Economist puts dent in optimism: bigger crash is coming (2011, credit, borrow)

[nicet4]

This doesn't sound good.

Economist puts dent in optimism

Posted Mon Jun 22, 2009 10:05am AEST
Updated Mon Jun 22, 2009 12:46pm AEST

An international economic forecaster says another big crash lies ahead for global share and property markets within the next two years.

Harry Dent predicted the Japanese recession in the 1990s and also forecast the current global financial crisis.

He has told ABC News Breakfast that the Australian share market will continue to make gains during the next few months, before bottoming in about 2011.

"I'd say maybe the Australian All Ordinaries will get back up near 4,500, the Dow maybe close to 10,000," he said.

"And then you'll see another crash late this year and into next year, as banking systems melt down again. I think the next one's going to start in Europe and Eastern Europe, housing prices would lag.

"I think stocks are going to end up down 60 or 70 per cent before it's all over, and I think housing prices in Australia will probably be down 40, maybe 50, per cent, maybe more than that in the United States and Europe."

snip

[Charles22]

What else is new?

[rubber_factory]

I pay attention to what Harry Dent says, mainly because we graduated from the same university.

I'm not exactly sure what data he uses to make his predictions, but I know it involves the study of economic cycles, along with age, population and demographic shifts. To sum it up, Dent believes that we have several cyclical forces coming into play all at once - one being this huge credit bubble cycle that began in the 1980's, that is possibly now winding down... and the other being the retirement of the baby boomers.

Listening to him talk, he's persuasive, but it sounds like total BS, hocus-pocus. I don't know nearly enough to claim that his methods are sound or not. I know that they are unorthodox.

[subsound]

The reasoning isn't bad if you take it without further investigation, but just the aging population stats (best with hard numbers) is not quite as strong as he pushes (especially for the US).

As stated in the article peak spending is at age 46, which supposedly has the biggest crest of baby boomers hit right at the time of the recession. However, if you look at the baby boomers as the generally accepted definition from 1945 to 1964 the crest of the wave hit long before the start of the recession...the recession hit at the tail end with those who were born in 1961...plus a second wave of growth in births starting in 1978 that goes toward baby boomer rates (BBHQ: Boomer Statistics).

Secondly he compares the rates of change to the Japanese recession, but it's not quite an accurate comparison. Some of the factors are very close, but the aging population is not quite the same...Japan has very low immigration rates (leading to a negative growth rate) to replace the workers lost, while the US has many more people coming in from other locations.

I would like to see the other numbers, before really picking at them...but very interesting.

[tallrick]

Anyone with a functioning reasoning brain knows that property prices have been way too high for decades. Here in Miami they are still double their true value based on local incomes. Once the bailout bubble pops and Obamaflation hits hard nobody will buy US bonds for less than 10% a year, short term! With the foreign borrowers gone the only thing left to do will be printing worthless Fiat money. High housing prices signal economic calamity in the future, The future is now people.

[CosmicWizard]

Harry Dent is the guy who predicted a DOW of 40000, so I'm taking his predictions with many grains of salt.

From Wikipedia

In 2000, based on his forecast that economic growth would continue throughout the 2000s, Dent predicted that the DOW would reach 40k, a prediction which was repeated in his 2004 book.

[texdav]

They all seem to have theirr predictions. Predictions are like football score predictions; only less accurate and of course there are so many someone will be right.

[GloryB]

Originally Posted by texdav

They all seem to have theirr predictions. Predictions are like football score predictions; only less accurate and of course there are so many someone will be right.

I'll place my bets on the positive statements. Not because I think I'll win.....but just because I'll feel like more of a loser worrying about the negative.

[Stac2007]

Originally Posted by nicet4

This doesn't sound good.

Economist puts dent in optimism

I will not be surprised when it happens.

[CosmicWizard]

Stac2007 wrote: I will not be surprised when it happens.

Isn't it incredible how we seem to get whatever we expect!