Friday, February 26, 2010

Prechter: Biggest Bubble in History

I'm fully aware of the doom that is being put forth in this video, its not my intention to scare, simply to show some other viewpoints. I'm cloudy as to Prechter's actual record, he defends it while his detractors look at him the way I look at Jim Cramer (as a loon). Regardless, much of what he is saying makes sense. While a year ago I was a staunch believer that we were in for major inflation (which I do believe will happen at some point) it is now entirely possible that deflation will be the order of the day. How else could one explain Bernanke's continued program of zero interest rates during an economic recovery. Either we are recovering and rates needs to be raised or Bernanke doesn't believe we are recovering, but won't say that publicly - thus the zero interest rates.

Combine this with the coming wave of foreclosure's from Option ARM's, commercial real estate write downs, sovereign and municipal defaults and you get a recipe for a bunker mentality and deflation (which actually might be good, but Bernanke won't allow it).

All I'm saying is that two years ago I would have dismissed this guy as a crank, today I don't. It doesn't mean I buy into what he says as if its gospel, but no longer do I dismiss him outright. Neither should you.

Scott Dauenhauer CFP, MSFP, AIF