Jul 20, 2011

Double-Dip Recession Or War of Aliens (ufo)

Double-Dip Recession Or War of Aliens, its not a windy its not ice creme one said and happened but it will we are developing , rising growing but all in negative direction what is going on on the green world knows every man here is my few dangerous lies one can say economically which can push us to double-dip recession.


A slow-growth decade is already raging. You feel it everywhere. And it’s going to get worse, much worse. A recession is virtually certain for 2012, in an angry, volatile presidential election year. May morph into a 1930’s-style depression.That’s the clear message we get from Gary Shilling, one of the world’s foremost economic forecasters, long-time Forbes columnist and author of “The Age of Deleveraging,” where you’ll find tips and warnings: The American economy is facing a huge shortfall in the 2011-2020 decade. We need real GDP growth of at least 3.3% just to keep unemployment stable.Click to PlayFive stocks you wish you boughtSome stocks have done well this year and still have room to the upside. Paul Vigna talks with Simon Constable about five stocks you wish you had bought earlier this year.But that’s impossible. America will be lucky to get an average 2% real growth, says Shilling. In fact, it’s worse: America faces the possibility of 10 long years of no growth. Or, more accurately, a decade of less-than-zero growth. Plus high-stress chronic unemployment. Plus accelerating global unrest, regional conflicts, increasing Pentagon budgets.In his latest newsletter, one of his scariest ever, Shilling’s scenarios for 2012 and the long years ahead feel more like a summer blockbuster that’s come alive with a vengeance.Wall Street greed worse since 2008 … will soon self-destructYes, a 2012 recession is coming, says Shilling, because “much of the excesses and financial leverage built up in past decades, especially in the financial sector globally and among U.S consumers, remain to be worked off.”Reagan and the Bushes expanded government, added debt: “The federal deficits and Fed excess bank reserves” fueled the Fed and Treasury’s failed “attempts to bail out the nearly collapsing U.S. private sector” just made matters worse for the economy by focusing on banks not jobs.As a result of the blunders by our fiscal and monetary leaders, the “private and public deleveraging will take years to complete and keep economic growth subdued.” As a result, in coming decades “recessions will be deeper and more frequent.” Yes, worse.Gary ShillingShilling exhibits his usual coolly cautionary yet wisely analytical tone: “The usual trigger” for a recession, “a tightening of monetary policy,” raising rates as former Fed Chairman Paul Volcker did a generation ago, “is unlikely in today’s weak climate, but others are at hand.”So which trigger will plunge America into a deeper, double-dip recession, and take the global economy down with it? “A further 20% drop in house prices because of the depressing effect of 2 million to 2.5 million excess inventories” is setting up a crisis.Yes, the housing sector. Remember how Wall Street’s excessive greed grew for several years, then triggered the 2008 meltdown? That disaster’s never ended. Why? Because another 20% drop in housing “would push underwater mortgages from 23% to 40% of the total, seriously depressing consumer spending, and wreak havoc among mortgages and related securities.”Perfect storm: 10 reasons for a slow-growth decade, 2011-2020It gets worse. Look around. Warfare? We are in a virtual mine field of triggers merging into a perfect storm, triggers that individually and together can and will plunge America into a double-dip recession. More accurately, a global depression: Another big “spike in energy prices due to Middle East trouble could also drive a weak U.S. economy into recession” and “force a Washington response in the 2012 election year.”No QE3 says Fed Chairman Ben Bernanke? But more “fiscal stimulus is likely since even Tea Party folks like to get reelected.” So stay tuned to Fox News and MSNBC for updates in this accelerating “War on the New Planet of the Apes.”Shilling summarizes the 9 reasons investors had better prepare for “Slow Global Growth in Future Years.” Not just for a temporary, double-dip recession in 2012, but a deeper depression-era slow growth likely till the election of 2020. So start by committing Shilling’s “9 Causes of Slow Global Growth” to memory, plus the 10th one we added:More and more consumers are shifting from a 25-year borrowing-and-spending binge to a saving spree. This trend will spread across the globe. Why? Because American consumers will import less from developed and emerging nations that are dependent on exports for economic growth.

Financial deleveraging is already reversing economic trends that financed much of the world’s new growth in recent years.

