One Forecaster's Prediction: The Economy Will Crash This Spring
Somewhere between March and June of this year, look for a worldwide economic downturn that will cause huge losses in stock exchanges around the globe. That prediction comes from Gerald Celente, who heads the Trends Research Institute.
For more than 25 years, Celente has been making predictions about everything from the price of gold to the market for organic foods, to geopolitical upheavals. He does it by analyzing current trends and forecasting where they will lead. Sometimes these forecasts are right on the mark, sometimes they're not, but they're always interesting and thought-provoking, as much for what they say about our world as it is as they do about the future.
Here are some of his predictions for the coming year:
1. World economies spiral in spring or early summer.
Don't blame Celente if he can't get the timing exactly right, he says. "You don't know what they're doing behind the scenes." The Federal Reserve had been buying some $85 million a month in bonds and mortgage-backed securities to stabilize the U.S. economy since the economic crisis began in 2008, he notes, and now is beginning to taper off those purchases. It's been holding interest rates at or near zero, he adds, as have other central banks, but that can't last forever. "It's a worldwide phenomenon that has never happened before, where so many central banks have lowered interest rates to such low levels," he says. The result, here and elsewhere, is a surge in the stock market but a tepid recovery. "When the central bank buys fewer bonds, interest rates will go up and the economy will go down," he says. "And this is global."
How can a small business prepare in case Celente is right? With a healthy dose of skepticism, he says. "Don't get caught up in the hype, look at the realities," he says. "Don't get caught up in financial exuberance that looks great in the stock market but isn't showing up in the rest of the country."
2. The Chinese buy everything.
"The Chinese global buying binge, now in its early growth stage, will noticeably accelerate in 2014," Celente predicts, noting that coal mines in Zambia, Borscht Belt resorts in New York State, factories in Italy, and farms in Ukraine, are just some of the Chinese projects currently in development around the world.
And where the Chinese buy, they bring in their compatriots, he notes. For instance, Chinese billionaire Guo Guangchang bought 1 Chase Plaza in New York this past fall, and though it's traditionally held headquarters of American banks, his plan is to bring in Chinese companies as tenants. The result, Celente says, will be "global Chinatowns."
3. Nobody likes their government.
In 2013, Celente says polls showed that, "a majority of citizens registered levels of scorn and ridicule unparalleled in modern America." But it's not just us. All over the world, he says, "People are awakening to how corrupt, inept, and incompetent their political systems are."
That's why, he adds, protesters are taking to the streets in places like Brazil and Thailand. "In Italy, the police put down their shields and stopped pushing back the protesters," he adds.
Look for less of this civil unrest in the United States, he adds, in part because American cities are not as concentrated and conducive to street protests as those in other parts of the world. The end result will be a lot of manufacturing work returning the U.S., a trend we've already begun to see. "Made in America, made locally, that's where the strength will be," he predicts. "That will be the fallout from all this."
4. The working poor stand up for themselves.
"Nearly half of the requests for emergency assistance to stave off hunger or homelessness come from people with full-time jobs," Celente notes. "Nearly 90 percent of the jobs that have been created in the recovery are part time or don't pay a living wage."
The fast food strikes seen in 2013 are the tip of the iceberg, he adds, with more to come as people struggle in what he terms our "plantation economy." These days, he adds, many of those working poor have college educations. "Kids get out of college with $60,000 to $70,000 in debt and wind up working at Whole Foods," he says.
Apparently the Democratic Party has observed the same trend: It plans to make raising the minimum wage a key priority for 2014.
5. Materialism is bad. Altruism is good.
"Several burgeoning trends identified for 2014 will coalesce in a welcome trend toward selfless concern for the wellbeing of others and an interest in the common good," Celente predicts.
It's easy to see that things like the tiny house movement, and the movement toward sharing resources (think Zipcar) could move people toward owning less and giving away more, especially since, as he notes, the Internet makes giving easier than ever. This prediction could be wishful thinking on his part. But wouldn't it be nice if it really happened?
Like this post? Sign up here for Minda's weekly email and you'll never miss her columns.