So far the economic storm which crashes the markets has yet to appear. Yet the conditions are easy to discern. This means that the STORM is coming and my bet is 2024...prior to the election of November 5. This event will likely favor Trump over Biden (but the margin may be close). If Kennedy gains some traction the election could end up in the House and this could destroy all the consensus conclusions. No-one knows what could happen as our citizens are confused and they change their preferences daily as events change. As of today, Donald Trump appears to be the nominee who has the most traction. But anything could happen between now and November.
The financial storm (which Buffet/Trump perceive) could change everything in a moments notice. Voters view the economy as KEY to their vote. Biden seems to be leading as of today but this lead is ephemeral. My sense is that Biden's economic policies will bring us the coming STORM. In reality, however, it is the FED which is behind all this chaos. Let's review some factors that will influence this STORM:
1. Interest rates are key. The past 14 months have resulted in mortgage rates going from 2% to 7.5%. This has caused an affordability issue for the vast number of buyers. Most first time buyers can not afford the payments which result from a typical residential mortgage. This means less buyers in the marketplace. At some point this will cause prices to decline and many borrowers to default on their existing mortgage obligations.
2. This same situation will affect the commercial real estate markets. Higher interest rates cause 'values' to decline and eventually borrowers (with non-recourse loans) to default. The lending banks will get a flood of new properties (returned) and much lower values. This could lead to a domino effect in these markets. Personally, I expect this domino event to start in 2024. Our Fed is the cause and most know that this institution is behind all this financial turmoil.
3. Warren Buffet has 20% of his portfolio in CASH as of today. Warren has some $167 billion in cash and this represents some 20% of his total investment portfolio. Warren says that a STORM is coming. If anyone knows our situation it is Buffet.
4. Donald Trump is likely (as of today) to be our next President and he says that Biden's strong dollar policy is killing our economy. The Donald wants lower interest rates and a weak dollar (so exports can grow). This mindset can not work in today's bubble financial world IMO. Inflation and soon mass deflation will produce a greater depression for the American economy. We may get lower interest rates but 'values' of real estate and other durable assets will be a greater problem. America's DEBT will reach unsupportable levels if Trump gets elected. We live with a HOUSE of CARDS!
5. As I write the stock markets continue to go UP and UP (with brief pauses). This is pure manipulation by our Plunge Protection Team at the Fed. Our PE ratios are now at historic levels and this means the stock market BUBBLE is about to burst. This will happen some time prior to the election of 2024 IMO. It may happen next week. The Total Solar Eclipse is still my messenger which SCREAMS that America's Judgment Day is coming. My sense is that this will start in 2024 and most likely prior to November 5.
6. The number of listings has increased in my area by 50% since one year prior. This means that sales are slowing and demand is drying up. This trend will continue and the breaking point is surely this year (2024). I can not envision this situation continuing into 2025. There is a LAG in the markets but this lag is now reaching 24 months. This means that a breaking point is very near. Watch the events in America as we will most likely LEAD the planet into this greater financial STORM.
7. No one can forecast any of these events precisely (to the day, week, or month). But the general SEASON is here and the pointers POINT to a STORM starting in 2024. Both Warren Buffet and Donald Trump do comprehend the DIRE situation for America. But neither has a solution. My view is that we need a NEW MODEL for the planet. Keynesian debt economics is OVER. It has been 90 years in the making. FDR started this MODEL in 1934. The model was flawed from the beginning. Most economists were aware of the unlimited DEBT issue (which this model produces). This would create an END POINT for this model. The end point is NOW (2024)!
The fireworks should start prior to November 5 (America's election day). I will be voting for a NEW MODEL for our planet. I will write in my Higher Power for King. I can not envision any man centered solution given the nature of our problems. War and financial chaos has arrived in spades for our planet. This points to an END POINT (and the Total Solar Eclipse was the harbinger IMO). God rules in the affairs of men! Think for yourself on all these issues.
I am: Donald B. Swenson, Economist/Philosopher, http://kingdomecon.wordpress.com. Also, donaldswenson.blogspot.com.
No comments:
Post a Comment