Developed countries in Europe and others are moving toward fiscal restraint and spending less.Throughout the world, increased government regulations and involvement in major economies will reduce innovation and increase economic inefficiencies.Nationalism and protectionism will also slow, possibly eliminate, economic growth throughout the world.Declining commodity prices will further limit consumer spending by commodity-producing nations across the world.Excessive inventories and reduced interest from investors will continue to suppress an already weak housing market.Deflation will cut spending as buyers wait for lower prices and negotiate harder.State and local governments across America are losing revenues, cutting services.But perhaps most of all, certainly impacting everything, the extreme, accelerating irrationality driving our angry political wars will undermine an already stagnant economy … until a 1930s-style crash takes down the American economy.

  • Investment opportunities: What should you buy? Sell?
  • So where can you put your money in this increasingly unstable world? First, let’s check out the bad news. Five risky “sells.” Then we’ll look at Shilling’s recommendations: Five-plus “buys” extracted from his recent Insight newsletter and “The Age of Deleveraging,” opportunities for the 2012 recession and the slow-growth decade, 2011-2020.
  • 1. Emerging nation stocks. Warning: Behind the smiles, American banks, brokers and financial advisers are running scared. They can’t find enough solid domestic companies, so they’re frantically chasing higher returns in risky, unstable emerging nations all across the planet. Sound familiar? Yes, this is an exact repeat of the build-up to the 2008 meltdown, when Wall Street chased subprime derivatives off a cliff. China’s the biggest risk out there, a new Humpty Dumpty headed for a great fall.
  • 2. Sell commodities. This bubble’s blowing big, will pop. Commodities are not an asset class for your portfolio. They’re a gambler’s bet taking you off your game. In the coming years of weak demand, expect excessive capacity and soft prices. China is buying up long-term supplies across the world, playing games, speculating, living dangerously.
  • 3. Sell U.S. major and regional banks. Regulation uncertainty. Taxes. Gridlock. Huge impact on capital. Vulnerable: Fannie, Freddie, regionals, community banks. In next four years bank portfolios have $800 billion more mortgages coming due, majority underwater.
  • 4. Sell your house, second home or single families investment realty. Most families have the bulk of their net worth and retirement funds tied up in their home equity. That’ll hurt Americans as underwater mortgages increase from 23% to 40% of the national total. Shilling’s been warning of this for a long time: If you do plan to sell any time soon, do it now, before inventories depress prices another 20%.
  • 5. Sell home builders. Our disastrous housing market says sell builders, sell, sell.
  • Now what should you buy? Shilling highlights several key areas of investment opportunity to counterbalance the risks and insanity driving the above sell suggestions:
  • 6. Income-producing stocks. The stock market’s gone nowhere for 12 years, says Shilling. Inflation-adjusted returns say Wall Street’s a loser. Buy direct or ETFs. Pick selective income-producers: utilities, drugs, telecoms, high-grade munis, preferreds.
  • 7. Treasury bonds. America is the long-term winner. Yes, banks, brokers and stockholders may hate them. But this is your safe haven in the coming deflationary storm. Long maturities. Zero-coupons. Lower commissions. Trust in America.
  • 8. The American dollar. The American dollar is as good as gold in a vast sea of risky black-swan currencies, and that includes China’s yuan. Have faith, the almighty dollar will continue strong. Bet on ETFs, futures, the index.
  • 9. Rental apartments. The American dream of homeownership is a nightmare thanks to a depressed housing market. REITs are overpriced. Rental properties are looking real attractive.
  • 10. North American energy. America has a new national policy: Reduce dependency on foreign oil. And since there’s never enough, the future for American energy is bright.
  • Want more? Read Shilling’s “The Age of Deleveraging.” He has detailed lists of buys and sells in many sectors: Health care’s 16% of GDP. Going up. Medical office buildings solid. Food and other consumer staples. You gotta eat, wash clothes. Also small luxuries that folks indulge no matter what. And more. Check out his book:
  • “Some of these are already unfolding. Others may do so only in future years.” Either way, Shilling’s lists are guaranteed to “help you prepare for the investment climate over the next decade.” Buy it. Read it. Whether bull or bear, optimist or pessimist, “The Age of Deleveraging” is essential if you want to be prepared for a volatile, risky, dangerous 2011-2020 decade dead ahead.


by erectusplus at 8:35 PM |

0 Comments:

Post a Comment

<< Home