Jay Reding.com

It is another year, and that means time for another set of predictions. So, without further adieu, here are my predictions for the coming year:

Politics

• President Obama’s popularity will remain mired below 50% throughout most of the year.
• The Democrats will lose more the 40 seats, putting the GOP in control of the House.
• In the Senate, Democrats will not fare much better. Majority Leader Reid will lose his seat, following in the footsteps of Tom Daschle. Chris Dodd also loses his seat to a GOP upstart. Same with Blanche Lincoln.
• The health care bill will be signed into law, and will be a major albatross around the necks of Democrats.
• The Democrats, rather than moving towards the center, will lurch left as the “netroots” convinces many in the party that the reason for the 2010 defeat was because the party was insufficiently “progressive.” The Democrats will end up in the same position the Republicans were in a year ago.
• But Republicans should be wary as well. They will have won not on their own laurels, but because of disgust with the current Congress.
• Cap and trade will be DOA as Congress gets increasingly worried about the political backlash.

International

• The protests in Iran continue in fits and starts, weakening the foundations of the regime. The Iranian government continues to brutalize its own people, while the West does little of consequence to stop them.
• President Obama launches further military action in Yemen to try to remove al-Qaeda.
• A major economic collapse in the EU shakes the foundation of the Euro.
• Gordon Brown faces a vote of no-confidence in Parliament, causing the him to call new elections in the UK.
• The situation in Afghanistan remains unsettled, but the addition of U.S. troops helps calm some of the tensions.
• Iran will come closer to testing a nuclear weapon, and will likely have the capability of doing so by the end of 2010.

Economics

• Unemployment will remain high throughout the year as discouraged workers reenter the workforce. This will be a huge political problem for the Democrats in the 2010 cycle.
• The price of gold and other hard assets will continue to skyrocket on inflation fears, leading to a mini-bubble in asset prices.
• The government will continue with bailouts of major companies, despite President Obama’s focus on debt reduction.
• The national deficit will continue to skyrocket as Congress is unable to restrain spending.

Society/Culture/Technology

• Apple will announce their tablet in early 2010, with a 10-inch touch screen and optional 3G wireless through Verizon rather than AT&T. The tablet (probably not called the iSlate) will have a major effect on the e-reader market, although Amazon will counter by making Kindle content available on the new device. Critics will complain that the price point is too high, but the device will sell like hotcakes anyway.
• E-Books will begin to outsell physical book copies.
• The reality TV show craze will finally, mercifully die off as people get sick of the them.
• Web series will continue to take off from being largely low-budget affairs to being more like regular TV shows. Shows akin to Dr. Horrible’s Sing-Along Blog will receive much critical acclaim and will begin to supplant conventional TV.
• “Steampunk” will go from a small subculture to the next major popular phenomenon. Things like home canning, writing letters on fine stationery, and Victorian styles will become increasingly popular.
• The death of the newspaper industry will not stop, even though many papers start reconciling themselves with the digital world.

Each year I make some predictions about the coming new year, and at the end of the year I take a (frequently humorous) look at how I did. At the end of 2008 I made some predictions about what 2009 would bring, and now it is time to see how I did:

Politics/National

• President Barack Obama’s popularity with the left will bleed away as he moves to governing as a centrist.

  Correct: Late in the year, liberal dissatisfaction started growing, as the President chose to double down on Afghanistan and failed to back the public option in healthcare. While liberals still tend to support the President, Obama has not given them everything they want, and that has not made the liberals very happy.

• Card check legislation will be narrowly defeated in Congress, preserving the rights of the American worker to a secret ballot.

  Not Quite: Card check has been pushed off until next year, where it may well be defeated, but it hasn’t yet gone away as a political issue.

• The Republican Party will continue to spend a year in the wilderness, while the seeds of political renewal will come from outside the party structure.

