Based on these analyses, I have made a number of predictions including, but not limited to:
Banking Sector
Treasury purchases of banks’ preferred equity will crowd out private capital, for example, by facilitating acquisitions of one bank by another
Funds will be available for starting new investment projects – if not from banks, from other institutions. Whether people want to borrow is another story
Banks will begin to forgive collateralized loans. The amount of forgiveness will decline with borrower income.
Residential Sector
Housing prices will continue to fall after the summer of 2008, by 10s of percentage points
Housing construction will resume in the summer of 2009
Nonresidential Nonfinancial Business
Nonresidential investment goods are cheap, and this increases nonresidential investment, especially in structures
Cheap investment goods = cheap stock market
U.S. GDP will not fall below $11 trillion (chained 2000 $)
Income and spending will start growing again before employment does
Labor Market
U.S. employment will not fall below 134 million.
Baby boomers will delay retirement
Loan forgiveness programs, such as the FDIC's Loan Modification Program, will dramatically reduce the incentive of affected borrowers to earn income