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23 Doomsayers Who Say We're Heading Toward Depression In 2011

Many prominent investors, and economists are now warning that our economy is in big trouble. On the left many are arguing for more stimulus spending, while on the right many are arguing for cutting spending. The one theme these "doomsayers" have in common is that they all are painting a not so pretty picture of the US economy.

On the left, Nobel Laurete Paul Krugman recently penned a frightening op-ed in the New York Times. Krugman, warned that the United States has entered the initial stages of a third Depression. In his view, inadequate fiscal and monetary stimulus, coupled with obsessive worry about short-term, record breaking budget deficits, are increasing the probability of a long, deflationary-driven Depression.

On the right, economists, and politicans are calling for the Government to cut spending, which they predict will lead to the collapse of the dollar at current rates. Ron Paul, and Peter Schiff have called for painful spending cuts, higher interest rates, and end to bailouts.

Schiff recently stated, "When creditors ultimately decide to curtail loans to America, U.S. interest rates will finally spike, and we will be confronted with even more difficult choices than those now facing Greece. Given the short maturity of our national debt, a jump in short-term rates would either result in default or massive austerity.

Outside of the political realm, people are equally as frightened about the US economy.

I mentioned in an article recently that John Hussman is predicting a double dip recession. Hussman further stated,

"In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during the coming year. Last time Hussman made a similar prediction was in November 2007. The National Bureau of Economic Research stated that the " Great Recession" started in December 2007.

Other people who foresaw the real estate bubble like Robert Shiller, are worried that the economy could be headed for some tough times ahead. Shiller stated that he sees a significant risk of a double dip recession.

Seth Klarman one of the best investors of our time, stated recently that he has never been so worried about the economy. It was surprising hearing this from Klarman, because he rarely is in the public eye, and focuses on the micro aspects of companies and not the macro picture.

Business Insider recently compiled a list of 23 "doomsayers", who are predicting that we may be headed for a depression in 2011.

Below is a link to the full list.

Read more: http://www.businessinsider.com/23-doomsayers-who-say-were-heading-toward-depression-in-2011-2010-5#ixzz0sIYhNlxF

About the author:

Jacob Wolinsky
My investment ideas have been inspired by many of value investors including Benjamin Graham, Charles Royce, John Neff, Joel Greenblatt, Peter Lynch, Seth Klarman,Martin Whitman and Bruce Greenwald. .I live with my wife and daughter in Monsey, NY. I can be contacted jacobwolinsky(AT)gmail.com and my blog is www.valuewalk.com

Visit Jacob Wolinsky's Website


Rating: 4.0/5 (22 votes)

Comments

yswolinsky
Yswolinsky - 4 years ago
I did not blame the Government in my article. I brought both sides of the aisle in the article, and did not offer my own opinion. I try to stay apolitical in my articles.
dldavy
Dldavy premium member - 4 years ago
Utter, absolute, idiocy.
yswolinsky
Yswolinsky - 4 years ago
What is?
BlueHorseShoe82
BlueHorseShoe82 - 4 years ago
We just need to remember that Gumby is a green, tofu-shaped, claymation dude whose only friend was a dog. Just like most communist beaurocrats! Jacob, I love ya bro, and I understand you need to stay neutral and professional, so leave it up to us "nobodies" to call out these economic illiterates for what they are!

Keep up the good work.
MGriff
MGriff - 4 years ago
Nice work, Jacob.
arodeen
Arodeen - 4 years ago
If Gumby were the Chair of the Fed, he would penalize me for saving, or "hoarding" my money - more than that, for not spending it where [he] needs it most.

Seriously, "This is a free country but I dont think anybody is free to hoard cash to the excesses for political gains...?" That is like your President saying, "I believe in a free market, but I think people can have too much money."

You, sir, are an idiot. I'm sure, if you chaired the Fed, you would do exactly what you are suggesting you would do, and you would be doing it for your own financial and political gain. You sound like someone dick-hurt because of your portfolio of late.

arodeen
Arodeen - 4 years ago
Great insight, and thanks for asking. I'm very proud of my modest 12% YTD return and I'm "hoarding" 93% cash right now - watching stellar bargains in the making. Some examples are WalMart, which is still as solid as ever fundamentally, yet at a historic P/B, P/S, and 52wk low and still falling.

However, I did take the time to be thankful. Thankful for what I've learned about Value Investing, thankful for trailing stops, thankful for GuruFocus newsletters, and most recently, the freedoms allowed by the Constitution in the U.S. - the last one being especially important given the date and that I'm stuck in Saudi Arabia. In that spirit, I've donated three times recently to Americans For Fair Taxation in support of the FairTax, which will be airing an informational TV spot on 1:30PM Eastern time on Fox Business. I've also prepared a nice check to deliver to my alma mater, the University of Oklahoma College of Engineering, but first I found a gentleman not in the position to donate to take advantage of his company's 3x matching on my behalf; value investing knows no bounds.
Sivaram
Sivaram - 4 years ago


I think Gumby's views are too simplistic and incorrect. His heart is in the right place--I think he cares a great deal about the country and how badly it was run in the last decade--but his criticism of capitalism is unwarranted.

For instance, banks can't tell who is a good borrower and who isn't. It sounds simple on paper (don't give money to someone who is buying their 3rd home) but it is difficult in practice (you have no idea how someone is going to use their borrowings.) So, it's easy to say they are hoarding money but it's hard to say how they should be managing their risk.

Having said that, Gumy is onto a point that he/she probably doesn't even realize. Banks could do whatever they want wit htheir money but the reality is that a lot of their money that is sitting around was literally given to them for free in the last few years. All those essentially near-zero-interest money lent to the banks, not to mention the big swaps of dubious assets for money by the central bank, are from the government. A lot of the banks wouldn't even be around today, let alone earning billions in profits, if it weren't for transferring huge sums from taxpayers to these entities.
Sivaram
Sivaram - 4 years ago


Gumby, I agree with you that capitalists can be ruthless and they only care about one thing: money. But at the same time, you fail to realize that they are partly responsible for creating all the wealth in your country.

A lot of the stuff you blame on capitalists is nothing more than human nature. You are picking off the financiers while ignoring the consumers. The reason the energy complex is as is, largely has to do with the demand from the market. It's people like you and me that largely dictate what is happening. It's easy to say that oil prices going to $500 is going to hurt but have you ever considered the fact that the vast majority of citizens want to consume oil products (at least when it's below $150/barrel)?

It's easy to say that alternative energy or some other means should be investigated but as long as they are uneconomic, it'll go nowhere.
yswolinsky
Yswolinsky - 4 years ago
Partisans like you who paint everything in black are white, are destroying our country. "Capitalism is good, socialism is bad" red team go is unamerican. Capitalism is good, but it needs some restraints or it can destroy itself i.e. the investment banks during the housing bubble. Socialism has some good aspects, but it can lead to cruelty like many communist states have shown.

A simplistic "I am right you are wrong approach" is the main factor that had been poisoning the political atmosphere in this country.

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