  Correct: The GOP remains mired, but the real energy lies in the Tea Party movement. The media paints the Tea Partiers as a radical fringe, and some of them undoubtedly are. However, they have energy and motivation, and that can make all the difference. Whether the GOP likes it or not, they will have to ingratiate themselves with the Tea Party movement and capture that energy in a constructive way. Doing so without alienating the vital center will be difficult, but it’s not impossible.

• Vice President Biden will say something incredibly stupid, creating a great deal of tension between him and President Obama.

  Duh: Predicting a Joe Biden gaffe is like predicting that the sun will come up in the east.

• Congress will continue to be unpopular as the economy continues to backslide and more and more scandals mount. By the end of the year, faith in American government will be at a new low.

  Again, Duh: Congress continues to be wildly unpopular with the American electorate, and sweetheart deals, political payoffs, and rampant corruption are to blame. People regard Congress with the same level of distaste they do with plague rats and filthy diapers—and who can blame them?

International

• Iraq will be a bright spot as its nascent democracy continues to develop. Rather than terrorism, its main problem will be corruption and governmental issues. Iraq will start looking less like Lebanon and more like Jordan in terms of its development. The media will basically ignore Iraq, even though there will be no major U.S. troop drawdowns until mid-year at the earliest. President Obama’s Iraq strategy will be a continuation of the existing strategy, not a clean break from the Bush years.

  Correct, More or Less: Iraq has not been in the news much this year. Partially because it is no longer politically expedient, and partially because what’s going on there doesn’t make good news. Parliamentary maneuvering isn’t as sexy as blood in the streets. It is very interesting to note that 57% now say the war in Iraq has been a success, a marked reversal from last year. Yes, it is true that Iraq has a long way to go before it’s as developed as Jordan, but there are many positive signs. There will still be bombings and attacks, but the biggest problem Iraq now faces has less to do with terrorism and more to do with politics. In many ways, beating corruption and political paralysis is harder than beating back al-Qaeda, but Iraq is unquestionably better off now than it was under Saddam’s brutal reign.

• Israel will again stop short of destroying their enemies, slowly backing down after token military actions on the ground in Gaza. Seeing another Lebanon, the Israeli people will reject Kadima and elect Netanyahu as Prime Minister.

  Correct: Operation Cast Lead beat back Hamas, but Gaza remains a problem for Israel. As a result of Kadima’s perceived weakness, Binyamin Netanyahu has able to lead a coalition of right-wing parties as Prime Minister.

• India and Pakistan will be at the brink of war throughout the year, but neither side will pull the trigger. This issue will dominate Secretary of State Clinton’s efforts throughout the year.

  Incorrect: Pakistan is more concerned with the Afghan border than with Kashmir. While it is true that Pakistan has been a major issue for Secretary of State Clinton, so far the India-Pakistan tensions aren’t the most pressing issue.

• Iran will test a nuclear weapon, leading Israel to formally announce that they possess nuclear weapons and that they will use them if necessary. Israel will work to expand ts fleet of ballistic missile submarines.

  Incorrect: Iran is almost certainly much further ahead on weapons development than the West thinks, but so far they have not tested a weapon. Sadly, it appears that this prediction could come true next year. The West does not have enough leverage to prevent Iran from going nuclear.

• Russa’s Gazprom state-owned oil company will collapse, causing massive unrest in the country. Vladimir Putin and his puppet Dmitri Medvedev will use the unrest to further restrict freedoms and consolidate their own power.

  Incorrect: Gazprom remains a powerful tool of the Putin regime, and thanks to its control over much of Europe’s natural gas will likely remain so for the near future.

• Due to oil prices plummeting, Hugo Chavez will be deposed in a bloodless coup.

  Sadly, Incorrect: Chavez will only be removed by a coup, but that seems far-fetched at this point. Chavez seems set to be the 21st Century version of Fidel Castro, much to the detriment of the Venezuelan people.

Economics

• The recession will not go away in 2009.

  Correct: This one was probably a given.

• Obama’s $1 trillion stimulus bill will narrowly pass on a party-line vote. It will not stimulate the economy, but will cause further job losses as small businesses prepare for the worst.

