We've spent the week reading predictions and forecasts.

In the past, we have tried reading entrails ourselves, but we could never get the animal to stand still, and didn't have the heart to kill it. Nor could we get a grip on soothsaying. We were willing to say a sooth, but we could never figure out what a sooth was.

Still, long-suffering Daily Reckoning readers will find our forecasts and reflections in this space tomorrow.

Today, we ridicule the competition, which is too easy. The competition makes itself ridiculous; we don't have to do anything to make fun of it.

Take Abby Joseph Cohen...please. The woman makes her living by telling investors, on behalf of Goldman Sachs, that the stocks offered by her employer are going to go up. She says so every year. In a bull market, she is mostly right. In a bear market, she is mostly wrong. So, her reputation flew as high as Amazon or Global Crossing in the glory days of the tech bubble of the late '90s. Then, when the bear market began in 2000, poor Abby took a beating.

Still, she remained loyal to her employer and faithful to her employment. Every year, she continues to tell us that stocks are going up. This year is no exception.

The reasons change, but the direction never does. This year, stocks are going up, she says, because investors are impressed by the "durability" of the expansion despite higher interest rates, and because corporations are about to begin investing their $2 trillion of cash in ways that will make the stock market go up.

As to the first point, it is surely correct that the longer the economy seems to survive injury, the more people think it will live forever. It is a little like a drug dealer in a shoot-out. A bullet in the leg barely annoys him. Then, he is shot through the arm. Still, he stands his ground. After a while, his friends begin taking bets about how long his will remain standing, and after another bullet to the stomach fails to bring him down, many of them begin to think he's invincible.

This, of course, is a good time to bet against him.

The problem with Cohen is that she hasn't lived in Baltimore. She hasn't seen enough street gunfights, but the cops will tell her: the guy always goes down, sooner or later.

So, do stocks always go down when their time has come? Has the time come in 2006? Abby knows no more than we do, but she is way ahead of us. Nobody ever lost his or her job at a major brokerage house for saying that next year will be a lot like last year...or that stocks will go up.

Abby's second point is that corporations are about to undertake more capital spending projects. They have the cash, she points out. What they've lacked so far is the will. This theme - capital spending replacing consumer spending - is a standard feature of this year's forecasts. Everyone sees that consumer spending is vulnerable. Yesterday, it was announced that new house starts had dipped for the fourth week in a row - to a three-and-a-half-year low. Oil is over $60. And borrowed money is more expensive. The consumer will probably be forced to cut back.

Maybe capital spending will take up the slack. There is no sign of it yet, however. Companies with cash have used the money to shore up their health plans, beef up executive compensation plans, or goof up their merger and acquisition plans. Business culture, in America circa 2006, is short-term oriented. Companies spent billions on information technology in the late '90s, when they thought it would bring them a windfall. We've yet to see a new factory built, or much real capital spending in the United States. Instead, the capital is being spent in Asia, where so much of it has been dumped into new factories that are already over capacity. Why U.S. companies would want to add still more capacity is a mystery.

But wait, Abby is probably talking about the New Economy...not the old manufacturing economy. Elsewhere, we read a forecast that GM shares may lose another 33% this year. Wall Street is writing off the old economy. We're not going to make cars in the United States anymore. We're in the more-profitable service business. That's right, we're going to wash them! Maybe there will be a new spurt of investment in carwashes and parking garages. We don't know, but we wouldn't count on it.

*** The housing slowdown makes it to front-page news in the mainstream media. Yesterday's WSJ featured a story on the housing slowdown, saying, "As home sales start to slow and the inventory of unsold homes climbs, many economists believe that home prices will rise more gradually, or even decline, delivering a jolt that causes consumers to rein in spending. That, in turn, may cause economic growth to slow."

And as if that isn't reason enough for consumers to restrain their over-the-top spending habits, as we flip further into the WSJ, we find an article on spending outpacing earnings in 2005 - the first year since The Great Depression that this has occurred.

Apparently, American consumers spent about $39 billion more than they saved, and the rise in home values actually contributed to a lower savings rate - as many homeowners draw on their home equity as a source of cash.

"It's a well-documented relationship in economics: One dollar of extra housing wealth translates into a reduction in savings of five cents a year," Dean Baker, co-director of the Center of Economic and Policy Research, tells the WSJ. "We saw the same sort of thing with the stock bubble [in the late 1990's]. You had this big run-up in stock prices, and the saving rate went down."

*** Jeez, we can't help but wonder: What are we going to write about now? The WSJ is picking up two of our themes, and Senators are actually agreeing with the sentiment expressed in Empire of Debt and the letters that we wrote them.

Senator Russell Feingold (D) of Wisconsin, the only Senator who didn't vote for the Patriot Act the first time around recently sent Addison a two-page letter...

"I share your concerns about wasteful government spending and spiraling budget deficits," writes Senator Feingold, "and for that reason I have led the effort to reinstate the pay-as-you-go (PAYGO) budget rule. Under this requirement, Congress must find offsets to pay for new spending on entitlement programs or new tax cuts...The PAYGO requirement is a proven tool of fiscal restraint that was instrumental in reducing annual budget deficits during the 1990's leading eventually to a balanced budget."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.