It’s coming apart according to Harry Dent, founder of economic research and forecasting company HS Dent. His “calculated guesses” say it’s now time to get out of stocks. Dent lays out a convincing case that things are about to fall apart in the video from June 19th below. He sees a rising chance of a great crash ahead that they’ve predicting for a couple of years.
Commenting on the recent Greek elections, Dent said it’s not a done deal yet. There will be a showdown as the Greeks start to run out of cash, according to Dent.
The debt situation in Europe is rapidly getting worse, Dent said. He added that the $1.3 trillion LTRO (“Europe’s QE2″) gave investors the impression the crash would be put off, but it was surprising how quickly Europe got back into crisis. It shows the stimulus is now becoming impotent, according to Dent.
Dent goes on to discuss how government manipulation of interest rates, the economy, and lending practices has created bubbles.
Dent said it looked like stock markets worldwide peaked in March and we’re on the first wave down of a broader crash that is going to get very severe in 2013 and bottom somewhere in 2014. He added the bond market could begin collapsing later this summer.
Dent explains the mechanisms employed in Europe to prevent a run on the banks. He discusses the housing bubble in Spain, which by his estimation was twice as bad as the bubble in the U. S., and is collapsing partly because of demographics.
Dent said the belief the Europeans can turn things around for the southern countries is psychological denial. Dent stated, “this is a bad poker hand and these strong governments should have folded a long time ago.”
SMA Comment: Dent is a great salesman and fear monger for the doomsday scenario in which equity markets worldwide drop 50-80%, but he appears to be unable to capitalize on his prescient observations. The recent shutdown of his Dent Tactical ETF (former symbol DENT) demonstrates that putting his insight into actionable trades is problematic.
Below is a Nightly Business Report interview with Harry Dent on June 22, 2012 where he actually advises shorting the S&P 500: