The Ides of March: Our Economy Is About to Implode

Economic Noise

Economists are trained to never give a date and a number. That way, a forecast can never be wrong.

Jack Kelly in this piece in Real Clear Politics violates this rule. He is a journalist and apparently has not learned the weasel techniques of economic forecasting.

I agree with his overall outlook, but don’t know whether his prediction will be true next week, next year or for a few years. The outcome appears inevitable; the date unknowable.

Don’t depend on anything unusual happening in the next three weeks. It is possible, but highly unlikely. I may feel confident that you have a birthday within the next year, but not comfortable guessing that it is next week.

Events like what major economic crises are easier to see than to predict time-wise.

Our Economy Is About to Implode

By Jack Kelly - February 23, 2014

“Beware the Ides of March,” the soothsayer warned in Shakespeare’s play “Julius Caesar.”

A Roman religious holiday, the Ides (15th) of March was the day on which Roman consuls assumed office — and the day Caesar was assassinated.

For the United States, and the world economy, the Ides will be around March 4 this year, predicted Grady Means in October 2012.

Mr. Means isn’t a doomsayer who’s predicted 11 of the last two recessions. He isn’t trying to sell gold, silver or freeze-dried food. He was managing partner of PricewaterhouseCoopers LLP, an assistant to Vice President Nelson Rockefeller and wrote well-regarded books on international finance.

And he isn’t alone in issuing warnings.

“We expect the bottom to fall out by the second quarter of 2014,” Trends Research Institute founder Gerald Celente predicted last October.

Because the dollar is the world’s reserve currency, America is, in effect, the real world bank. Soon there’ll be a run on it, though, because our massive deficits have eroded foreign investors’ faith in the safety of the dollar, Mr. Means said.

The run on the bank “will start suddenly, build quickly and snowball,” Mr. Means said. “Interest rates will skyrocket, businesses will fail, unemployment will go to record levels.”

It will start when we add “another trillion dollars or so” to our debt, Mr. Means wrote in The Washington Times Oct. 25, 2012. The national debt — $16.3 trillion when he wrote those words — is $17.3 trillion now.

The Federal Reserve Board has financed much of our debt by, in effect, printing money. This has kept interest rates near zero, which has been good for banks and the stock market but has clobbered savings and investment and slowed economic growth.

The Fed must stop “quantitative easing” before all our seed corn is consumed. But when it does, “interest rates will go up and the economy will go down,” Mr. Celente said.

The decline in manufacturing orders in January was the steepest in more than 30 years, the latest evidence the U.S. economy is “exhausted,” said David Goldman, who used to oversee bond research at the Bank of America. A little nudge could push it into recession.

Obamacare could provide that nudge — in March.

continue article at Economic Noise:

http://www.economicnoise.com/2014/02/24/ides-march/