. Thousands die in Darfur as the U.N. dithers. France and Germany shun responsibility. The Arab League deplores U.S. intervention in Muslim lands, but stands mute in the face of the horror despite U.S. willingness to provide logistical support for any effort they might extend.
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  This, unfortunately, is the true face of the "multinational community."

Vol. 4, No. 1, 1/1/02:

"From now on, it is going to be much harder to tell the 'good guys' from the 'bad guys.'"

  "However, the military campaign in Afghanistan was the easy part. Now, the conflict enters more difficult, and messy phases - inside Afghanistan as well as outside Afghanistan.
 [
  "By relying on indigenous militias to supply all the ground forces, the U.S. achieved many objectives. It frustrated its adversary's primary objective of inflicting casualties on U.S. soldiers - avoided the appearance of occupation - and strengthened the hand of alternative local leaders. However, it also limited U.S. control over the battlefields and influence over political developments. At least a few of the terrorists who thus escaped from Afghanistan will cause trouble later. The level of political discord in Afghanistan may again undermine the possibilities for peace and progress. From now on, it is going to be much harder to tell the 'good guys' from the 'bad guys.'
 [
  "Diplomatic results even when apparently favorable can be far more problematic than military results. Pakistan is an obviously weak link in the alliance, and terrorists operating from its territory are a problem not yet solved. Future military efforts may be required in jungle or major urban areas. These will be far more difficult than in the open deserts or among mountains and valleys denuded of vegetation where superior technology and firepower can dominate miles of terrain. Guerilla warfare is far more potent where there is no substantial winter that ties guerilla forces to supply bases that they cannot protect. Attacking the sources of political and financial support is inherently more complex than a military campaign. If Iraq becomes a military target, many of its most important military assets will be found under hospitals and orphanages." (Or in mosques!)

"It is weakness - and the perception of weakness - that is still the surest invitation to war."

"It is still the active engagement of the United States that is the only substantial check on the war fever that infects the world's trouble spots."

"It is becoming apparent that the current crop of terrorists do not have the ability as yet to mount a continuous campaign of terrorism that might actually weaken the United States or other modern states."

"Nations based on a particular religion or religious sect find themselves in conflict or constantly threatened by conflict with those from different religions and those from different sects of the same religion."

"When clerics are given free reign to preach discrimination and hate as a means of keeping their flocks from considering alternative religious views, how can war fevers ever be quenched?"

"Robust peaceful competition is as important in restraining excesses in religion as in economics or politics."

  War fever:  "That this is still a dangerous world has been a constant theme of  FUTURECASTS forecasts. Dogmas of all sorts - both secular and religious - continue to arouse passions and stimulate conflict amongst the peoples of Africa and Asia.
 [
  "Those who asserted that the United States no longer faced any military threat that justified the maintenance of its military strength and intelligence capabilities have yet once again been proven wrong. Those who assert that military conflict can be avoided with good will and sweet reason - or by pieces of paper - or by isolationist retreat - remain determinedly ignorant of some of the less palatable realities of this world.
 [
  "It is weakness - and the perception of weakness - that is still the surest invitation to war. A visible aversion to casualties - retreat in the face of previous opposition - failure to enforce the requirements of the peace treaty with Iraq - and absurdly ineffective responses to previous major terrorist attacks - all gave the impression of growing decadent weakness. The perception of retreat encouraged dreams of possible conquests among a rogues gallery of putative despots. It is still the active engagement of the United States that is the only substantial check on the war fever that infects the world's trouble spots.
 [
  "Man's propensity to commit mayhem against his fellow man continues into the 21st century - as broadly expected. Every futurist has for years been warning that there would be major terrorist incidents, even if the exact nature of such attacks was admittedly not capable of precise prediction.
 [
  "Complete protection against terrorism is not possible. (You cannot protect everything everywhere!) Horrendous incidents will occur. Inevitably, there will be car bombs and attacks on vulnerable civil aircraft. However, it is becoming apparent that the current crop of terrorists do not have the ability as yet to mount a continuous campaign of terrorism that might actually weaken the United States or other modern states. Conflicts in the 21st century that are anywhere near the scope of the 20th century's two unlimited world wars remain unlikely."
 [
  "Where large families remain the rule - generally on the Indian subcontinent and in sub Saharan Africa and the Muslim nations stretching across the tropical deserts and jungles from Morocco to Indonesia and the southern islands of the Philippines - war fevers continue to flare - providing the world with continued examples of the horrors of modern warfare."
 [
  "In Afghanistan - after two decades of destruction - the people hopefully will support those leaders who advocate peace. However, 'nation building' remains as difficult as before. This may again be demonstrated in Afghanistan - especially if its neighbors persist in playing 'The Great Game' among the various tribes - at the expense of the Afghan people."

