Tech stocks took a little beating yesterday, sending the NASDAQ down slightly, even as the DOW was up. Such fluctuations usually cause a murmur. However the day-to-day roller coaster is really a poor indicator of overall health in the markets. A deeper look reveals a very ugly truth. Our entire economy is built on nothing but a series of failing bubbles. It’s only a matter of time before a chain-reaction ushers in a correction and chaos.
Jim Rogers, who called the Great Recession five years in advance and who took timely evasive actions in 2006, says the end of this year, 2017, or early 2018, will herald the next downturn. And he says it will be the worst in our lifetimes.
Blodget: And how big a crash could we be looking at?
Rogers: It’s going to be the worst in your lifetime.
Blodget: I’ve had some pretty big ones in my lifetime.
Rogers: It’s going to be the biggest in my lifetime, and I’m older than you. No, it’s going to be serious stuff.
We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one.
This is the longest or second-longest in recorded history, so it’s coming. And the next time it comes — you know, in 2008, we had a problem because of debt. Henry, the debt now — that debt is nothing compared to what’s happening now.
In 2008, the Chinese had a lot of money saved for a rainy day. It started raining. They started spending the money. Now even the Chinese have debt, and the debt is much higher. The federal reserves, the central bank in America, the balance sheet is up over five times since 2008.
It’s going to be the worst in your lifetime — my lifetime too. Be worried.
Blodget: I am worried.
Rogers: Good. Good.
Blodget: Can anybody rescue us?
Rogers: They will try. What’s going to happen is they’re going to raise interest rates some more. Then when things start going really bad, people are going to call and say, “You must save me. It’s Western civilization. It’s going to collapse.” And the Fed, who is made up of bureaucrats and politicians, will say, “Well, we better do something.” And they’ll try, but it won’t work. It’ll cause some rallies, but it won’t work this time.
Blodget: And we are in a situation where Western civilization already seems to be possibly collapsing, even with the market going up all the time. Often when you do have a financial calamity, you get huge turmoil in the political system. What happens politically if that happens?
Rogers: Well, that’s why I moved to Asia. My children speak Mandarin because of what’s coming.
You’re going to see governments fail. You’re going to see countries fail, this time around. Iceland failed last time. Other countries fail. You’re going to see more of that.
You’re going to see parties disappear. You’re going to see institutions that have been around for a long time — Lehman Brothers had been around over 150 years. Gone. Not even a memory for most people. You’re going to see a lot more of that next around, whether it’s museums or hospitals or universities or financial firms.
Rest assured that, right up until the very end, the base liars at the Federal Reserve and the habitual idiots in D.C. will maintain that: “things are fine, never been better, impossibly healthy.”
I’m hesitant to put a date stamp on this thing. However, I respect Roger’s expert opinions over my own foresight. But it is coming – we’re overdue and living in a financial fantasy world. When it comes, it will not be pretty. And this will probably be the one when the usual “rescue” gimmicks fail.
As for the starting point: I would suggest Venezuela or South Africa. Then again, as Rogers alludes, the watched pot never boils. Once it starts, there will be few safe havens. Are you also residing in Asia? Me neither.
The good theoretical news is that this crisis will present the opportunity for a total reset, a comprehensive solution to more than a century’s worth of economic problems. The odds of that, in most places that count, however, are rather slim. It’s far more likely that Westerners will endure a decade or two (or three) of painful stagnation followed by more of the same.
There are ways to personally prepare for some of this. You should be looking at them. And now. Looking at the TeeVee doesn’t count.
You’ve been warned. Again.