2012 – The Year of Volatility

If I had to choose a single word to describe my outlook for 2012, I’d pick “volatile.”

I believe this will shape up to be a year of instability in key areas that will impact our lives and set up even more challenges to come in the 21st century.

While making specific predictions about the future is a futile exercise, I think it’s wise to seek understanding of the times and prepare.

It is with that spirit that I humbly offer my outlook for the coming 12 months.

More Sovereign Debt Crisis

Last year we saw double the normal volatility in U.S. markets than any single year since 1970.([1]) In spite of the roller coaster ride, the S&P 500 ended the year with little overall change from when 2011 began.

Seasoned experts are finding that the market is not moving on the fundamentals that once guided it but is instead reacting to government policy changes, news from the Eurozone and an underlying insecurity about whether an investment portfolio should be at risk or safely hedged in case there’s another meltdown, as happened in 2008.

It should not surprise anyone if we see more of the same in 2012.

The global debt crisis will only get worse, even after every effort is made to convince us that the problems are solved. I expect Greece and Italy to continue avoiding default in 2012 despite the reality that they’ve been essentially bankrupt for a long time. Japan’s problems will also increase global volatility as it proves unable to find a way out of its own debt crisis.

New debt will be piled upon old debt in Western nations to prolong the “extend and pretend” policies that have been employed to “rescue” the global economy.

The problems in Europe and Japan will temporarily benefit gold and the U.S. dollar. However, Japan’s end of year announcement that it will trade with China in yuan and not the U.S. dollar is yet another vote of no confidence in the world’s reserve currency. China is gradually shifting away from the dollar as political gridlock in Washington has demonstrated our inability to solve our fiscal problems.

U.S. Economic Pain  

The U.S. economy will be disappointing due to slow or no real job growth. Due to the Obama Administration’s need to reflect better overall numbers leading up to the election, most of the so-called “improvements” in the employment picture will likely be the result of new, creative ways to express the data. While there was much hoopla last month over the “official” unemployment rate falling to 8.6%, the real unemployment rate, which includes those workers who have simply given up looking for jobs, is close to 16%.([2])

The reality of the unemployment crisis, regardless of the positive reports from the White House, will continue to hold down economic recovery and residential real estate prices. With housing values remaining soft, interest rates will also remain artificially low.

Like the stock market, companies are unsure whether to invest in expansion or minimize risk until volatility is reduced. Therefore, many corporations flush with cash will stay in “wait and see” mode until after the election.

Although severely weakened, the overall performance of the U.S. economy will remain among the strongest in the world. Even with the mountain of new regulations coming out of Washington, the U.S. remains home to some of the world’s greatest entrepreneurs.

The 2012 Presidential Election

There is more at stake for the future of this country in the presidential election of 2012 than any other in my lifetime. The questions on everyone’s mind are straightforward: Will the majority of voters support a clear and unapologetic move towards bigger government and “crony capitalism” (I would call it phony capitalism) where profits are privatized but losses are socialized and paid for by taxpayers? Will we vote for more out of control spending, more debt and higher  taxes? Or, will President Obama and profligate spenders in the House and Senate be voted out?

This highly charged election promises to be the lead news story throughout 2012. Tensions will be high on both sides of the political aisle.

Expect social unrest in major cities on the East and West Coasts. Unions, government workers, and the Occupy Wall Street gangs will be out in force. I expect outbursts of protest leading up to the election, and I fear severe civil upheaval, possibly even rioting, if the election is close but favors Republicans.

The battle over ideology is much clearer than in 2008 and both sides are gearing up for an epic political battle for the White House and Congress.

Geo-political Hot Spots

New and historic shifts in geo-political alignments are likely to happen in 2012. It seems apparent that China is trying to uncouple itself from the Western debt crisis and is seeking stronger financial cooperation with Asian nations, including Japan. Meanwhile, European alliances are strained, perhaps nearly to the breaking point. There will be more talk of an EU breakup, particularly if Greece or another debt-laden European nation is allowed to default.

With America’s military forces spread thinly across the globe and financial tensions between nations increasing, the possibility for war to erupt between historic foes is higher than normal. Europe vs. Europe, Israel vs. Iran, and North Korea vs. South Korea are key areas of volatility to watch.

Longstanding dictators in Egypt and Libya have been deposed by social revolution. There is the very real danger that Islamic fundamentalist regimes will come to power in these countries and elsewhere. The so-called “Arab Spring” has the potential to become a Middle East uprising against Israel, particularly as tensions rise between the Jewish State and Iran.

Meanwhile, relations between the U.S. and Pakistan continue to deteriorate and should be monitored closely as well.

