9 scenarios and all lead to stock plunge

This guy is MarketWatch's doomsday columnist but he has some worthwhile ideas and warnings here.

9 scenarios and all lead to stock plunge

Paul B Ferrel, Nov 4,

SAN LUIS OBISPO, Calif. (MarketWatch) — “Is the U.S. Condemned by History to Slow Growth?” asks Bloomberg BusinessWeek. Yes. But for traders and investors, it’s far worse than just bearish slow growth. Plan for no growth or zero growth.

Why? Wall Street, America and the world economy are in the early stages of a long era of “de-growth,” a reversal of economic growth and reduction in market growth as population growth adds new stresses on commodities resources, creates unrest, disasters and wars. Big problems ahead.


Reuters
Our nine economic scenarios all lead to a stock plunge.
Please listen: Earnings growth is in a long slowdown in all of the following nine scenarios. Economy down. Earnings down. Stocks down. Trading down. Focus on the long term, on history, look past the noise about elections and fiscal cliffs.

Why? This is an economic “perfect storm.” All nine scenarios end in bad news for all markets, spell danger for your future income, your family’s security. Start planning now.

1. 800-year growth trend: Back to pre-Industrial Revolution levels

Yes, BusinessWeek says America is condemned by history to slow growth. They open with an “IMF warning that global growth would slip below 2% in 2013.” Then a review of Richard Gordon’s provocative National Bureau of Economic Research study: “Is U.S. Economic Growth Over?”

Yes. History tells us for five long centuries before the 18th century, a “capita rate of just 0.2 percent per year.” Then, the Industrial Revolution. A few centuries as U.S. “growth shot up” to 2.5% by 1930. Driven by endless innovations: Steam engine. Railroads. Electricity. More. But “it’s been downhill since 1950, with annual growth averaging just 2.1 percent per capita through 2007.”

NBER’s Gordon warns: “If the U.S. continues on its current trajectory, by 2100 the world’s biggest economy will wind up back where it started, at 0.2 percent growth per annum.”

2. ‘Less Than Zero Growth:’ Long decade of decline: 2013-2022

Markets now totally irrational: Read economist Gary Shilling’s Forbes warning: The “Bad-News-Is-Good-News Effect Can’t Last, Expect Markets to Nose-Dive.” The bulls can’t hear, will get caught exposed.

Listen: “There’s a ‘grand disconnect’ currently going on in global markets. Suddenly weakening economies worldwide are driving optimism in markets.” Why? Global “dependency on monetary and fiscal bailouts.” Everyone wants more stimulus, more bailouts. “Conditions are so bad, they’re good.”

Dead ahead, a nosedive into Shilling’s prediction of a long decade of “less than zero growth,” high-stress chronic unemployment, accelerating global unrest, regional conflicts, higher Pentagon budgets,” because “much of the excesses and financial leverage built up in past decades, especially in the financial sector globally and among U.S consumers, remain to be worked off.”

Whether bull or bear, optimist or pessimist, you better prepare of the coming Age of Austerity.

3. ‘Hyper-Growth’ traders: New bubble repeats 2008 meltdown

This is a trader’s ultra short-term global reality: Their brains focus on “The Moment” like a New Age Guru meditating on the “Eternal Now.” Today’s closing prices, quarterly earnings, even annual returns may be of interest to Main Street investors. But as BusinessWeek once put it, 15 minutes is an “eternity” for traders.

Forbes tells the high-frequency traders brain narrows to the “20 milliseconds it can take quotes to travel from Chicago to Nasdaq’s market site in New Jersey.” Traders leave stuff like long-term global population growth up to some higher power. Unfortunately, the trader’s myopic view of the world will ultimately backfire, repeating the 2008 meltdown.

4. ‘Perpetual Growth:’ Economic theory now self-destructive fantasy

Perpetual Growth is the basic theory for all business economists in Wall Street banks, Corporate America, Big Oil, Billionaires, the Fed. Economic growth parallels population. Supply is infinite: The Chamber of Commerce CEO says the world has “1.4 trillion barrels of oil, enough to last at least 200 years,” natural gas for 120 years, coal for 450 years.” At least five times what we need.

These classical business economists ignore environmental economists as just liberals. But the real reason: stock profits would fall if corporations had to factor in the rising public costs of their damages to the environment.

Environmental economist Bill McKibben also knows the planet has a five-times supply of energy. But that’s the big problem. If we use more than 20% of the supply, we’ll be dumping so much excess carbon dioxide into the atmosphere we’ll soon kill the planet. Big Oil doesn’t care, warns McKibben: Big Oil is a “rogue industry, reckless like no other force on Earth ... Public Enemy No. 1 to the survival of our planetary civilization.” Big-Oil dismisses environmentalists as a left-wing anti-capitalist conspiracy plot.

5. Population Growth out of control: Planet can’t feed 10 billion

6. Gates, ‘Cap population growth at 8.3 billion:’ But still too many

7. ‘End World Poverty’ to end growth on our ‘Crowded Planet’

8. ‘De-Growth’ scenario: WorldWatch’s solution to global disasters

9. ‘War and Disaster scenarios:’ Bad endings are inevitable

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Warning to all you investors, the stage is set. The economic growth trajectory of the last 300 years is ending. You must take action, protect your family. A collapse can happen sooner than you think, spread fast, wide ... these nine scenarios are now a perfect storm.

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