| | Stimulating Economic News
I don't know how closely you all have been following the news on the economic stimulus plan that the president and Democratic members of congress have been concocting (Oh yeah, I think they allowed the Republicans to sit in and watch the process too.) But as the government is winding up its arm getting ready to throw obscene amounts of money at the problem, economists seem to be unanimous in detailing the futility of the move (http://cato.org/fiscalreality), siting history to back up their claims.
Economist Harry S. Dent Jr., author of "The Great Depression Ahead", was on Fox yesterday. Apparently, he has successfully predicted major economic trends over the past few decades. He predicted the 1990s economic boom, he predicted the down turn of the Japanese economy "way in advance" and has been forecasting another Great Depression for the US. He said the current situation is not due solely to the collapse of the banks but reflects the retirement of the big-spending Baby Boomers from the work force. (If you want more details, watch the Doom and Gloomer video in the business section on Fox News.)
Anyway, he said that at best this stimulus will last through the next year and is really just going to make things more comfortable as they go down, but won't and can't stop what's coming.
SO, his predictions are as follows. Three to six months into this year, there will be a bump in the stock market lasting until late 2009 or as far as early 2010. The DOW is currently at about 8000 and could go up to 10000 or even 11000 and then fall to about 3800. So, he recommended selling off your stocks and 401Ks during that bump period and then holding on to the cash which will then increase in value during the subsequent depression period. He also recommended holding off until 2012 or 2013 for people thinking about buying a house because real-estate will come down to year 200 prices, about half what it is now.
I'm not sure how the holding onto cash part will really stand up to the out-of-control amounts of money the US is currently printing, according to Glenn Beck (you can see the video on Fox News as well). It looks like the value of the US dollar is poised to PLUMMET LIKE MAD! So that's kind of frightening. Maybe it's best to just buy and hold on to gold.
Meanwhile, on this side of the ocean, the yen is the only currency which is not dropping in value. In fact it's being invested in like gold, which baffles my business class students since Japan has no resources of its own, no agriculture and no military. The wealth in Japan comes from its factories and exports, which are going to become too expensive for other countries to purchase if things keep up as they are. Sony, Toyota and Panasonic are all in the read and Japanese economists are predicting not only more layoffs, but also a major drop in prices in Japan (by up to 70%), which I don't quite understand.
All this to say, it's an interesting world and it seems like the world is on the brink of something. If I had enough money or assets to make it worthwhile, I think I'd follow Dent's advice, since he's got a strong record of being right in these things. Anyway, I just found this all interesting and thought I'd pass it on for you all. If you have anything to add or correct in this or have any comments, please let me know!
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| | Posted 1/30/2009 4:13 PM - 17 Views - 2 eProps - 1 Comment
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