SPROTT: THE S&P WILL FALL BELOW ITS MARCH ’09 LOWS, U.S. ECONOMY IS A PONZI SCHEME
Eric Sprott of Sprott Asset management has been very vocal about his disbelief of the 2009 rally in equities. He believes the U.S. economic recovery is simply a continuation of the ponzi debt based scheme the U.S. has been running for years. He’d be easier to shrug off had he not predicted the current crisis and navigated his firm through it with extraordinary success. Sprott’s fund has returned almost 500% during a period where the S&P was sliced by a third. In a recent Bloomberg interview he said:
“We’re in a bear market that will last 15 or 20 years, and we’ve had nine of them. We don’t have employment gains. We have less of a decline. That’s a sign of weakness. The data is weak.”
Sprott thinks the U.S. debt based/printing recovery has the potential to cause further gains in gold as investors lose faith in the U.S. dollar and shy away from fiat currencies:
“If you get into this thing where you’ve got to keep printing more and more and more, who knows about the price of gold? It will be the new currency in due course.”
You can read his full thoughts on the Ponzi economy below:
Source: Sprott, Bloomberg
Hard to argue with. The idiot fed chairman and the other retards let leverage grow unchecked and now its so big no one can ever be repaid.
So then the balancing amount within the “Household Sector” is debt that is just created and held…in this catagory…..never really sold or bot….just created??
IF so….the author is correct…Ponzi all the way……Sure wish I had a “legal
tender” printing press….
Household sector just might be Afghan narco-traffickers managed by the CIA. Thanks to military genuis matching US financial innovation, Afghanistan now supplies 90% of the world’s heroin.
TPC,
Sprott and all the other bears are way too early. I see the S&P retracing back to 750 but not until 2011. People will be reluctant to be “out” of the market now for a year or two at least. Plus, the people of this country (the US) are such self-interested sheep that they couldn’t care less that the government is being bankrupted to save corporate America, esp the banks, so long as their 401k accounts are recovering. We will have a few scares this year (10% drops) but these dips will be bought by the same parties (government?) that bought the July dip (where we should’ve started going back down). I would bet the S&P hits 1200 before it hits 900.
I like your thinking Edna!
Edna and TPC,
May I offer a few reasons to temper optimism with caution:
1)
Study of the S&P500 chart comparisons, with private notes often omitted by market pundits: http://tinyurl.com/y8uw6nm
2)
This second report was pulled down from one of theMorgan’s private servers:
spx comparison_retrace Deluxe Edition price 1200US, for high net worth clients only.pdf http://tinyurl.com/yaq4vvj
if 2nd link is broken try… http://sekrit.info/gvpxu
But the timing here is key. I don’t doubt that Sprott will be right, but where is the catalyst that will send the market reeling again? As far as I can see, there is little chance of a major market downturn while earnings are coming in better than expected and so much of the government stimulus has yet to be spent. Everyone thinks this is going to unravel overnight. It wont….2011 & 2012 could be very interesting though…
Have you ever heard this old Wall Street adage?
“Prices can fall of their own weight, but it takes buying to put them up.”
Well, there is more to “buying” than meets the eye via mere changes in price. Here’s my take:
Why No Blowup is Needed for Market to Reverse Course
Edna,
Now that is a mighty brave bet. Since the SP500 closed 12/31/09 at 1,115 and the Fed and their minions at GS, JPM, etc. have been artifically supporting the market for 9 months now with massive liquidity and ultra low interest rates.
Hmmmm, 1,115 to 1,200 is like a 7.6% rise from 09 year end. 1,115 to 900 is a 19.3% drop from 09 year end. Not to mention you want a tiny rise in historically the best time of the year for market increases. Most folks would take a bet with almost 3:1 odds in their favor based on the spread of the outcomes, let alone other ST factors seemingly in their favor.
Accordingly if you are willing to give decent odds on that bet, such as 4:1, we would be happy to take up the bet against you.
I tend to agree with EDNA. The government is so committed to preventing collapse that any sign of weakness will be meet with some sort of bailout. 10 trillion, 20 trillion what is the difference. They are on the roadway of printing money and I do not think it will change until the house of cards finally gives way. Obama should remember his youth, when his mother was struggling and working hard. That is what the US needs a reality check, hardship for a few years is better in the long-run then giving everyone a free lunch. It will make them lazy. Asia is giong to eat our lunch, because they work hard and save money.
in a way sprott’s point is the truth down to its core, we’ve never experienced such distortion of perception, manipulation is at its best, just to get the masses to believe again to get…again. nothing really got fixed at a macro economical level, forget about down by the wall, the party’s in full swing, no regulatory or protective act what so ever, the lobbying and twisting congress’s arm, still to protect the scheme. saw some new rule some weird number 3156 I think, in the WSJ, can’t wait to see how that’s gonna work, LOL, you have to understand that wall street works for wall street not for anybody else. its just amazing to see how the practice of the art of war is almost working for them, for now, but for how long ?
think ponzi is being nice about the whole thing, its much worse and rotten for most to understand.
should concentrate on the fact that the market would probably have point swings of at list its current number for the next two years, yes we’ll hear the negatives by the bears to move markets down and for sure see them same bears clipping claws and sharpening horns to move markets up, this bull bear debate is about to escalate to unseen levels, this dead cat bounced too high too quick, it doesn’t make any sense, all the numbers coming out of any of them agencies are to “adjusted”, “seasoned” = fudged in my eyes, don’t even want to go by all those upgardes that are tearing shorts to bits , the “correction” is coming, profit from it.
I just hope its not going to be as severe as it should.
I don’t doubt Sprott’s work one bit, but I also cannot believe there won’t be some warning signs of this unraveling, be it in the treasury market, FX, whatever. At some point the “smart money” will show its hand, and it will be up to us to read the signs correctly.
FYI Eric Sprott’s been bearish since March too.
Oh yeah, and stop blaming the regulators for this whole mess! It takes 2 parties to borrow money! It’s called capitalism fueled by greed, and the stuff hits the fan several times every generation.
@JDEE
Sprott may have been bearish since March, but let’s put this in perspective – he made money in the good years before the crisis, and did not lose money during the crisis.