Economic 9/11 in 2012

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There have been many predictions of markets and economies crashing this year but in the Daily Mail today is a report from 3 well-known forecasters and authors Gerald Celente, Harry Dent and Robert Prechter that this year you had better prepare for an economic 9/11.

Just when you thought unemployment was dropping and stock markets were surging back, these three analysts today sent out a stark warning to Americans to brace for another financial crash.

Trend forecaster Gerald Celente advises buying a gun to protect your family, stocking up on gold if the dollar crashes and planning a getaway, so it’s no shock he’s preparing for an ‘economic 9/11’.

Share prices and unemployment are posting their best figures in four years since the recession hit, but Mr Celente, along with authors Harry Dent and Robert Prechter, says the rebound won’t last.

All three were profiled in a USA Today feature on Monday. Mr Dent, who had The Great Crash Ahead published last September, believes stocks are simply experiencing an artificial short-term boost.

Mr Prechter, who had a new version of Conquer the Crash published in 2009, is fearful of today’s economic similarities to the Great Depression and says the brief recovery will fail like in the 1930s.

‘The economic recovery has been weak, so the next downturn should generate bad news in a big way,’ he told USA Today, saying the markets look ‘very bearish’ for the third time in 12 years.

Mr Celente, who works as an analyst at the Trends Research Institute, which he founded in Kingston, New York, has been doom-mongering for years – so his latest concerns are hardly surprising.

But he told USA Today that a potential run on banks by savers could cause the government to invoke a national holiday and temporarily close them all, which happened during the Great Depression.

‘When money stops flowing to the man on the street, blood starts flowing in the street’

Gerald Celente, trend forecaster

It comes as billionaire Berkshire Hathaway chairman and CEO Warren Buffett today painted a happier picture of stocks, which he said are relatively cheap compared to other investments as the economy improves.

Meanwhile contracts to buy previously owned U.S. homes neared a two-year high in January in further evidence the housing market was slowly turning the corner, an industry group said today.

However oil prices have been spurred higher by worries over disruptions to Middle East supplies due to sanctions against Iran and expectations for greater demand from an improving U.S. economy.

On the stock market
But on the markets, the S&P 500 has risen nearly nine per cent so far this year and the Dow Jones is trading around the psychologically-important mark of 13,000. But the three experts aren’t happy.

Mr Prechter told USA Today both markets will crash back below their lows hit at the height of the financial crisis in March 2009. Unemployment fell last month to 8.3 per cent, a three-year low, and weekly jobless claims are at a four-year-low.

But Mr Dent believes that people will be left out of work again in 2013 or 2014 and U.S. markets will crash because central banks have been pumping so much money into markets that they are unrealistically strong.


Spain’s Woes Caused By Euro

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Spanish economist Dr. Manuel Balmaseda gave an interview with RussiaToday outling the problems Spain find itself in and relates it to its membership of the euro. The key points are:

ECB set interest rates for core of Europe but too low for Spain.

Cheap money created a real estate bubble and brought in many unqualified immigrants.

When crisis happened, the real estate bubble collapsed causing the economy to collapse.

The cuts now won’t make a difference, it’s the euro that’s causing the problem.

There is about 6 – 9 months of goodwill left in the country after that the people will feel deceived when they realize that reality doesn’t meet their expectations.

Spain’s future does not lie in the euro zone, same for the PIGs.

Spain’s exit from eurozone is a political problem. Of Spain’s’ foreign debt of €900 billion, about half is owned by France and Germany so they don’t want Spain to leave the euro. Because if you leave the eurozone you must default.

It’s very simple, if I am a bank and you owe me money, then “STOP EATING, TAKE YOUR CHILDREN OUT OF SCHOOL AND PAY ME BACK”.

Devaluing is the solution and long as you make other structural changes also, but you can do nothing if you don’t devalue.

Politicians have FALSELY said if you leave the euro you are out of the EU.

In Spain nobody is aware that the crisis is caused by the euro and lack of competitiveness it brought. The banks and media blame overspending by the administration, although that didn’t help.

Its economics 101, if you have these countries in trouble and force cuts, this will cause them to go deeper into recession. You will never reach the goal of closing public deficit because the cuts keep reducing your income.

For full interview click here.

MISH wrote further about Spains worsening economy

Conditions in Spain have deteriorated at a rapid pace. As little as a few months ago the Spanish economy was foolishly projected to grow at .7%. Now it expected to contract 1%.

Likewise, Spain’s budget deficit was supposed to shrink to 6% in 2011 and 4.4% in 2012. Instead it rose to 8.51 percent in 2011, up from a revised estimate of 8.2% which was up from a revised estimate of 6.5%.

Spain must explain soon to the European Commission why its 2011 budget deficit was substantially higher than expected and deliver clear future budget plans, the Commission said on Tuesday.

Spain’s 2011 budget deficit came to 8.51 percent of GDP, the finance minister said on Monday, up from early estimates of 8.2 percent and far above forecasts from the Commission for something nearer 6.5 percent.

Specifically, Spain’s budget deficit is 91.3 billion euros, 8.51% of GDP. So it should not take a wizard to realize the simple mathematical fact that team Rajoy has not yet begun with budget cuts and tax increases, if by 2012 Spain is to meet the 4.4% of GDP deficit target set by creditors.

The measures announced in December were only an appetizer. Instead of sharpening the blades, I think a good lawn mower would be more practical.

The announced cuts and tax increases of last December (income tax, capital gains), are expected to generate about 14,900 million.

To meet the objective of a 4.4% deficit, in 2012 the government deficit should not exceed 46,500 million euros.

To do so requires a nearly 30 billion euros hole to be filled, with the aggravating circumstance that it’s now March and those 30 billion euros need to come in the next 9 months.

This figure is double the cuts and tax increases approved last December. So Rajoy has quite imagination if he expects this to happen.

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