- - - 

  "Israel has the power - but not the will - to utterly destroy its Palestinian adversaries. The Palestinians do not have the power - but do have the will - to utterly destroy Israel.
 [
  "The Palestinians thus retain their powerful strategic advantage over Israel. Israel can win all its battles, but cannot win its war, and the guerilla war of attrition grinds on interminably in the Holy Land. Yasser Arafat is increasingly faced with potential rivals promising more aggressive prosecution of the conflict and who thus attract increased numbers of youthful martial followers. This progression in favor of the most radical and paranoid leadership has been typical of many revolutionary movements throughout history. In Israel, popular support has already responded to the ongoing conflict by migrating towards the most militant political leaders.
 [
  "However, settlement of this conflict - or even the disappearance of Israel - would not bring peace to this region. Iran and Iraq still eye each other with distrust, India and Pakistan remain just a hair trigger away from full fledged warfare, Afghanistan still boils with ancient enmities, and a variety of other conflicts seethe just beneath the Middle Eastern and North African sands.
 [
  "Here, we see yet once again a demonstration of the extraordinary brilliance of the founding fathers of the United States Constitution. The separation of church and state allows Christians, Jews, Muslims, and many other religious groups to live in peace and prosperity - and friendship - within the same nation. Meanwhile, nations based on a particular religion or religious sect find themselves in conflict or constantly threatened by conflict with those from different religions and those from different sects of the same religion.
 [
  "After all, when each religion - and each sect within each religion - is certain that it alone possesses God's ultimate truth - where is there any scope for the constant play of compromise and accommodation that alone can provide a basis for peace and prosperity? When clerics are given free reign to preach discrimination and hate as a means of keeping their flocks from considering alternative religious views, how can war fevers ever be quenched? Religious wars have been responsible for vast miseries throughout history.
 [
  "No single clerisy holds a monopoly on God's truth. Indeed, there must be an especially hot sector in the uttermost depths of hell reserved for those clerics who have invoked God's name and words to preach intolerance and hate for those who have chosen other religious beliefs. It is certain that God appreciates all humane ways that men have adopted to give thanks to their maker.
 [
  "Robust peaceful competition is as important in restraining excesses in religion as in economics or politics."

"Inevitably - as in the past - there will be abuses of the new powers now hastily granted to the intelligence agencies and other defense agencies. - - - The problems will have to be dealt with as they occur - without hobbling the agencies on which everything depends."

  Inadequate defenses:  "Weaknesses in certain aspects of the military defenses of the United States have been growing for many years. The elite military units - the marines, airborne, special forces, and similar units - are indeed better and more potent than ever - as amply demonstrated in Afghanistan. However, deterioration in the regular military units has been evident for some time. - - -
 [
  "FUTURECASTS has been warning since August 1, 1999, that sometime in the early years of the 21st century, the United States would  suffer a major military reverse because of these weaknesses. This has now indeed occurred - but because of the unilateral disarmament of the intelligence agencies rather than because of weaknesses in the traditional military arms. A then liberal Congress began hobbling the intelligence services in the 1970s, and the process was accelerated by the Clinton administration in recent years. The inevitable results are now on view at Ground Zero in New York City.
 [
  "Inevitably - as in the past - there will be abuses of the new powers now hastily granted to the intelligence agencies and other defense agencies. (This eventuality was so obvious, it's not even worth a Bingo.) However, these powers are essential for effective protection in a still dangerous world. The problems will have to be dealt with as they occur - without hobbling the agencies on which everything depends."

The politicization of the judicial system comes with some very noxious - but inevitable - unintended consequences.

  Politicization of the judiciary:  "Political competition to control the courts so that they can be used to further political agendas increasingly undermines faith in the courts and obstructs the ordinary administration of justice.
 [
  "Currently, a Democratic Senate breaks all records for holding up administration appointments made by the opposing party. (As of 2004, the Democratic minority was increasingly using its filibuster powers to block appointments.) This type of obstructionism now no longer even draws much comment from the press or from bar organizations. It has become an expected part of the legal landscape. The politicization of the judicial system comes with some very noxious - but inevitable - unintended consequences.

  Over 80% of the state court judges are elected. These elections are becoming increasingly politicized - and the costs of judicial campaigns are skyrocketing. The perception of impartiality on the bench has to be a casualty of this trend.

Vol. 4, No. 2, 2/1/02:

[

  "FUTURECASTS remains confident that - as stated in last year's Near Futurecast - all stock market averages will move well above current levels during 2002." (BOOO - Still running too early on this forecast.)