  Correct: Instead of saving jobs, the unemployment rate reached double digits. The “stimulus” has failed on its own terms, failing to create new jobs and leading to yet another “stimulus” bill. The massive increase in national deficit—$1.4 trillion this year alone—will have negative economic effects that far outweigh any benefits of all the spending. The fact remains that the Keynesian multiplier is a myth, and $1 of government spending will not produce even $1 of growth.

• The Dow will sink below 8,000 and not stay above that level for most of the year.

  Incorrect: The Dow has rebounded to above 10,000, although how much of that growth is sustainable over the long term is an open question.

• By the end of 2009, the U.S. will face double-digit unemployment, economic recession, and massive deflation as the credit markets remain frozen.

  Partially Correct: We’ve hit the double-digit unemployment figure and are still in recession. However, it looks like inflation rather than deflation is going to be a problem. By opening the spigots, the Fed has helped ease the credit crunch. The problem is that they have nowhere else to go. With the national debt continuing to rise, running the printing presses is not a sustainable option.

• Congress will pass a protectionist trade measure that will have massive ripple effects throughout the world economy. The European Union will push for the WTO to punish the U.S. for their actions. Rather than improve our relations worldwide, America will be disliked ever more intensely across the globe.

  Not Yet: I’m somewhat surprised that the U.S. hasn’t pushed a major protectionist trade measure quite yet. But, much to his credit, Obama has not been a full-fledged protectionist. As politically expedient as it is to bash China and trade in general, the U.S. economy is too dependent on trade for Congress to start re-enacting Smoot-Hawley.

• The one bright spot will be that consumers begin shedding their debts and living more fiscally responsible lifestyles.

  Correct: Consumer debt continues to fall, as people continue to try and pay down their debts.

Society/Culture/Technology

• The last MacWorld will announce the iPhone Nano, a new Mac Mini, and a quad-core iMac. It will be revealed that Steve Jobs is in fact unwell, which will cause Apple shares to slide. However, the corporate culture that Jobs has created will keep Apple innovative.

Partially Correct: Steve Jobs was in fact unwell, having received a liver transplant last year. The iPhone Nano is probably not going to happen, and is probably a bad idea. Better Mac Minis and quad-core iMacs did appear, but later in the year. Instead, new unibody MacBooks were the big announcement at MacWorld 2009.

• Microsoft will release Windows 7 by years-end. It will be better than Vista, but still not sell well due to the decline of the industry.

  Partially Correct: Word is that Windows 7 is selling very well compared to Vista, but Vista did not have good reviews. Windows 7 is much better than Vista, but that’s not saying much. With Apple continuing to do very well, Microsoft’s OS dominance means less and less. The future is mobile, where Microsoft is an also-ran compared to BlackBerry, Google’s Android, and the iPhone and iPod touch.

• The economic downturn will cause a widespread cultural re-examination. Church attendance will climb as people look for stability in their lives.

  Uncertain: In general, church attendance does increase in bad economic times, but there isn’t much evidence that this is holding true now. I’m somewhat surprised that there’s not more definitive evidence on how this recession is affecting church attendance.

• The New York Times will file for bankruptcy protection. Liberal investors will save it from falling, but circulation will continue to drop.

  Partially Correct: It was only a bailout by Mexican billionaire Carlos Slim that kept the Times alive, but even then the paper teeters on the edge of bankruptcy. The economics of the newspaper business will not get better any time soon—if ever—and it remains to be seen how the Times will survive in the coming years.

• Star Trek will be a major hit as the public rejects the gloomy outlook of other summer films. Chris Pine will become a breakout star from his role as James T. Kirk.

  Correct: J.J. Abrams reboot of the franchise was a hit, the highest-grossing Trek film ever. Chris Pine’s Kirk was a star turn (as well as Zoë Saldana’s role as Uhura). Star Trek breathed new life into the franchise, and while it wasn’t the deepest Trek film, it was a hell of a great ride, and it was one of the best films of the year.