More Attacks Against Christianity

I am expecting a 2012 announcement by CERN, the European Organization for Nuclear Research, that the “God Particle” has been “discovered” or at a minimum, verified to exist.

This will embolden neo-atheists like Richard Dawkins, Bill Maher, Sam Harris and others of their ilk to launch more virulent attacks against Christianity. These anti-God activists will continue their campaign to convince the world of the supremacy of humanism over faith.

Making the Most of 2012

Like every year, 2012 will hold a mixture of ups and downs, pleasant and unpleasant circumstances, joy and sorrow, trials and triumphs.

Solomon said it well in Ecclesiastes 1: 9-10: “What has been will be again, what has been done will be done again; there is nothing new under the sun. Is there anything of which one can say, ‘Look! This is something new?’ It was here already, long ago; it was here before our time.”

However, my sense is that the volatility we’ll experience in the next 12 months will be a warning to prepare for more turbulent times that are coming.

While my outlook highlights the challenges we may face, in the midst of it there will be a constant, unchanging source for personal peace and security, Jesus Christ.

In the New Year ahead, we can enjoy a close walk of faith as we keep our identity and security in Christ. We can learn to be salt and light in a world desperate for real hope and real change.

On a personal note, I have two resolutions for 2012. First, I have decided to fast from sugar—no sweets, desserts or candy. This is needed to correct a dietary weakness, but it’s also a spiritual discipline. My prayer is that denying myself a pleasure will allow me to rely more upon the strength of Christ.

Second, I am resolved to reduce our family’s discretionary spending. Ann and I have come to appreciate that less is truly better. We are out to reduce our possessions in 2012, not to increase them.

How about you? What is your outlook for 2012? Have you made any resolutions?  Your comments and feedback are welcome on our blog page.

God’s abundant blessings to you and your family as we ring in 2012 together!

Chuck Bentley

You can obtain a copy of my newest book, The S.A.L.T. Plan, How to Prepare for an Economic Event of Biblical Proportions at Crown.org/SALT.

[1] “U.S. Stocks Little Changed as Consumer Confidence Offsets Europe,” Bloomberg, Dec. 27, 2011. http://www.bloomberg.com/news/2011-12-27/u-s-stock-futures-fluctuate-before-release-of-housing-confidence-reports.html

[2] Table A-15, Alternative Measures of Labor Underutilization, Bureau of Labor Statistics, Dec. 2, 2011. See U-6 figure for Nov. 2011. http://www.bls.gov/news.release/empsit.t15.htm

About Chuck Bentley

CEO, Crown Mininstries
This entry was posted in Handwriting on the Wall. Bookmark the permalink.

4 Responses to 2012 – The Year of Volatility

  1. Neil says:

    Chuck,
    I really appriciate the observations you share in Handwriting on the Wall. I relate to your two 2012 resolutions. We all should reduce our sugar intake. On the second one, my wife and I have started to sort through our “stuff” to determine what we can donate or sell. If we haven’t used it in the last 6 months, will we ever? It truly gives us a sense of freedom and refocuses our priorities.

  2. Terry says:

    Chuck,
    When we look back at our 31 years of marriage we find that we were most happy with less “stuff” and I agree with Neil if you haven’t used it for 6 months give it or sell it!

  3. Mike says:

    A wonderful article and solid outlook for 2012. Our family has long since abandoned the materialism disease that permeates this country, but this Christmas season was a wonderful time to renew that commitment. We desire to live simply, so that others may simply live. In our effort to give more to missions this year and invest in that which does not pass away, we are seeking to honor the Lord with our finances and all resources. It will only be by His grace!

  4. Charles says:

    CHUCK,

    YOUR ARTICLE WAS ABOUT AS ON TARGET AS ONE CAN GET! AS A FORMER BANKER AND INVESTMENT SPECIALIST I CONTINUE TO KEEP UP ON WHAT EFFECTS THE ECONOMY. I HAVE SAID FOR A LONG TIME THAT THE GOVERNMENT IS USING STATISTICS TO THEIR ADVANTAGE. THEY CONTINUE TO CLAIM REQUESTS FOR UNEMPLOYMENT INSURANCE ARE DOWN BUT NEGLECT TO CONSIDER THAT THERE ARE SO MANY OUT OF WORK NOW THAT THERE ARE FEWER PEOPLE TO BE UNEMPLOYED.
    THANKS FOR YOUR VALUABLE INSIGHTS AND FOR THE WORK THAT CROWN IS DOING. MAY GOD CONTINUE TO DIRECT YOUR MINISTRY AND MAY THE FRUITS OF YOUR EFFORTS SHINE FORTH!!!

    “HAVE A GOOD AND GODLY DAY”!!!!!!!
    CHARLES

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