TOM HUDSON: Today’s settlement over bad foreclosure documents, nor a deal to bail
out Greece changed the coming slowdown in consumer spending, leading to a
failing market and a market crash. That’s the Harry Dent forecast. He is
with us here tonight in Orlando, president of HS Dent, economic research,
author of “The Great Crash Ahead.” It’s nice to see you again, Harry.
HARRY DENT, PRESIDENT, HS DENT: Nice to be back, Tom.
HUDSON: You’re not bruised up here despite forecasting a great crash
at the Money Show. In January you were looking for a 30 to 50 percent move
in the markets before September. You’ve gotten good jobs numbers,
manufacturing is coming back. Are you wrong or just early?
DENT: Well, you know, back when we talked to you last and before
that, we were looking for the fourth quarter and first quarter to be
stronger than expected in economy. That happened. We were expecting
inflation to stay near 4 percent and we were thinking well, U.S. Treasury
bonds will go up in yield 3 to 4 percent. And that would make it harder for
the Fed to stimulate with the QE3. What we have seen is the flight from
Europe, European bonds, U.S. has pushed our bonds down to ultra low yield
which says the world is saying you know what. QE3 is going to happen.
HUDSON: You expect it to happen. You mean the Federal Reserve will
launch a third round of Treasury buying, bond buying in order to help goose
the economy further.
DENT: We think with Europe slowing, baby boomers are going from a
plateau phase in spending since 2007 to a decline in the next two years and
beyond and everything else happening that our economy I think is going to
slow again. QE2 is going to wear off. That’s about a year lag. But the Fed
can step in now and come in with a strong QE3 and thwart that again.
HUDSON: So Harry with that forecast, if the Federal Reserve launches
another stimulus effort, is your forecast then for a fall in the autumn or
in the fourth quarter or on into 2013?
DENT: I think we’re going to see stocks and the economy slow down in
the second quarter, maybe third quarter at the latest. Stocks are going
start to go down again, like they have in the past. The Fed is probably
going to step in again very strong. Stocks will come back. The economy on
a lag because again it’s about a one-year lag in all this quantitative
HUDSON: That’s all happening this spring. We move into the sell-off.
DENT: So I think we get a mini-crash in 2012 instead of a major
HUDSON: Mini-crash is 20 percent, 25.
DENT: Like 20 percent or so which is enough to get out of the way,
but QE3 will wear off even faster because the baby boomers are aging.
They’re going to spending less. There’s nothing you can do to stop 92
million baby boomers from saving money instead of borrowing and spending.
HUDSON: The great crash is how much, 50 percent.
DENT: I think it’s, I think market, I think it’s 50 to 70 percent.
It’s going to be bigger than the last crash.
HUDSON: And 2013.
DENT: 2013 to 14, possibly 2012 starting but I think it’s just going
to start here and we’re going see more down the road.
HUDSON: Is that by gold, by water, by —
DENT: No, it’s not by gold. I want guns, shotgun shells and scotch
HUDSON: Is that right?
DENT: Because that’s what people will trade for, not gold. This is a
deflationary crisis. We got $42 trillion in private debt, way greater than
the public debt at $15 trillion that will delever in the next downturn and
that will cause dollars to be destroyed, deflation in prices and the U.S.
dollar will go up and prices will go down. Gold is an inflation hedge.
HUDSON: You don’t want to be — optimistic bunch here at the money
show. Good luck getting out tonight with that forecast. Harry Dent here
with us in Orlando. He’s the author of “The Great Crash.”