• A major network will announce a new series to be aired entirely on the web rather than through traditional channels. It will be a major hit and the start of a new trend away from traditional media towards online distribution.

  Incorrect: I’m waiting for this to happen. Dr. Horrible’s Sing-Along Blog was a pioneer for online distribution, but so far the major networks haven’t yet embraced the idea of an online-only series. The time is right to do this, but the networks remain stuck on the idea that legacy media has to be the star. There are plenty of web series (like Felicia Day’s wonderful series The Guild) that prove that web distribution can work. The question is when the major networks will “get it.”

Every year I do my annual round-up of predictions for the coming year, some of which come true, many of which, well, do not. Last year’s predictions turned out to be less than accurate—let’s see how I did.

Politics/National

• Hillary Clinton defeats Obama for the Democratic Nomination. She picks Mark Warner as her running mate. — Nope, instead Obama managed to run a better ground game, and buoyed by a synchophatic media, he took the nomination. Instead, Clinton gets to be Obama’s Secretary of State, where she will enjoy the Sisyphean task of trying to create peace in the Middle East rather than resurrecting her political career. It’s essentially like being exiled to Siberia for her.
• She then narrowly loses to the Republican candidate (who is not Mike Huckabee). — Instead, Obama won by a convincing margin and an Electoral College blowout. But Huckabee was not the nominee, thankfully.
• Sensing a weak field, Michael Bloomberg runs for the Presidency on a third-party ticket, picking CNN anchor Lou Dobbs — Chuck Hagel as his running mate. He barely registers in the polls, despite pouring millions of his own money into the race. Not even close. Apparently Bloomberg isn’t a dumb as I thought.
• The Democrats retain control of Congress, but not be margins large enough to threaten vetos. Pelosi and Reid remain in control of their respective chambers, but end up being just as ineffectual as they have been over the last major year. Congress still does almost nothing throughout the year, and this Congress leaves with no major legislative achievements to its name. — The Democrats won’t get their veto-proof Senate majority, but this year was another GOP bloodbath. The Democrats have to lead now, however, and that will be more challenging for them. The only legislative “achievement” this year? A massively unpopular “bailout” bill that represents one of the biggest dangers to this Republic in decades. Congress is and will remain profoundly unpopular because of it.

International

• Violence in Iraq remains sporadic, as US forces slowly withdraw. Iraq becomes less and less of a domestic political issue. Al-Qaeda attempts a Tet Offensive, but it is quickly crushed thanks to solid intelligence provided by Iraqi civilians. — I was correct on the first part, but al-Qaeda hasn’t been able to push back in Iraq. For all practical purposes, the “war” in Iraq is over, and our mission will be to train the Iraqi police, military, and government as best we can. President Obama seems like he will not precipitously withdraw from Iraq, and there’s no reason to. Gen. Petraeus and the U.S. military has done its job in Iraq. What’s sad is how little recognized their monumental achievement has been.
• The center-right remains triumphant as Nicolas Sarkozy, Angela Merkel, Kevin Rudd, and Stephen Harper all work towards free market reforms in their respective countries to great popular acclaim. — For the most part, this is true. Stephen Harper’s problems in Canada may end up hurting the divided Canadian left more than him. The big problem is whether the financial crisis will lead to a dangerous expansion of government or the realization that the more control government has over industry, the more problems with one will harm the other.
• The situation in Pakistan remains deeply unsettled, with Musharraf having only a tenuous hold on power. — Musharraf is out of power, and so far Pakistan has not yet exploded as some had feared. But it hangs on the knife’s edge, and if Pakistan collapses, the effects would be catastrophic.
• Iran continues to rattle sabers, and continues to enrich uranium, while the Bush Administration tries to ratchet up diplomatic pressure—to no avail. — This was a sure bet. Iran has no reason not to rattle their sabers, because they know that no one has the stones to stop them. However, with oil price plummeting, it may be domestic turmoil that does what the rest of the world won’t.
• The Annapolis Peace Conference accomplishes nothing as once again Israel offers concessions and the Palestinians end up being too divided to offer anything in return. — This was like predicting that the sun will rise in the East and set in the West.
• China improves its image with the Beijing Olympics. — They did, but they remain a curious hybrid of free-market optimism and state-run oppression. China remains a country that is divided between the future and the past, and what is keeping that arrangement together is the entrepreneurial spirit of their people. They could be a superpower, or their country could collapse, and it’s hard to tell which way things will go. There is the potential for a major economic crisis in China this year, and the effects could be massive.

