"Trader Vic's" 5 Frightening Market Predictions
1. The U.S. is going into recession.
This is being entirely caused by the woefully misguided fiscal policies of the Obama administration. Their anti-business, socialist agenda is killing the "Golden Goose" (i.e. Capitalism). Raising the costs for small and big business via tax hikes, Obamacare, and massive regulation is in effect causing a capital "strike" by entrepreneurs. As a result, GDP is going to decline.
2. The EU, as it is currently structured, will end.
The economies of Greece, Spain and Portugal cannot survive this ideology of their avowed socialist governments. They are running "out of other people's money."
3. Gold will continue its long term uptrend.
The annualized increase in the price of gold since 1971 (when the U.S. went off the international gold standard) is about the same as the world money supply growth rate. World money supply is about $100 trillion, and was estimated at $3 trillion in 1970. The compound increase is 8.93% for money supply and gold 9.61% estimated.
The United States will be forced into printing ever increasing amounts of paper money to stop deflation, causing recession to become hyperinflation.
The government's inevitable answer to economic decline will be printing paper money, borrowing and spending, and devaluing the dollar. This will lead to a great deal of inflation.
5. Unimaginable losses in bonds (and stocks).
The one true bubble in the world is debt. The Fed has caused the Mother (and Father) of all economic distortions, by keeping short term interest rates at zero for the last 35 months (!) and at the August meeting saying they will remain there for another two years.
In addition "QE1", "QE2" and "Operation Twist" which involves buying long term bonds (and other junk debt e.g. mortgage- backed securities) will cause great government losses when interest rates eventually rise.
So, what can be done? Here are a handful of key changes needed to solve America's current problems.
1- End Obamacare once and for all. Allow free market insurance and tort reform instead.
2- Lower capital gains taxes on new investments to zero.
3- Freeze government spending for 5 years across the board, exception of interest payments.
4- Institute term limits.