A 5-Year Scenario: 2011-2016
by Charles Hugh Smith
OK, on to the scenario which will get me in all sorts of trouble:
Here is the sequence of events I consider rather likely:
Q3/Q4 2011-2012: extend and pretend fails. The wheels fall off the global “recovery,” the emerging market equity bubbles, oil, China’s equities and its property bubble, and most if not all commodities. Gold and silver swoon as per late 2008 as raising cash become paramount. Oil retraces to the $40/barrel level, and then drops further as exporters ramp up their exports to generate desperately needed cash.
Interest rates rise sharply, risk assets tank, borrowing dries up, housing prices “slip” to new lows (the stick-slip phenomenon), and the hated/loathed U.S. dollar confounds almost everyone by breaking out of technical resistance levels.
Civil disorder spreads along with recession and lower energy prices, which devastate oil exporters’ primary source of government revenues.
With better grain harvests stemming from improved weather, declining meat consumption in 2012 due to recession and the implosion of the market for corn ethanol, grain prices plummet, wiping out all the speculators who reckoned 2010 had set the trend for the decade.
All of this starts slowly in Q3 2011 but gathers momentum in 2012.