Economics

• While the media continues to paint their picture of economic despair, the real story continues to be the “Goldilocks economy” of low unemployment, high economic growth, and steady wage growth. — Oh, how I wish that came true. While the first half of 2008 was relatively strong, the economic crisis of the last half was the beginning of a fundamental economic shift. What happens from here is anyone’s guess, but it seems likely to get worse before it gets better.
• The sub-prime mortgage issue fades as the impact becomes more fully known. As the uncertainty fades, it becomes clear that the fears of recession were baseless. — I don’t think that the assumptions about the recession were right at that time (although there is some evidence that the recession did start around December of 2007), but there is little question we’re now in a recession. While everyone blames Bush, the real culprit is years of Washington and Wall Street engaging in an incestuous relationship—and both parties are guilty of that. We need to realize that in many cases regulation does not level the playing field, it tilts it.
• Oil prices stabilize around $100/barrel. — Oil has fallen to around $40/barrel this month, which is probably too low. The equilibrium price is probably closer to $100, but right now the market is seeing a major collapse in demand. That means cheaper oil, and more hurt for petro-dictators like Chavez and Ahmadinejad. However, we can’t expect the prices to stay this low forever.

Society/Culture/Technology

• At MacWorld, Apple announces iTunes movie rentals – in HD, with a new Apple TV to match. They also announce an enhanced iPhone, an ultraportable MacBook with a flash-based hard drive and long battery life. Apple stock continues to climb. — This all turned out to be true. The MacBook Air is not quite the machine I imagined, but I love mine and think it’s the best built laptop I’ve ever bought.
• However, Amazon’s DRM-free MP3 download store starts stealing some marketshare from iTunes. More studios embrace selling their music unencumbered by DRM, leading iTunes to abandon their FairPlay DRM on music by the end of the year. — Amazon’s store is still very nice, and Apple would love to ditch DRM, but the music labels are still resisting. The day the RIAA and the labels become irrelevant is rapidly approaching, however.
• Despite blockbusters like Indiana Jones and the Kingdom of the Crystal Skull and Star Trek, box office receipts decline both in number of tickets and dollars grossed as the price of high-def movie equipment declines. While movie ticket sales decline, sales of HDTVs, home theater setups, and HD-DVD and Blu-Ray players soar. HD-DVD players hit the $100 mark by the end of the year, meaning that HD-DVD adoption pulls away from Blu-Ray. — Star Trek was pushed back to next summer. HD-DVD lost the format war. But the larger point remains, movies are becoming more of a personal thing, and with the economic downturn, that’s going to be ever more of a factor next year.

Also, No Country for Old Men did win Best Picture, as it very well should have.

My predictions were widely off the mark in a year of phenomenal “change.” Obama’s surge, the economy’s collapse, and the aftereffects of both were currents that will carry us into a turbulent new year. But every new year is a turbulent one, and the assumptions we all make now may be as broken as the ones I made a year ago.

Later, my predictions for 2009, as well as an important announcement.

I have had neither the time nor the inclination to do my usual election-time prognostication, but I’ll give it a go for old time’s sake:

Minnesota CD 2: John Kline will do what he always does: kick ass and take names. Steve Sarvi will lose in a blowout.

Minnesota Senate: Norm Coleman is not a Republican’s Republican, but he’s a smart and honest guy. Franken is and always has been a joke. Franken will lose by at least 5.

Minnesota Presidential Results: I wish that someday Minnesota will turn red, but it won’t be this year. Obama will win, but not in a blowout. Obama by 4.

