You're watching...
Harry Dent tells Tom that baby boomers will be staying in the workforce longer because of the added time it will take to build up their retirement fun...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Well some economists are cautiously optimistic about the direction of the US economy but one forecaster sees a catastrophe coming our way.
Harry Dent accurately predicted the stock market crash of two thousand eighties it to crash the markets in trouble again could crash later this year joining me now.
Is economic forecaster in the author.
The great -- hedge strategies for a world turned upside down Harry Dent and Perry look -- we just talked to while art Laffer he's concerned about.
The debt but wasn't.
Our my impression has been -- interpreted -- -- didn't seem like he was overly concerned are you.
Yeah I am we had 42 trillion private that.
Thirteen trillion in government debt at the top of the bubble in 2008.
We do you averaged four trillion in the private sector which the government stop -- all this stimulus but we've added another seven trillion in government that we are more in debt.
That we were already more -- -- in time in history you can't carry these sort of debt loads.
It's four times GDP it like took up the statistics for Spain in the US and took off the -- she couldn't tell the difference.
Debt percentage of GDP total in private and government debt -- percentage of GDP were off the charts only Japan's worse than we are.
-- and see you you are doing what others have done this well not all economists talk about this but I'm glad you brought this up because.
You're you everybody talked about the sixteen trillion you're using a much bigger number how do you get there.
Yeah yeah I mean up financial sector -- seventeen trillion of pop -- consumer debt fourteen trillion most of it mortgages.
Eleven trillion and corporate debt.
And then you know thirteen trillion -- government that I mean that's the total debt.
In most developed countries in Europe United States -- that are the private debt is three times as much as the government debt and believe it or not.
In the last boom.
Private debt group two point seven times as -- -- GDP government debt grew 2.4 times so private debt bubbled up even more.
Than the biggest government debt bubble in history so debt is the biggest problem we have.
The biggest problem -- -- that is the demographic clip baby boomers have peaked in their spending after 2007 as we predicted twenty years ago.
Every year aging baby boomers are gonna spend less they still dominate the workforce until the next generation and has more.
And civilian be fighting this demographic -- -- -- debt loads continue to be -- they have no easy way out of this.
But at -- and I know and I love your demographic numbers I think you're you're right on but the thing that makes.
Does -- throw you a little bit of his view is the fact that I saw a story there earlier this week about.
As 75 year olds are working longer people that are working longer they ever have 75 and above -- -- throw you off.
When now this is not for this happen in the great depression and we actually just how we got social security -- -- late thirty it was to get old people to move -- the workforce and let the young people went.
So young people are gonna and -- later whose jobs -- gonna be harder for them in baby boomers who have been retiring at age 63 on average.
You are gonna see them stay in the work force later but here's the thing Tom.
The key thing that happens -- understand it's not retirement it's the peak and spending around your family cycle.
Raising the kids educating them clothing them feeding them housing everything.
That's what peeks at age 46 and declines -- -- like time.
People will save more for retirement and even if they retire later.
It's because they're gonna have to work longer to meet their retirement goals than go to war because of a bad economy and falling mark.
Well and that brings it to the market because you're talking about the fact that even though this past week we saw the S&P.
-- numbers we haven't seen since 2007.
So old.
What's the problem.
We don't know I'm right now -- we've got a fed stimulated economy and and what we've -- we've studied Japan over the last two decades they did everything we did baby boom box.
Real estate -- ahead of us.
They keep stimulate an economy works for about three or four years and then the stimulus does not work to get the point where there's nobody left the refi -- by left of them.
Buy a house or car they would have people over stimulated -- it's even higher and all it takes -- the next little trigger.
Four states in the United States triggered the -- worldwide crash around the world with a sub prime crisis for state.
Greece and Spain could just as easily any time.
Trigger the next crisis I think they're going to in the second half of this year so right now economy still growing -- up to stimulus again.
Even though the economy started -- every -- economy slowed the government just throw them more money -- that doesn't work forever.
And we've shown in past cycles no longer than four years so we think 2013.
It's gonna be like 2012 for Europe united -- European another big stimulus plan early 2012 went into recession anyway we think in 2013.
By that -- did this year we're gonna go under recession in the second half -- year despite another big round of stimulus.
Interest in because over the last few years have been talking about the economy's -- recovering economy can recover and the first part of the year we do get a little bit -- recovery.
And then it drops off again we -- talk about just to drop your your thinking the.
It is a bubble in the first part of this year.
Yet -- municipal but -- twenty your value your bubble up and then things get overly stretched and then you get a crash you don't get you don't get a soft landing.
2002002.
We had a big trash led by tech stocks well.
2007 we bubbled up again led by real estate emerging -- -- well that bubble crash and it took the whole system now.
When you have too much debt and when demographics are slowing down you don't have a soft landing landing when the bubble.
The birth him in the stimulus isn't working you get another crash so we get bubble crash bubble crashed.
First bubble peaked in 2000 -- -- -- 2007 the third what's gonna peak in 2013 probably in the first half of the year.
And then we see nothing but another crash each bubble goes a little higher so I think we'll see new -- -- the S&P.
-- NN and -- and then then -- crash goes a little lower so we see 6000 on the bottom side for the down a few years so.
People may be saying the economy better than what the few years ago now but two years from now.
I don't think going to be saying that this stimulus with artificial and it doesn't work and it doesn't address the real problem.
Which is aging population and too much debt Japan's been putting this off for two decades ago what.
They've never come out of the down here yeah.
You only make -- -- are you.