  The economy was recovering on schedule - as FUTURECASTS had predicted - but the recovery was not reflected in the stock market. Uncertainty over the war - an exploding budgetary deficit - a weakening dollar - and the accounting scandals - all dictated lower price/earnings multiples which held the market down. That this would be one of many noxious impacts of a weak dollar had been emphasized by FUTURECASTS from the outset - but should have been reflected in its 2002 market outlook.

"There are reasons why the U.S. has not engaged in 'nation building' except where that was deemed essential. It is a very difficult and expensive occupation - as we may learn again in Afghanistan and similar dysfunctional places."

"Unless a sustained terrorist campaign is successfully mounted, the U.S. economic system will absorb the risks and expenses, reflect the resulting marginally lower productivity, and move on."

  Terrorism:  "There are reasons why the U.S. has not engaged in 'nation building' except where that was deemed essential. It is a very difficult and expensive occupation - as we may learn again in Afghanistan and similar dysfunctional places."
 [
  "Unless a sustained terrorist campaign is successfully mounted, the U.S. economic system will absorb the risks and expenses, reflect the resulting marginally lower productivity, and move on." (BINGO)

  The costs of the war against the Muslim militants are substantial - but have not prevented the U.S. from enjoying substantial rates of productivity improvements.

  Economic headwinds:  This decade will experience rising rates of inflation and interest rates. It "should be a fine prosperous period - and the stock market will do well - but it certainly will not be able to repeat the performance of the 1990s."

  Now that Bush (II) budgetary policies have undermined the dollar, the FUTURECASTS economic outlook is no longer so benign.

Vol. 4, No. 5, 5/1/02:

"Once again - as in so many previous Middle East crises - it is likely that neither our worst fears nor our fondest hopes will be realized. Conflict merely continues interminably."

[

    "Large parts of the world are now primed to condemn as war crimes any effective Israeli response - thus raising a significant barrier to the viability of [Tom L.] Freedman's suggestion" that Israel withdraw and grant the Palestinians full sovereignty and depend on ruthless counterstrokes to deter Palestinian harassment. (BINGO)

  Even the building of a defensive wall drew condemnation from the U.N. General Assembly. The U.N. has been effectively captured by Muslim interests seeking to render it impossible for Israel to defend itself. However, at least for the present, the wall has been very effective. Indeed, if  some  temporary restoration of peace is actually achieved, it will be the effectiveness of the wall - along with the death of Arafat and the deposing of Saddam Hussein - that makes it possible.

  "Once again - as in so many previous Middle East crises - it is likely that neither our worst fears nor our fondest hopes will be realized. Conflict merely continues interminably."

  Israel - with its lengthy walls and its determination to keep striking hard at its attackers - has ingeniously found a way to quell the recent Palestinian assault against its civilian population. However, it still has no means for resolving the conflict.

Vol. 5, No. 2, 2/1/03:

Militant Muslim clerics still routinely preach religious intolerance and hatred - as much against other Muslim sects as against non Muslim beliefs.

"The Middle East remains a caliginous bog of religious and ethnic factionalism - and states held together only by despotic power. It is far easier to crack these Humpty Dumpty despotisms than to put them back together again in any modern functional manner."

  The winds of war:  "FUTURECASTS remains confident in the ultimate success of the modern world in general and the U.S. in particular in this conflict. Wherever theocracy triumphs, it can only destroy the nations that it dominates. The militant Muslim fundamentalists can't build anything - they can't win anything. They can only destroy - and in the nearly 1-1/2 years since 9/11/01, it has become apparent that their capabilities are in reality very limited.
 [
  "Repeatedly, nations that were prone to tolerate militant Muslim groups have been hit with explosions and thus forced by the flight of capital and tourists to actively oppose the militants. The militants cannot gain the sympathy of peoples whose livelihoods are threatened by their activities." (BINGO)

  In Indonesia - the world's largest Muslim nation - the two fundamentalist parties received almost no support in recent elections. Most Arab governments continue to actively suppress the Muslim militants, and the fabled "Arab Street" remains quiescent. Even in Iraq, electorates in local elections have uniformly rejected extremist religious parties.

  "The militants are now being actively opposed in Europe and the U.S. where before they were being determinedly ignored. Defenses against the terrorists are rising everywhere - albeit at great cost - both in money spent and in increased costs for international commerce.
 [
  "But the militants still find open sanctuary in a variety of remote border areas, including in Pakistan and Afghanistan. Militant Muslim clerics still routinely preach religious intolerance and hatred - as much against other Muslim sects as against non Muslim beliefs.
 [
  "The Middle East remains a caliginous bog of religious and ethnic factionalism - and states held together only by despotic power. It is far easier to crack these Humpty Dumpty despotisms than to put them back together again in any modern functional manner."