Other Minnesota House Races: Paulsen will squeak by Madia by the narrowest of margins, Bachmann will narrowly beat out Tinklenberg, and the rest are obvious.

President of the United States: I’m going to go off on a limb here and say that McCain will win Pennsylvania, and thus the Presidency. Obama and Biden have done much to alienate voters in Western Pennsylvania. From the “clinging” comment to Joe the Plumber to Jack Murtha’s accusations of racism to the recent brouhaha over bankrupting coal companies, the gaffes have just kept on coming. In the end, the Palin pick was one of the smartest things that McCain could have done, as it let him connect with the voters in the heartland. She’s one of them, and that may make her hated in the Boston-NYC-DC megalopolis, but it makes her popular with the rest of America. McCain will eke out the narrowest of Electoral College wins, trading PA for CO, IA, and NM. VA stays red by the slimmest of margins.

U.S. Senate: The Democrats miss their filibuster-proof majority (thank God), but pick up enough seats to be close: 58.

U.S. House of Representatives: The Dems pick up plenty of seats, but there’s one silver lining for Republicans: the execrable John Murtha is sent packing.

We’ll see how this plays out as the night goes on.

This one won’t be that hard to predict, at least on the Democratic side. Hillary Clinton is toast. She needs a miracle to defeat Obama, and the ham-handed way she’s tried to come back have failed. Even though she’s right—even her paltry experience is infinitely more than Obama’s platitudes—the Democrats have embraced Obama’s gauzy rhetoric. Politically, it’s not a bad move. In terms of who can provide the Democrats with real leadership, Obama is a terrible candidate. However, he happens to have the right message at the right time, and that’s enough to win.

On the Republican side, I wouldn’t count Romney out quite yet. He did well in the debates, and McCain’s overtly combative side that we saw this weekend does not suit him well. The independent voters in New Hampshire will likely join the Obama juggernaut, which gives McCain less of an advantage. That being said, I think McCain will win. If McCain wins New Hampshire and Michigan, I don’t see how Romney can continue. Which is too bad, since I’m warming to him the more I hear.

Those two matchups are all that matter in this race. The rest of the candidates aren’t in the game in New Hampshire. Rudy and Fred are not campaigning there. (And Ron Paul isn’t going to get the nomination, even if he will pull some support in New Hampshire.) Edwards is a dead man walking, politically. He didn’t even pull the same support in Iowa he did in 2004. Huckabee will get some play in New Hampshire, but his brand of evangelical identity politics does not play well at all there.

For the Democrats, I don’t see any way that anyone can stop Obama now. It’s possible he could slip up, but the Clinton campaign has come off the rails in a way that I wouldn’t have expected. She’s never had to run a truly competitive race in her life (and neither has Obama), and she doesn’t know what to do. My guess is that Clinton will not go quietly. What’s amazing is that even her well-crafted spin machine can’t save her now.

The Republican field is still wide open. Romney is sinking, but he’s not out. McCain’s star is rising. Huckabee is still in the lead. Thompson is hanging on and betting the farm on a solid performance in South Carolina. Rudy could always come up from behind and surprise everyone if his strategy actually works. At this point a brokered convention isn’t out of the picture. There’s no real momentum yet for one candidate.

The big question is who goes out first. Right now, Romney looks like he’s going to lose steam before the others. If that happens, who gets his support? That’s why this race is so undecided—in a race divided by a few percentage points between the candidates a gain by one can propel someone ahead of the others. If Romney’s support goes to Thompson, Thompson ends up being in a vastly better position. If it goes to Huckabee, he’d be nearly impossible to beat. If it goes to McCain, McCain would have a strong chance of winning. If it gets split, then we’re still in a morass.

New Hampshire is proving to be somewhat anti-climactic, but that could change in the event that Hillary or Mitt stage a comeback. However, it’s looking like the Democratic race is becoming more firmly established just as the Republican one continues to be unsettled.

