Jim Blasingame's 2003 Predictions

Jim Blasingame One of the fun things I get to do on my show and in this column is make predictions. I'm very serious about my predictions, but I must admit to being more capable in some areas than others.

As a person who's frequently wrong but never in doubt, it's cool when my prognostications come to pass (unless I've predicted a bad thing). And as a person who enjoys a good laugh at his own expense, I even have fun on the very rare occasion when I miss the mark.

GLOBAL POLITICS

2003 Prediction: A U.S.-led U.N coalition force will NOT invade Iraq in 2003.
Saddam Hussein is a bad guy but he's not stupid, and he knows George Bush is not bluffing. There will be lots of continued saber rattling on both sides, but Saddam knows he can't continue to defend his despotism against the now-aligned powers of the world. He'll either be dispatched by his generals, or accept a one-way ticket to Saudi Arabia to hang out with Eidi Amin, the infamous former dictator of Uganda. All of this will happen before April 1, 2003. What about the allied forces already deployed in the region? They will be needed to stabilize post-Saddam Iraq -- and the neighborhood -- for at least 5 years.

2003 Prediction: There will be no crisis with North Korea in 2003 over their renewed nuclear activity.
North Koreans are starving. The country is in economic shambles. The only reason KIM Chong-il is stirring up his nuclear plans right now is to take advantage of the Iraqi crisis as leverage to get foreign aid in return for playing nice with his nukes. The North Korean flair-up will be buttoned up by multi-lateral diplomacy (China-Russia-South Korea-Japan-U.S.) by March 1.

2003 Prediction: International terrorists will lay low in 2003.
With the Iraqi diversion behind us by May, more attention and assets can be devoted to putting pressure on terror cells around the world. Al Quida and other terrorists groups will not go away, but will regroup and redeploy, except not on any major scale in 2003. Terrorists are nothing if not patient, and they will see 2004 as better timing.

2003 Prediction: No peace in Palestine in 2003.
Alas, this could be a prediction for many years. There will be rampant capitalism and democracy in China long before there is enduring peace in Palestine.

GLOBAL MARKETPLACE

2003 Prediction: Great Britain will not adopt the euro in 2003.
The debate is heating up, but in the end, the English, et al, but will not adopt the euro this year. However, the controversy will not derail the Blair administration, which is in favour of the monetary conversion.

2003 Prediction: The Century of the Entrepreneur will gain significant momentum in 2003 outside the U.S.
Entrepreneurialism will begin slow but steady growth across Europe. European countries and companies can no longer be competitive with their current socialistic employment policies. Nothing too dramatic in 2003, but the trend will become much more noticeable this year. Countries to watch are Italy, Germany and China. Entrepreneurs in China will make dramatic progress in gaining access to outside markets. Wireless technology and technological convergence found in handheld devices will link more of them to other international entrepreneurs in the cyberspace marketplace.

2003 Prediction: This will be an important year in the future of the World Wide Web as many governmental entities try to regulate it.
The beauty of cyberspace is that there are no physical boundaries. Unfortunately, in an attempt to regulate the very robust World Wide Web, many countries (and states) will pass laws that will hinder the global explosion of information sharing and electronic commerce by establishing commercial and legal restrictions for their own citizens and businesses, as well as outsiders doing business with them. Advocates of free markets will have to be especially active and diligent in 2003.

U.S. POLITICS

2003 Prediction: George Bush's approval ratings will be above 60% by December 2003.
In comedy and politics, timing is everything. By year-end, the U.S. economy will be trending upward, the stock markets will be advancing, geo-political challenges will be subsiding, terrorism will be temporarily dormant, and the Democrats will be distracted with their 2004 presidential nomination process. Advantage: George W. Bush.

2003 Prediction: The herd of Democrat presidential candidates for 2004 will be down to no more than three by December 2003.
All three will be seen as representing the Democrat Party's future instead of its past, like Edwards of North Carolina, Dean of Vermont, and Clinton of New York.

