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The Economic Crisis of 2008 Did Not End, It Has Been in Remission

The Economic Crisis of 2008 Did Not End, It Has Been in Remission

There have been many articles appearing in recent months suggesting that the economy might go into a recession within the next year. Many have focused on whether the Federal Reserve should cut interest rates to stop this from happening. There also has been a lot of speculation as to the effect that an economic downturn will have on the 2020 Presidential elections. I have not seen anyone talk about how today’s high stock prices will likely cause an economic collapse.

Trading Penny Stocks
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There have been numerous suggestions coming at things from the opposite direction, making the case that a recession will likely cause stock prices to fall hard. But I view that way of thinking about things as a holdover from the Buy-and-Hold Era. If stock price changes are caused by rational assessments of economic developments, it would make sense that economic bad times would cause stock prices to fall. But I believe that Shiller’s research showing that valuations affect long-term returns is legitimate research. If that is so, then high stock prices are caused by irrational exuberance and the inevitable disappearance of irrational exuberance causes trillions of dollars of consumer spending power to leave the economy, causing a contraction.

If that’s the way things work, the economic crisis of 2008 never came to an end. Employment numbers improved and businesses stopped going under. So, in a surface sense, economic conditions certainly improved. But the economic numbers improved only when CAPE levels returned to the dangerous levels that applied prior to the onset of the crisis. We pumped up stock prices to make people less fearful of spending but at the cost of insuring that a follow-up price crash would be coming in not too long a time.

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Jim Rogers: “Before This Is Over, Gold Might Turn Into A Bubble”

Jim Rogers: “Before This Is Over, Gold Might Turn Into A Bubble”

Famed investor Jim Rogers, chairman of Rogers Holdings, told Kitco News that while he is not yet buying gold at current levels, a rebound in the yellow metal could cause it to overheat. “Before this is over, gold could turn into a very overpriced asset, it might even turn into a bubble,” he said. Rogers noted that while he holds physical gold, he would not buy more until prices drop below $1,000 an ounce. “I’m still waiting for $950 an ounce, or something like that,” he said.

Jim Rogers rogers holdings chairman

On U.S. equities, Rogers said that current valuations are overstretched, although stock prices could still climb higher on good news. He added that the next bear market could be “the worst in my lifetime,” and that instead of U.S. stocks, he is looking at investing in Zimbabwe, an emerging market. “I’m buying Zimbabwe. Zimbabwe was ruined for 40 years by a crazy dictator. There’s a new guy, he may be worse, he may be better, but he’s certainly different, so you should think about Zimbabwe,” he said.

Jim Rogers: “Before This Is Over, Gold Might Turn Into A Bubble”

Transcript

Joining me today is Jim Rogers chairman of Rogers Holdings. Jim good to see you again. Thank you for joining us. I’m delighted to be here. How are you. I’m doing great.

And since about last time we spoke you said that if gold doesn’t rally when bad things are happening then the correction isn’t over.

Now we’re up a little bit this Thursday. But what’s keeping gold from really taking off here.

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Forget About Catalonia And Brexit, The Next European Black Swan Could Be Transylvania

Over the past 100 years, the borders in Central and Eastern Europe have been redrawn time and time again, often leaving groups of people separated from their home country by new borders. Although land often changed hands relatively peacefully, suddenly finding one-selves as an ethnic minority in a new country was bound to lead to tension and resentment.

Transylvania
Walle1886 / Pixabay

While these resentments may reveal real disenfranchisement of ethnic minorities in Central Europe, politicians, especially populist figures, have seized on the outsider narratives inherent in the diaspora experience.

As the April 2018 election approaches in Hungary, Prime Minister Viktor Orban has been reaching out to the Hungarian minority in Romania, drawing criticism from Romanian leaders, while his supporters insist he is trying to lend his support Hungarians everywhere.

Rooted in History

Tensions between Romania and Hungary can be traced back to World War I and the Treaty of Trianon.

Although the Treaty of Trianon ended hostilities between the Allied Powers and the Kingdom of Hungary, the peace came at a great price to the Austro-Hungarian successor state. Hungary lost 2/3rd of its population and territory, leaving the former imperial hub landlocked in the heart of Central Europe. Most of its territory was ceded to Yugoslavia, Czechoslovakia, and Romania, as well as Austria, Italy, and Poland. Romania was granted the entire region of Transylvania, where an estimated 1.3 million ethnic Hungarians reside, making Hungarians Romania’s largest minority.

The loss of such a large chunk of territory and population would certainly leave its mark on national memory. Recently in Hungary, politicians have been revitalizing this narrative.

Magyarorszag 1920.png
By derivative work: CoolKoon (talk)
Hungary1910-1920.png: The original uploader was Fz22 at English Wikipedia
(Original text: fz22 (talk)) – Hungary1910-1920.png, CC BY-SA 3.0, Link

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Olduvai IV: Courage
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Olduvai II: Exodus
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