While I have no idea what the outcome of Iowa will be (and I doubt anyone else does either), I’ll venture a few predictions for tomorrow’s matchup in Iowa:

On the Republican side, Huckabee peaked too early. The attention he got caused people to take a look at his record, and it’s not good. Huckabee sailed in on homespun congeniality, but the more people look, the less substance he has, and where has has substantive positions they usually rub the Republican base the wrong way. I would cautiously predict that Huckabee will do worse than expected—mainly because he has nowhere to go but down. His support is soft, and he doesn’t seem to be moving in the right direction to take a convincing win.

It’s safe to predict a Romney win, since he’s poured so much into Iowa. However, to be viable, he has to pull off a convincing win. If Huckabee is sliding, that benefits Romney.

There’s not one, but two dark horses in Iowa. McCain and Thompson are fighting for third place, and both have been doing better than expected. Thompson needs a strong third-place finish in Iowa to remain viable. McCain hasn’t campaigned in Iowa, but does have a base of support there. Zogby is showing a late breakout towards Thompson. If Fred can get 15%+ that keeps him alive until South Carolina. If McCain does well (double digits) that keeps him alive until New Hampshire, where he has a chance at the top. It all depends on where those last undecided voters go—if Thompson were to pick up a lion’s share of undecided voters (which seems possible), that could give him the finish they need. If they go to McCain, that puts McCain a real edge given that New Hampshire will give him a boost as well.

The real story of the Republican side of Iowa is not who wins, but who gets out alive. I’m guessing that we’ll lose Rep. Hunter by the end of the week, since he has no traction nor any chance of gaining it.

Rudy’s out of Iowa—last year he was the front-runner, now he’s running a dangerous game that could easily put him out of the race before he really gets started. He won’t break single digits in Iowa, but what he needs is for Iowa and New Hampshire to be won by different people so that no front-runner emerges. If Romney wins both, Giuliani may be in trouble.

On the Democratic side, Clinton, Edwards, and Obama are all in play. I doubt Edwards will win, although he’ll come in a strong third. His brand of economic populism plays well with the Democratic base, but he’s not electable, and he’s been running for office longer than gaining experience. He couldn’t win his old Senate seat back, and he and Kerry lost ground against Bush. Kerry was smart enough to realize that he was damaged goods—Edwards is too vain to notice.

The Obama-Clinton race will be the one to watch. Obama’s run a campaign much like Howard Dean’s, except smarter. He also has the same problem that Dean has—his base of support is with people who don’t tend to vote. Still, I wouldn’t count him out. My sense is that he could very well win in Iowa, which would put Mrs. Inevitable in a very tight spot. Obama’s playing a dangerous game, however. The Clinton smear machine has him in their sights, and while their first shots were weak, sooner or later they’ll take him down.

If Clinton wins, it puts Obama in a tight spot. He has to perform, and he needs national momentum to do that. A Clinton victory puts the spotlight on her, and without an upset, Obama’s strength in Iowa will be put a roadblock to her path to the nomination.

If I had to guess, I’d say the former frontrunners will be the future frontrunners: which means narrow wins for Clinton and Romney. Huckabee leaves Iowa intact, but the pressure on him won’t go away, and he’ll do poorly in New Hampshire. Thompson needs a strong third place finish in Iowa and a win (or near win) in South Carolina to stay alive—which means that Thompson will need to campaign hard in South Carolina to keep Huckabee down.

Of course, all these predictions are going by the polls. The polls, as in 2004, could be entirely wrong. Thompson’s Iowa barnstorm could turn him into the John Kerry of the GOP, the single-digit candidate who suddenly became the frontrunner. Huckabee could collapse as Dean did, and for some of the same reasons. Clinton could sink and Obama could soar. Edwards’ populism could propel him to the top. McCain could surge in Iowa and then take down Romney in New Hampshire, putting him ahead.

Part of the fun of Iowa is watching expectations crash and burn, and there could be a lot of political wreckage strewn from Council Bluffs to Dubuque after tomorrow night.

