Peter Costa, a regular on CNBC, discusses his strategy for stocks going forward and the reasons why he believes that current stock markets levels will not last.
I think the recovery is still a long way off. I think we still have a lot of things to go through. You have unemployment, you have the US government that’s going to be totally bankrupt in a year and a half when they have to pay all these bills. Things are not looking all the great for me.
It seems that Peter Costa’s forecast for a US government bankruptcy are right in line with Bob Chapman’s recent forecast where he called for a Total Collapse Between mid-2011 and mid-2012.
Watch Peter Costa on CNBC:
Hat tip Zero Hedge
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Hey buddy, the federal government IS bankrupt. What do you call almost $100 trillion in federal deficit and UNFUNDED liabilities such as the social security and medicare, when the already grossly misreported GDP is only $13 trillion?
So true Chris! We are insolvent NOW, not a year and a half from now!
The benefit Uncle Sam has is that he can keep pretending to not be broke because he has the presses.
I am actually surprised that China, Japan, et al have not called us out on that. I guess they know what’s going on and they are getting all their ducks in a row.
Something about how the Soviet Union collapsed back in the 80’s is very familiar to our current situation.
(ps… I am not suggesting we are red commies like them, but they did go broke, and it led to a serious meltdown in that country and they have yet to recover)
I realize we are NOT Japan, and we have basically no savings, but consider the following. Â Our debt as fraction of GDP is only about 80-90%, while that of Japan is OVER 200% already, and headed for approx 250% by 2014! Â I don’t know what fraction of their govt debt is funded internally vs by foreigners, but I’m sure their internal funding is a lot higher than ours.
It is crazy though, to think that they are at 2-3x the debt as % of GDP that we are at… and they’re not collapsing. Â I guess it’s all about faith in a particular fiat currency.
I am however, reminded of George Soros’ comments on the subject, and I’m paraphrasing, “the US dollar is the worst currency out there, except for all the rest.”
There’s a lot of truth in that apparently… at least for the time being.
Patrick, you make an interesting point on Japan. More often than not, I hear that Japan is a good place to invest. But honestly, I am not convinced because of the reasons you cited above.
Here is an article I read the other day from HS Dent:
http://www.hsdent.com/blog/2009/11/04/is-japan-getting-closer-to-meltdown/
That article also has a cross link that eventually links you to “worry About Japan, Not America”:
http://www.ritholtz.com/blog/2009/11/ambrose-evans-pritchard-worry-about-japan-not-america/
These guys, nearly 2 decades later, are still in a world of hurt and it might get much worse because of their aging demographics and other factors.
I am actually a little surprised that the Yen is doing so well right now vs. the dollar. perhaps a temporary effect. I read recently (no link but i am sure you can find it if you haven’t read it yet) that the Japanese may intervene in their currency and weaken it against the dollar. Some say Yen 200:1 .. that would be a hell of a move for the dollar.
Whether we will see an effect in the price of gold (in terms of dollars) if this happens, though, is the real question. If the flight to safety has started, then gold will just continue to inch up, regardless of what the yen and dollar do against eachother.
Anyway, an interesting point you made and Japan is certainly a country to watch. Marc Faber likes Japan long-term. Harry Dent doesn’t. Me? I am not sure at all, so I will just stay away and focus on the stuff I understand, even if my understanding is somewhat limited.
Woa…there must of have been a disturbance in The Force that caused The Empire’s Stormtroopers to slip a bit today…
Two commentators on CNBC not completing touting the market??? Back-to-back?!??!
It’s usually Peter Schiff vs. a Dennis Kneale (gee, I miss him) drone of some sort.
What’s interesting to me is, after watching events unfold over the past few months, that seemingly as more and more people denounce this rally and say we’re due for a correction, the markets just continue upward as if lifted by a current of warm air. There doesn’t seem to be any stopping it.
I read many sources daily and the general timeline I’ve read for a correction or re-collapse is by Feb. at the LATEST next year. But still, after seeing all this, I seriously doubt reality will come back again, at least not for a long time.
I wonder if this thing won’t just go to the moon for a year or two (as much as it pains me to say since I’ve lost some $ on a few puts this year which really sounded good at the time, and also no reader here wants to read), which will really divorce Wall St. from Main St, particularly as unemployment continues to creep up and banks continue sitting on their money. After all, if the printing presses are now running at full force, and they can continue to hide how much market manipulation is going on, who’s to say they can’t get away with much much more of it?