So the question is whether we are going to have the “biggest crash of your life (Nasdaq -92%, BTC -95%) by mid-June”.
To answer this question, I suggest you analyze the words of the guy in question and see if it holds up.
By the way, I kinda urge you to read the article on ‘credit crunch’, they are related and it will help you put Harry’s grim predictions into perspective.
Yes, Harry Dent, “economist, founder of HS Dent Investment Management and author of several bestselling books, warned in an interview with David Lin published Friday that the biggest crash of our lifetime “is going to happen between now and about mid-June”.
He was particularly alarmist, judging that “people will know that this is not a major correction, but a major crash, a crash that you have never seen in your lifetime”predicting that it will happen in about 2 months.
“We will not see this again. We won’t see a bubble economy, our kids probably won’t even see a bubble economy in decades and decades… It only happens once in a lifetime at most,” he said. explain.
Well that’s it normally you tremble with fear.
You are overcome by dread.
Your legs are shaking.
And your heritage bristles.
Let’s look at the elements he submits to our sagacity to support his forecast.
“According to him, the biggest crash that is brewing is the one that should have taken place in 2008-2009, noting that the S&P 500 had fallen by 57% at the time. “About a year and a half into this crash, central banks stepped in and started printing money at unprecedented rates…So this recession hasn’t really succeeded in eliminating the biggest bubble in the world. indebtedness of history »explained Mr. Dent”.
What he says there is true.
Undeniable.
In 2008, the world should have collapsed and the economy would have been swept away by a huge recession that the central banks did not want. They changed the rules of the game in the middle of the game and they flooded the planet with money. Low or negative rates, and open bar liquidity for everyone.
As a result, the “creative destruction” did not take place and the bubbles started again to inflate even more until today.
Dent expects an 86% collapse for the S&P 500 and 92% for the Nasdaq.
“However, he estimated that “this is only the first wave of decline”, and explained that “we have already started the next wave of decline which could bring the Nasdaq up to 8,000”, and predicting that “ that’s when people will realize that this isn’t a big fix, but a major crash, a crash you’ve never seen in your lifetime and even millennials won’t see a bigger crash than this”.
The economist also warned that “we are about to reach the third wave”, stressing that he does not believe that the Federal Reserve will be able to stop it.
He indeed explained that the Federal Reserve has stimulated the economy too much and that it must now “tighten sharply”, while “the underlying economy has been weak since 2008 and will only strengthen in a few years”, a fatally negative cocktail for the economy”.
Credit crunch!
The essence of a bubble economy is to be fed and carried by the easy recourse to abundant and cheap credit.
When you withdraw abundant and cheap credit, you create a major credit crunch and therefore burst the bubbles that have been building up for years now.
The question now is whether what Dent says can produce an 86% drop for the S&P and 92% for the Nasdaq.
Is it possible ?
Yes. Finally in theory.
But the destruction of value that this would entail would undoubtedly prompt central banks to intervene because such falls in valuation would bring the wider financial system to its knees, not to mention that it would be the destruction of Americans’ funded pensions.
We can therefore reasonably tell ourselves that at a -50% drop in the stock or real estate markets, the FED like the ECB would start to lower rates and stimulate the economy again, which would then be in the doldrums between deflation and terrible recession. .
Let’s say that I find this forecast excessive and that for the moment it is not my central scenario.
Afterwards, if Taiwan is invaded by China, if globalization is brutally cut off by subjecting China to the same sanctions as Russia,then all the values of globalization will obviously fall by at least 50% by losing the Chinese market.
For this dark scenario to materialize, in my view, several other factors would be needed to multiply the negative effects of rate hikes and the credit crunch that central banks can still steer by ceasing rate hikes and then lowering if necessary.
A good correction yes.
A crash even with -30% or -40% is possible (and that would probably be a good entry point into the stock markets).
At this stage, a 90% collapse in prices is not impossible, but not the most likely scenario.
So watch out.
It is already too late, but all is not lost.
Prepare yourselves !