Worst Is Yet to Come?

" Americans are getting tired of watching -- money will melt the way out on Wall Street which is the past time right now take a look at it down below 7000. For the first time in almost twelve years. But -- respected economists Harvard MBA says the worst. Is yet to come and that there is nothing president Obama or anyone else for that matter can do about it. Harry -- economist and author of the Great Depression ahead joins me now hi Harry. Nice to be back very welcome back to the program all right so you up. I I find your resume impressive yet I always find you quite depressing. How come but but you don't like you see it and you predicted the Dow was going to fall precipitously months ago and indeed here we are look at it and looking at a number below 7000 which is the first time it would seem that -- years. -- how on earth. Do you think this thing gets to 3800 that's -- predicting when will that happen and how on earth does it happen."

" What noted this banking meltdown is more than just a sub prime crisis when banks -- against real estate homes that have doubled in five years on average than tripled in many areas. They were already in big trouble. And and now of course all these -- credit default swaps and insurance by companies like AIG that really wasn't there are no collateral so. The banking crisis is very serious it will continue to melt down the government can best stave off a little longer. More importantly we've got baby boomers which we've been predicted for many years can't remember I've been bullish for twenty years because of the baby boomers. Are now turning from spenders to savers and that's why it's going to be nearly impossible for the government to stimulate their way out of this Japan already tried in the 1990s with eight stimulus programs. And they continued to see real estate -- continue to see their markets fall. I do think the only good news that we're expecting a bounce here. Even sooner but I do think we're getting ready will probably go lower but probably see a bounce in the next three to six months maybe back up from nine to 10000 we're told people take advantage of that. This thing just keeps getting worse I've -- earliest we could see the stock market bottoming would be late 2010."

" And I know he is saying our minimum target I know you've been saying that you've been predicting that we're -- big bounce before we see this major crash them into the 3000 -- Why do you think there's going to be such that such a big bounce and and exactly when you think if we how long do we have to wait for it."

" Well again you know we would have expected about -- very strong support around 7200 on down we've broken below that that means we probably are going lower here but. You know it markets overreact to things and and of course there's a lot of bad news and continues to get rabbit. At some point the market's likely to balance we just look at the pattern from the market and it looks like. We're getting close to a temporary bottom but again we're saying this is just the first wave down. There's at least another major crash to come probably going to come and this fall through next year so again if if we do balance this year 9000 of our target about 9100 maybe as high as ten now. Be sure to sell your stocks do not be hoping that the stimulus plan work. It's not the the government's doing the wrong things is just they cannot do enough there's too much to fight -- is banking crisis in nineteen million baby boomers spending less predictable."

" You know that asked giving you admit that this is this is an inaccurate prediction on here to have a lot it was a Harry -- is the guy who predicted we'd see Dow. 40000. In the year 2008 which sadly we did not."

" Yeah -- back you know we were seeing this -- we predicted the bubble in the ninety's when nobody saw it coming. And we were looking back in the early 1900 where we saw first -- bubble a crash and early twenties and and a second one what what happened this time but the ball went right overseas right in the commodities. Right into housing. And we did see a second boom we did see an incredible bubble around the world we we just didn't see the US stocks follow through we had a white."

" I I can't let go without avenues I know you have that you do have a theory on what what people should be doing with their money. Tell us what they should be doing."

" We know it is real some bullets you have to move in the past whenever you fell out of an asset that bouncing you decide to sell real estate this year we really warned years ago but. People should fell real estate at the latest this summer you sell stocks on the -- you simply put it in the past very high quality T bill. Cash and just hold and wait for this deflation process to work out a lot of people going to tell you inflation what you gotta worry about. But the government printing money it's deflation holding cash is the only way to fight deflation."

" Andy and went when your -- we cannot in January he said consider investing in commodities like gold or silver you still believe that are now."

" Yeah I mean right now I think two bodies are probably going to have the strongest balance on this rebound but that's a short term thing maybe for the next year Mac. Gold and silver have been a good -- they've been going up -- everything else has been going down but. Just recently gold and silver got two. Over bought we think they'll probably pull back. For a month or so so I think you know gold and silver pullback that's another good place to hedge against falling markets and NASA."

" All right well Harry it's always interest in talking EI hope you're so wrong I hope you don't know what you're talking about -- a little worried that you do. If you want to read his book the Great Depression ahead by Harry -- always a pleasure speaking -- thanks so much coming up."