UPDATE: Bob Novak predicts Hillary will come in third in Iowa. That would be a real blow to her campaign. However, I think the “Dean factor” is at play here—a candidate that excites younger voters doesn’t do so well in caucuses which are dominated by older voters who are deeply entrenched into politics. Then again, a narrow Clinton win doesn’t help her much, as it leaves two viable competitors who could present further challenges down the road.

As is my yearly tradition, I offer a few predictions for the new year, to be revisited (and frequently mocked) a year later. So, without further ado, this year’s predictions:

Politics/National

• Hillary Clinton defeats Obama for the Democratic Nomination. She picks Mark Warner as her running mate.
• She then narrowly loses to the Republican candidate (who is not Mike Huckabee).
• Sensing a weak field, Michael Bloomberg runs for the Presidency on a third-party ticket, picking CNN anchor Lou Dobbs Chuck Hagel as his running mate. He barely registers in the polls, despite pouring millions of his own money into the race.
• The Democrats retain control of Congress, but not be margins large enough to threaten vetos. Pelosi and Reid remain in control of their respective chambers, but end up being just as ineffectual as they have been over the last major year. Congress still does almost nothing throughout the year, and this Congress leaves with no major legislative achievements to its name.

International

• Violence in Iraq remains sporadic, as US forces slowly withdraw. Iraq becomes less and less of a domestic political issue. Al-Qaeda attempts a Tet Offensive, but it is quickly crushed thanks to solid intelligence provided by Iraqi civilians.
• The center-right remains triumphant as Nicolas Sarkozy, Angela Merkel, Kevin Rudd, and Stephen Harper all work towards free market reforms in their respective countries to great popular acclaim.
• The situation in Pakistan remains deeply unsettled, with Musharraf having only a tenuous hold on power.
• Iran continues to rattle sabers, and continues to enrich uranium, while the Bush Administration tries to ratchet up diplomatic pressure—to no avail.
• The Annapolis Peace Conference accomplishes nothing as once again Israel offers concessions and the Palestinians end up being too divided to offer anything in return.
• China improves its image with the Beijing Olympics.

Economics

• While the media continues to paint their picture of economic despair, the real story continues to be the “Goldilocks economy” of low unemployment, high economic growth, and steady wage growth.
• The sub-prime mortgage issue fades as the impact becomes more fully known. As the uncertainty fades, it becomes clear that the fears of recession were baseless.
• Oil prices stabilize around $100/barrel.

Society/Culture/Technology

• At MacWorld, Apple announces iTunes movie rentals – in HD, with a new Apple TV to match. They also announce an enhanced iPhone, an ultraportable MacBook with a flash-based hard drive and long battery life. Apple stock continues to climb.
• However, Amazon’s DRM-free MP3 download store starts stealing some marketshare from iTunes. More studios embrace selling their music unencumbered by DRM, leading iTunes to abandon their FairPlay DRM on music by the end of the year.
• Despite blockbusters like Indiana Jones and the Kingdom of the Crystal Skull and Star Trek, box office receipts decline both in number of tickets and dollars grossed as the price of high-def movie equipment declines. While movie ticket sales decline, sales of HDTVs, home theater setups, and HD-DVD and Blu-Ray players soar. HD-DVD players hit the $100 mark by the end of the year, meaning that HD-DVD adoption pulls away from Blu-Ray.

We’ll see how well these predictions turn out next year…

UPDATE 12/31/07: One minor change. Despite both being cranks, Bloomberg and Dobbs apparently don’t agree on much. However, Bloomberg and Sen. Chuck Hagel have met before, making them more likely political bedfellows.

YET ANOTHER UPDATE: One more prediction: No Country for Old Men will win Best Picture at the Oscars. It deserves to. If you’ve not yet seen it, it’s an amazing movie because of the way it’s almost entirely built on subtext. But don’t let that dissuade you: it’s not preachy, it’s not pretentious, and it isn’t an “art house” movie. It’s just a damned good film.