So What Does the Future Hold?

Dollar Vortex

QUESTION: 

Dear Martin,

In your last post you say that sovereign debt crisis may be postponed for 8.6 years.  Would this delay the phase transition in the Dow and other US share markets.  Thank you for your posts, me and others I talk to read your blog everyday.

Sincerely,

JD

ANSWER: Any postponement in the Sovereign Debt Crisis would be from the US Perspective. In other words, the pace would be slower. There are still problems in Europe and now that the German elections are out-of-the-way, we will see a stronger move toward the federalization of Europe. Japan is also on the list to fall. The rise in the dollar will send losses throughout the developing nations who have funded their debts in dollars. A dollar rally creates a massive debt crisis worldwide outside the USA.

We also have the Pension Crisis that is boiling now. We may see that distract people during the 2016-2020 decline. The smart Pension funds are starting to move into equity. They have no choice or go into default. The Baby-Boomers also come on-line by 2016. The demands on pensions will rise sharply.

This is the pressure cooker we are in right now. Governments are hunting cash. Germany will now raise the top tax rate to 49% since the elections are finished. This is creating slower economic growth and with the rising costs, we enter STAGFLATION. So there is not much good news because the pressure is not yet sufficient to push us into monetary reform of the entire system. Until that happens, politicians will not be willing to release power as long as they think they can survive.

The Phase Transition is not yet confirmed. This may come into play during the first quarter next year.