- - -

  "But with so many vulnerable targets to  choose from all over the world, FUTURECASTS is frankly amazed that the terrorist have had such limited success."

  The attacks in Spain and the kidnappings in Iraq have forced some minor players to withdraw from Iraq. However, it has always been FUTURECASTS expectation that it is the Iraqi people themselves - with help primarily from the U.S. and Britain - who will determine the degree of success in Iraq. The same can be said of Afghanistan - and throughout the Muslim world. This is, essentially, a Muslim civil war, and the Muslim peoples in each particular nation are the only "allies" who count.

"Chronic weakness in the dollar is the ultimate indicator of real economic trouble to come."

"Currency devaluation may be made necessary by - but it is never a cure for - economic problems."

  Dollar devaluation: "The strength of the dollar remains the key economic factor. Since its earliest issues, FUTURECASTS has been warning its readers to be on the lookout for weakness in the dollar. Chronic weakness in the dollar is the ultimate indicator of real economic trouble to come."
 [
  "As in the 1970s, as the dollar weakens, even the appearance of short term - palliative - success for the Keynesian nostrums of budgetary deficits and expansion of the money supply will fade and disappear. Currency devaluation may be made necessary by - but it is never a cure for - economic problems."

  Yet once again, many professional economists are left with egg on their collective faces. Yet once again, a period of substantial currency decline has occurred - and international payments and trade deficits have perversely worsened instead of improving. Once again, reality perversely refuses to conform to the Keynesian expectations of many professional economists.
 [
  Currency devaluation never has - never will - never can - BY ITSELF - correct payments and trade imbalances. Only measures of austerity -  of budgetary and monetary discipline - can correct such imbalances. Only budgetary and monetary discipline - and a strong currency - permit sustainable economic growth.

  "But now, the feared devaluation of the dollar has begun and casts a longer term pall over the market. Perhaps this stock market is still a leading indicator - of the period of uncertainty and multiple difficulties we may be beginning. A significant turn towards a bull market depends on a favorable resolution of Middle Eastern crises and the recovery of strength by the dollar. If either or both of them drag on indefinitely, the market is in for a rocky period the precise course of which cannot yet be predicted."

  The stock market became mired in a trading range for more than 16 years - from 1966 to 1982 - during the last significant period of dollar devaluation. And, that was the least of the economic problems experienced during the last heyday of Keynesian economic policies. At present, the top of the market trading range seems to be somewhere around 12,000 on the Dow. The bottom is not yet knowable, since it will be determined during the first recession of this developing period of economic volatility.
 [
  In fact, one of the many necessary consequence of reliance on the Keynesian remedies of budgetary deficits and low real interest rates is an increase in economic and financial instability. For the first time since the 1970s, there will be more than one recession in this decade -- and the next one will not be as mild or short as those of 1991 and 2000.

"The longer real interest rates remain negative, the weaker the dollar will be and the higher gold, oil and other commodity prices will go."

Deflation humbug:  "Fear mongering about deflation - and comparisons with Japan - are demonstrable stupid." (Another one so obvious it doesn't rate a Bingo.)
 [
  "In fact, the differences between Japan's economic climate and that of the U.S. are many and fundamental. Indeed - rather than deflationary problems - it is towards inflationary trouble that the U.S. is once again heading."
 [
  "Unlike in Japan - the U.S. economy remains flexible enough to adjust to difficult times. Indeed, the processes of creative destruction and the rationalizing of business plans have proceeded vigorously throughout the private sector of the U.S. economy."
 [
Interest rates:  "The longer basic real interest rates remain negative, the weaker the dollar will be and the higher gold, oil and other commodity prices will go. If the Fed refuses to defend the dollar, inflation will become manifest and problems of stagflation similar to that at the end of the 1970s could return." (BINGO)

  By the middle of 2004, long term interest rates had begun rising, increasing the spread between short term and long term rates. As soon as the Fed began to slowly permit its short term rates to rise, the increase in long term rates stopped and those rates even began to decline, narrowing the spreads.
 [
  This demonstrates that the Fed has not yet lost the confidence of the markets. Its rising interest rates should begin to bring some strength back to the dollar. Its problems are similar to, but still considerably less severe than, those of the 1970s, as FUTURECASTS has been explaining. However, it now faces some intractable problems with its monetary policy that will be explained further in next month's Near Futurecast for 2005.