Monday, June 2, 2014

4 Things Doom-and-Gloomers got Totally Wrong

This article from the marketwatch.com  is about failed doom and gloom predictions.

Its well worth reading and although some of the content should be taken with a grain of salt (or two) it is true that some people just love fear mongering. The article mentions something I’ve written about many times before: Fear sells.

1) The economy and stock market will crash.
Even though there was clearly a serious economic crisis, the U.S. economy didn’t collapse as many predicted or some maybe even hoped for. Can it happen? Lots of things can happen eventually. Is it likely? Nope. The economy seems to collapse in Argentina every decade or so, other developing countries have similar problems, but its not that likely to see the same thing happen in the world’s most powerful country and anyone that spends his entire adult life predicting the end of the world every five years due to an American financial meltdown is either a lunatic or an unscrupulous money grabber. 

2)The Euro will Collapse, along with the EU.
Again, can it happen? Sure, and some politicians grab plenty of votes with their anti EU stance, along with their poorly hidden fascist and racist agenda. Likely? No. In a world with countries such as USA, China and Russia, European countries can only be a strong enough force if they stay together. The EU and the Euro may not be perfect but it does make those within the union stronger than they would be standing alone.  Countries that needed help such as Ireland are slowly getting back on their feet and the Euro isn’t likely to go away any time soon.

3) Gold will hit $5,000 an ounce.
As gold and silver “lose” value those that “invested” in it speculating are going nuts. “I’m losing money!”. Well, it depends. The gold and silver you have are still there, and if there is an economic collapse, even a big scare or crisis the price will no doubt go up, but the virtue of precious metals isn’t making people rich but somewhat retaining its purchasing power and value as centuries go by. The only difference between silver eagles at 40 bucks and the same coin at $20 should be that you can now buy two of them a month if that was the budget you had in mind for it. 

4) The U.S. will suffer Zimbabwe-like hyperinflation.
Given that U.S. is nothing like Zimbabwe (or Argentina for that matter) its unlikely that you’ll wake up one day and see prices triple, the USD losing 70% of its value over night. Having said that I do believe that inflation is very real, and while a sudden collapse isn’t likely because hyperinflation isn’t likely either, we are seeing inflation rise and some very clear attempts made to hide it. What this basically means is that life gets more expensive, the same amount of labor gets you less goods and services and as time goes by most people are forced to live in slightly worse conditions. This slow decay of quality of living does exist and we can see it, but it sure isn’t the hyperinflation (or deflation) many doom worshiping prophets have predicted. 

People, real-world survivalism isn’t about fear mongering. Having gone through what lots of self-claimed experts seem to fear (or maybe look forward to) and only guess or speculate about, I can tell you that so as to get by when things get that bad you don’t need to be some pessimistic doomer. Its actually the other way around, you need to be creative, resourceful and a positive thinker in general. You need to stay optimistic because if not you simply wont make it emotionally speaking when everything is in fact going to hell all around you. You wont make it in terms of financial survival when job unemployment sky rockets, inflation is killing you day by day and you need to make it work, may that be at your place or employment or in the business you run yourself.  Its not about seeing the glass of water half full, its about having less than 1/10 of the glass full and still say “Hey, that’s not bad, its all I need. I’ll make it work!”.



Greek Caste System said...

"Sure, and some politicians grab plenty of votes with their anti EU stance, along with their poorly hidden fascist and racist agenda."

Xenophobia-Europhobia-Islamophobia-Homophobia: The EU ruling elites, like the KGB, want us to believe that anybody who argues with thier polcies, suffer from some kind of mental disorder.

As for the article, I agree with (1),(3),(4), disagree with (2): In 1988 *nobody* predicted the collapse of USSR, which was a state, not a union of sovereign states like the EU.
*Nobody* thought that the mere deep dissatifaction of the peoples under communist rule, had more power that 6000 nuclear heads, 10.000 tanks and 24/7 propaganda.
So, yes, black swan events can happen and for some people are wellcomed.

Burke said...

Anyone who thinks the US is the country it was a few decades ago is clueless. It's going the way of Argentina, just on a different timescale.

Don Williams said...

