Friday, October 03, 2008

I would advise going long on the zloty

People keep asking me about what I think will happen to the economy in the near future. I don't know why they keep asking me: maybe it's because I carry an air of patriarchal wisdom, or maybe it's because as an atmospheric scientist I have experience of making predictions about chaotic and turbulent systems. Mostly I think it's because I am an expert bullshitter and they actually believe that I know what I'm talking about. Now that the Business School faculty are all ruined and depressed and viewing the world through the bottom of a bottle I have no competition. It also helps that I am fairly calm about the current economic situation, since I have no money anyway.

Anyway, for those of you who do own stuff and have money and are so desperate for advice that you'll even trust me, my prediction is that by February (March at the latest), China will hold the controlling stake in USA. It's well known that China is by far the dominant investor US treasury bonds, and now that the US government has to borrow another $700bn to cover it's 'rescue plan' there will be even more opportunity for investment. (I firmly believe that the only reason Chinese regulators have stopped lending to US banks is that the Chinese government want to keep all the action for themselves). So, given that within six months the US Treasury will be effectively owned by it's creditors (i.e. China), and given that by taking on Wall Street's crappy mortgage-backed debt instruments the US government will effectively own all property in the USA, China will be the de facto owner of the USA, its banks, corporations and most of its houses.

Before that happens inflation will overtake that of even Turkey and the US Treasury will be unable to keep up with demand for dollar bills. Responsibility for minting will be handed over to the Kimberly-Clark company after they convert their toilet paper factories for the purpose. There will be regional spikes in power consumption as people realise that the nickel in their quarters is worth more on the open market than the coin's face value, and try to smelt them down in their kitchen. As the last remaining state with the resources to fund itself, Alaska will declare independence and secede from the Union, immediately auctioning off drilling rights to ANWR. Queen Sarah I will crowned in a quiet, private ceremony attended by Princes Tod, Track and Trig, and Princesses Bristol, Willow and Piper; Hello! magazine will exclusive rights to the coronation having paid an undisclosed sum.

Having assumed control of the US government, China will obviously want to streamline its investment. Guardianship of the gold reserve at Fort Knox will be put out to tender. Blackwater will win the tender by undercutting the US army's bid, and due to doubts over the army's ability to complete the contract. Many functions will be outsourced to a call centre in Hyderabad, including the IRS, the State Department and the Supreme Court. Detroit will be sold to Mexico's largest steel producer for scrap.

Unfortunately this will be to no avail, and as the US economy keeps on declining China's ownership of now-worthless US government-backed paper will eventually lead to a crisis of confidence in Asia. In the biggest takeover since Michael Milken was locked-up, Taiwan will launch a successful hostile takeover funded by an anonymous source (later found to be George Soros). The Forbidden City will be sold to the Radisson Hotels and Resorts, and Disney (Europe) will immediately begin construction of 'Kuomintang-land' on the site of the 2008 Olympic stadium.

Students visiting Tijuana for Spring Break next March are well-advised to carry plenty of cash in the form of Polish zloty's, since by that time it will probably be the only hard currency still accepted by drug-dealers, strippers and prostitutes. If you are no longer a student (and do not have the protection afforded by being tenured faculty) then my only suggestion is that you sell everything you own while it still has some value, and live on a beach in Bali and paint nudes.