2003 Prediction: Both Republicans AND Democrats will advance economic stimulus proposals that specifically target small business.
Republicans will advance the supply-side concept of Dynamic Scoring, the short definition of which is that a dollar of potential tax revenue left in the hands of businesses will create two through the productivity of investment and job creation. Democrats will focus on government managed policies and subsidies, like hiring and investment credits.

2003 Prediction: After being the stepchild of the marketplace -- and politics -- for the entire 20th century, small business as a class will become a bigger target on the radar screens of policy makers in 2003.
More momentum for the Entrepreneurial 21st Century. Small business owners have an unprecedented opportunity to get some fiscal and regulatory help (which could mean they just leave us alone) from the government over the next two years, but we're going to have to help them. Sadly, most politicians don't have a clue as to how the economy -- or the marketplace --works.

U.S. MARKETPLACE

2003 Prediction: The U.S. economy will grow at an annual rate of over 4%.
The Fed has taken the steps to keep inflation essentially dormant, while at the same time minimizing any danger of widespread deflation, resulting in the most stable price levels in a long time. Furthermore, businesses have relearned how to focus on operating efficiencies for profitability. All of this, combined with the compounding effect of 2002 performance will lead to very positive economic numbers in 2003.

2003 Prediction: All stock indexes will close on December 31, 2003 above where they opened on January 1, 2003.
Having wrung out operating inefficiencies, and advancing on the learning curve of how to manage in the 21st century marketplace, public corporations will return to profitability in 2003. Most of the year will be devoid of wars and rumors of wars, allowing managers, customers, and investors to focus on business.

2003 Prediction: The Federal Reserve Board will hold rates steady until their two-day meeting on September 16-17, at which time they will increase the Fed Funds Rate by 25 basis points.
This timing will give capital spending a chance to reestablish itself, but enough in advance of the end of the year so as not to harm the holiday shopping. Any earlier increase would not be economically damaging, but the emotional impact of an increase could set back any progress capital spending will have made. The Fed will take this step largely to spread rate increases out over longer periods in the future to eliminate the roller-coaster effect we had during 2000 and 2001.

2003 Prediction: At least one more major U.S. airline will reorganize under Chapter 11 of the U.S. bankruptcy laws in 2003.
Ultimately, all major U.S. carriers will have to find a way to lower operating costs by restructuring one of their largest expense line-items, payroll. Currently the most effective method to dispense with uncompetitive union contracts is reorganizing in Chapter 11.

2003 Prediction: A drop in the national unemployment rate will not correspond to the economic recovery in 2003 as it has in the past.
Paradigm shifts in the global marketplace, partially as a result of new technology and new applications of existing technology, require business models that leverage market penetration in ways that don't require as much manpower as in the past. Consequently, job creation will lag behind economic growth.

2003 Prediction: Credit availability will improve for small businesses.
Reversing tight credit policies, banks will take their place as part of the reflation triumvirate in 2003, along with the Federal government contributing improved fiscal policies (lower taxes and tax policy more favorable to the marketplace), and the Fed holding interest rates down. Reflation is an economic policy where governments use fiscal and/or monetary stimulus to expand output, and which you're going to hear more about in the months ahead. Participation by the banking sector will be essential to a successful reflation plan.

2003 Prediction: There will be an entrepreneurial resurgence in the United States after 3 years of diminished activity.
Reactions to the dot bomb phenomenon, the bear's occupation of Wall Street, the tiny recession and subsequent slow economy, the events of 9-11, the diminished appetite of investors, and the credit crunch, all combined to make entrepreneurial soil less fertile in the U.S. over the past three years.

Entrepreneurialism in the U.S. is not like a fire that can be extinguished. It's more like a column of volcanic lava that may be slowed temporarily, but ultimately upward pressure will cause an eruption. Entrepreneurialism in the U.S. will erupt with a renewed force in 2003, creating a new entrepreneurial landscape even more fertile than before.

Write this on a rock... Before you discount my abilities as a prognosticator, check out my record for last year.

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