1)I am inclined to agree with Burke -- slow , arterial bleeding from a cut wrist is not a dramatic as a sucking chest wound from a gunshot, but it is just as certain.

2) The US recovered from the 2008 crisis but at the cost of incurring $9 Trillion in additional debt within just 5 years. The economic version of several hefty defibrillator shocks to the heart and an IV drip.

And the Fed is kinda quiet about what happens if they try to turn the IV drip off.

3) The London Financial Times is the newspaper of the global elite -- it makes the Wall Street Journal and New York Times look like pamphlets that the commies hand out to the rabble.

Here is what Timothy Geithner told FT's Martin Wolf in a recent interview:

"High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/2/2e13cb90-dabb-11e3-8273-00144feabdc0.html#ixzz33gNM5eMw

“We had a 50- to 70-year quiet period in American finance. It bred this vast degree of excessive confidence. And those conditions allowed two dangerous things to happen. One was a long period of rapid growth in debt relative to income. The second thing was that in the US most of that risk ended up outside the core of the banking system.”

"High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/2/2e13cb90-dabb-11e3-8273-00144feabdc0.html#ixzz33gNowavM

“the reaction was late in our crisis mostly because of the limits on the tools we had going into it, because we didn’t have the authority, until the panic scared people to death, to do what we needed to do. You also have this fog of diagnosis at the beginning: you don’t know if the shock is systemic. The optimal response should be gradual initially because you learn something from that and you don’t want to be prematurely generous.”

Re a question from Martin Wolf about why Obama did not fight for a bigger stimulus package, Geithner responded:

“Look, we thought we were over the abyss. We didn’t want to put ourselves in the position where we were fighting a protracted war with uncertain outcome.”

Ref: http://www.ft.com/intl/cms/s/2/2e13cb90-dabb-11e3-8273-00144feabdc0.html#axzz33gJB8BwD

I have not read Geithner's book "Stress Test" yet but plan to do so. Of course, the difficulty lies in determining whether Geithner's inflates the danger in order to justify handing campaign donors massive amounts of our tax money from the US Treasury in the guise of "public safety".

TampaMark said...

Fernando, I think you are operating on a very short term view. Every sign is there for economic crash, hyperinflation and soaring gold prices. Liebig’s Law of the Minimum applies, take out one necessary ingredient and the whole suffers to that amount. We have extended ourselves beyond our means to support civilization as we know it and are not prepared for it.

Case in point, I live in the Tampa Bay/St. Petersburg area and we have not had a hurricane in 70+ years. This does not mean we won't, we live in the sub tropics and this is hurricane country. I live with that and am prepared for it just like earth quakes in my native Southern California or tornados in my fathers time in Kansas. Just because it hasn't happened yet does not mean that the likelihood has been reduced or eliminated. The conditions still exist for catastrophe.

ronym said...

there are many flaw in this article :
1. stock and currency crash will happened not only because it is possible, but because of one group of people want it ( they will get lot of profit because of market crashs crash )
what is the trigger ?... interest rate...to trigger derivative bubble burst
remember 1929 market crash ?
by the way, it's done by the same group of people
2. if USA are goes down, so the other countries, including EU
because of chain reaction and economic interconnection
3. gold will hit $5000 it's possible. not because of supply and demand but because of the losing power ( purchasing power ) of US Dollar compared to food, oil, etc
if gold hit $5000 and silver $250,
and house / property price are flat ( or maybe down 20-30% )
it's like buying a house with 50% discount with gold / silver
lot of people referring Marc Faber are pessimistic because of Doom and Gloom "prediction" he make. but a lot of people are forget about history and "economic cycle"
which is repeating himself over and over like a wave
Martin Armstrong even able to predict when it will happened
( the exact date ). because he have economic confidence model that he build from lot of economic data

cryingfreeman said...

@ Greek Caste System, re "nobody predicting collapse of USSR in 1988, I have in the book case beside my computer desk a copy of KGB defector Anatoly Golystin's 1984 book, New Lies For Old, in which, wait for it... he predicted the collapse of the USSR. Only thing is, he said they would stage it as part of a long term plan of deception against the West.