2012 Predictions Update

I’ve finally updated my predictions page for some of the predictions I made last year that can now be called.

I haven’t made new predictions for 2013 yet; I still need to take the time to do the analysis I want to make predictions I’m relatively sure of.

I learnt a few obvious things when reviewing my previous predictions. Although I’ve called all but one as “correct”, that included one where strictly speaking I would never be able to call it as true.

I said “MTN and Vodacom will never officially support bitcoins”. This can be called as false the moment they do support bitcoins, but can never truly be called as correct. However, I’ve called it as correct anyway. It’s become increasingly clear that bitcoins were the irrelevant fad I called them as being with more stories written about bitcoin fraud than anything else over the last year.

My most important prediction turned out to be incorrect. I predicted an increase in Italian bond yields or an exist of one country from the Euro. Italian, and particularly Spanish, bond yields did rise dangerously during the year. The ECB bent rules around directly financing nations through its support of secondary market bond prices. Technical acrobatics that circumvented the intentions of the founding fathers of the ECB, but also reflected the naivete of the founding thinking.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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    1. Fortunately, I don’t need to create a detailed response as to why I’m not dead wrong, because the very first person to comment on the story linked above has done a fantastic job of highlighting how misleading article “Piet” references is.

      The key reference from the ECB paper that supports the conclusion of irrelevance is:

      “Bitcoins tend to be inherently unstable, but cannot jeopardise financial stability owing to their
      limited connection with the real economy, their low volume traded and a lack of wide user


      In my world that demonstrates irrelevance and supports my conclusion.

  1. The almighty powerful ECB, who has so much on their plate, took the time to deal with bitcoins. Yet its irrelevant ?

    The ECB is scared as hell of bitcoins and will do everything it can to discredit the currency of the future. A currency which will make the ECB irrelevant.

    1. Now if you’d said that WordPress is accepting Bitcoins, then I would admit “good point maybe I was too quick to say they are irrelevant”, but instead you focus on a report by an organisation that concludes “we don’t care”. There really isn’t a sensible argument in saying “see the court found him not guilty, but he must be guilty if the court bothered to even consider it”. There is no way you can take a report that concludes “bitcoins are irrelevant” and use it to support the relevance of bitcoins. Newsworthy? Maybe. Interesting? Definitely. Going to replace real currencyes? No. Good for the economy if it replaces currency where monetary policy can be used to offset business cycle issues, increase in demand for money through population growth and real economic growth? No way, Jose.

      Oh, and did you notice that Bitcoins are back at some-period highs? Again, you’re using the wrong arguments to support the relevance of Bitcoins. Even I can come up with better arguments in support of Bitcoins!

  2. How does your argument of almighty monetary policy and hence money printing tie up with what happened in Zim ? The market replaced the Zim dollar with other currencies. Same will happen with the Rand and the Dollar and the Euro and…

    1. Have you heard of Godwin’s Law? Well using Zimbabwe as an example in fiscal or monetary policy is about equivalent. Zimbabwe, and Germany in the 1920s, had hyperinflation. Granted. Now, please explain the parallel between these countries and the US, South Africa or the Eurozone? No hand waving of “printing money”, because there are many more countries that have used monetary policy without hyperinflation than there are those with hyperinflation. Presumably you were one of those predicting high inflation in the US *every* *single* *year* since 2008? Have you noticed that it hasn’t happened? What about Japan? Expanding the monetary supply in a depressed economy with interest rates up against the zero lower bound doesn’t cause hyperinflation.

  3. Have you noticed how expensive things have got in the last 5 years ? Contrary to the manipulated government stats the world over, things are sky-rocketing in price. We are just following the lead of the US and Europe. Japan too. Ever been to Japan ? I have many times. Its crazy expensive; in fact the cost of living there would make your eyes bleed. How about Switzerland, Germany, every single country in Europe ? Again, eye torture. SA is quickly approaching this level without the rising wages to match. How do you explain the rapid rise in prices ? How ? Whats causing them ?

    1. You are confusing high prices resulting from wealthy countries to low prices from poverty. Totally distinct from inflation. You are suffering from confirmation bias. Plenty of things have become cheaper (internet bandwidth as one of the best examples) but you only look at those items that support your views. Don’t look at government statistics if you believe that are lies. I’m sure I’ve suggested before that you go to the Billion Prices Project http://bpp.mit.edu run by MIT. Supports inflation in the US as calculated by government sources.

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