Money manager Michael Pento thinks the global economy is terrible. So, will the Fed still raise rates soon? Pento contends, “The global currency situation will actually go into hyper-drive if the Fed follows through and goes on this protracted rate hiking campaign. Wall Street is a myriad and plethora of myths. . . . One myth that is out there today is the Federal Reserve may go and do a ‘one and done’ rate hike. Where has that ever been done before? Previous rate hikes have been about 300 basis points (or 3%). The last one was 425 basis points. . . . The Fed wants to be at 1.6% by the end of 2016. The only reason why they won’t get there, and I don’t think they ever will get there, is if the global economy continues to collapse. By the way, that is exactly what is happening. The global economy is imploding. Our clueless and feckless Federal Reserve is fighting inflation. . . . There is one area of inflation and that is asset prices. That’s where all the inflation has gone. The real battle is the global collapse of commodities. Commodity prices are at panic lows and even lower. We are having a global implosion of growth because China is no longer a sustainable communist regime.”
Pento also contends China is in financial trouble, and that means the rest of the world is in deep trouble too. Pento explains, “Global debt is up to $200 trillion. China’s debt alone, since 2007, is up 300%, but this kind of debt that they raised wasn’t debt they raised from the private sector. It came by government edict. What was this debt for? It was to build empty cities, to build airports without planes, to build bridges without cars. These are unproductive assets. This is why the debt to GDP ratio is not only skyrocketing in China, but it is skyrocketing all over the globe. That means Japan, Europe and, yes, even the United States. There is no delinking, and China is responsible for virtually all the global growth since the great recession in 2008, and now that demand is collapsing. That’s why you see Brazil, Russia, Japan, Europe, and Australia either in recession or growing with a 1% handle.”
On stocks, Pento warns, “The market is extremely overvalued. If revenue and earnings growth is negative, if global growth is falling, if U.S. growth is falling, if margin debt is at a record high and cash is at a record low, and the only thing we had going for the markets is trillions of dollars in QE and 0% interest rates, and now we are going to lose that. Why would anybody think the stock market is going to hold up very well? I think the stock market crashes, and I think it is going to be the same thing that happened in 2007. As the stock market goes, so goes housing and so goes the economy. It happens over and over again throughout history. It will never be more so true than today.”
Michael Pento also says the biggest problem facing the world is outlined in his book titled “The Coming Bond Market Collapse.” He calls it a “coming financial apocalypse” and tells readers how to “insulate themselves against the worst shocks.” To buy a copy click here. There is also free information and his past interviews on PentoPort.com.
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.