Delaying the inevitable


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Chief trends forecaster Gerald Celente has been predicting severe economic turbulence for some time. In this question-and-answer session with institute staff he addresses that forecast, as well as how developments in Ukraine will affect the region and beyond, and reviews the real estate market as the high-selling season unfolds.

The crisis in Ukraine is about six months old. You forecast the civil war that has broken out. What’s next? What countries are most affected and how?

What, where and why violence and bloodshed will happen next is anyone’s guess. But what is certain is that, as with all civil wars of such magnitude, it will be long, drawn out and bloody. With the country deep in debt and mired in recession, it will prove devastating to all Ukrainians in terms of lost money and lost lives.

As for what countries it will affect and how, obviously if natural gas prices are raised and supply is limited, that would have a devastating effect on all of Ukraine, which gets 63 percent of its natural gas from Russia, and on much of Europe, as well. Some 30 percent of the European Union’s natural gas and 35 percent of their oil are imported from Russia. Of course it will damage Russia’s economy, too, if demand for their major export is dramatically curtailed. With forecasts by the European Central Bank for slower EU growth, an energy price shock could prove economically devastating to the entire region.

It is worth noting that Vice President Joseph Biden’s son, Hunter, and Devon Archer, a partner in Rosemont Capital, a private-equity firm he co-founded with Christopher Heinz, Secretary of State John Kerry’s stepson, were both recently appointed to the board of directors of Burisma Holding, Ukraine’s top private gas company. “Today, Burisma Holdings reminds me of Exxon in its early days,” Mr. Archer has boasted.

And, beyond the economy, much of the world could be in peril should the civil war escalate beyond Ukraine’s borders into Europe, Russia and beyond.

Is the financial turbulence in worldwide markets you have been predicting still on your radar? And why do you think the Street seems to weather so many economic and geopolitical storms?

Yes, the conditions for turbulence are extremely high. At some point equities will crash. When? I had previously forecast it would be by the end of June. But with the financial games rigged, timing can be tricky.

Are you saying the markets are rigged?

Yes, rigged. How many more high financial crimes and misdemeanors must be reported in the news, and how many more billions of dollars in fines must be paid by the criminals who committed them, before society has the courage to yell “fraud” and “Ponzi?” The recent Barclays Dark Pool fraud is another in a long line of examples.

The only reason the Street is weathering the economic storm is because of the steady flow of record-low interest rates. When the cheap money stream starts to dry up, the markets will sink.

As for weathering the many geopolitical storms, none of the turbulence to date has had global implications. But that could suddenly change. Much of the Middle East is in turmoil more violent than any seen in our lifetime. Look at how oil prices spiked when civil war broke out in Iraq.

The point is, when a foreign war hits home, and it can come in countless forms, that’s when it will hit the markets.

While populist movements across the globe continue to grow in intensity, the US, as you had predicted, remains passive on this front. Is that going to change?

Not only is the time ripe for a populist movement in the US, conditions for a strong third-party presidential candidate are more favorable now than at any time in the last hundred years. In Trend Tracking, which I wrote in 1989, I predicted the emergence of a new third party and identified Ross Perot as the type of political maverick who would appeal to voters disenchanted with both parties. And let’s remember, despite his running a half-hearted, “I’m-in-the-race,” “I’m-out-of-the-race” campaign, Perot still received some 20 percent of the popular vote.

Read the current polls, Americans are again disgusted with both parties. Just nine percent of likely voters think Congress is doing a good or excellent job, while 61 percent rate Congress’ job performance as poor and President Obama’s ratings are at new lows.

But rather than simply mirroring the European populist brand, the US will see the ripening of a “progressive-libertarian” movement, a trend I first forecast in 2002. I believe that, within the decade, there will be a real third-party movement in America that will challenge what has essentially become a two-headed, one-party system. I call this movement the progressive-libertarian party. It will serve as a counterbalance to those favoring free-for-all globalization. It will combine progressive economic and social philosophies with new approaches to privacy and foreign policy involvement.”

Although we have not yet identified a progressive-libertarian or European-style populist movement in the US, the leadership vacuum has never been greater, and it is ready to be filled.

What’s your take on the housing market as the summer and fall selling/buying seasons approach?

The low-interest-rate days that boosted the housing market over the last three years have run out of juice. In the absence of a rapid rate hike, market crash or major war, housing in most markets will fluctuate between stagnation and modest growth. It takes a lot of money to buy a house and a lot more Americans are making a lot less of it.

Traditionally, some 40 percent of new homebuyers are between the ages of 24 to 35. Because of the weak job market and low-paying jobs plaguing this age group, that number has fallen to 26 percent.

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