In this question-and-answer feature with Trends Journal Publisher Gerald Celente, we spend some time on the impact the political craziness in Washington has on your life. Who does Celente blame for the paralysis that has overtaken political leaders in D.C. and across the globe? We also explore a number of global economic developments that are emerging as key trends. Those trend lines include the sustained gloomy jobs forecast for the world’s young.
Was there any single political figure, party or strategy responsible for the ridiculous budget and debt limit impasse in Washington this fall?
The main single political figure is the President. War and peace, crime or the economy, he sets the agenda. The president promotes the policy and sets the tone. Yes, “the buck stops (and starts) here.”
Both political parties also are responsible. But they are not “parties.” That’s White Shoe Boys lingo for “gangs.” Republicans-Democrats. Capone-Lansky, Bloods-Crips. While their mannerisms and social behavior differ, each, in the pursuit of money and power, have track records of pillage and plunder.
In 1780, shortly after the birth of our nation, John Adams, warned: “There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.”
What John Adams dreaded (as did George Washington, James Fenimore Cooper, Teddy Roosevelt and others) has now come to pass. Not only in the U.S., but in many of the so-called “democratic” nations where just one or two parties rule. Look at the U.S. We have a gang of 535 men and women in Congress who in practice only represent the special interests who enrich them and not the public interests they pretend to represent. Politicians call the money they get to pass legislation that promotes those special interests “campaign contributions.” In Bronx-speak, it’s called “bribes and payoffs.”
For a truly democratic nation, I advocate that people running for office should “pledge allegiance to their constituents” instead of to their “party.” If the nations that call themselves democracies were truly representative forms of government, those holding office should be non-aligned and unaffiliated.
How much direct cause-and-effect do you see between the budget and debt limit craziness in Washington and world markets?
As you will note in my “Empire America is fading fast” trend forecast, the world leaders of finance and leaders of nations were literally shocked at the level of irresponsibility of America’s politicians, whose selfish actions jeopardized global financial stability. That said, with all the talk about a new reserve currency away from the dollar, what would replace it? For example, there is a lot of speculation that the BRICS (Brazil, Russia, India, China, South Africa) and other nations want to establish a reserve currency to rival the dollar and we have written about that extensively in past Trends Journals. But with the world economy weakening, and many of the BRICS saddled with their own financial problems, they don’t provide a reliable alternative. The same holds true with the euro.
How much of a real threat is Obamacare to the United States’ economy?
After the 2012 election, despite President Obama’s pledge not to raise taxes on the middle class, Washington raised the payroll tax. Immediately, retail sales slumped. Now, with everyone either being forced to buy an Obamacare plan or taxed for not buying one, dollars being spent on health care insurance won’t be spent on consumer goods. That, combined with declining wages, will put even more downward pressure on retail sales and ultimately the GDP.
Do you see any new trend lines in the business of health care that are promising, perhaps offering some opportunity for entrepreneurs?
On the micro-level, yes. The big entrepreneurial trend I have been talking about for years is Whole Health Healing. And from it, many other opportunities will arise.
But while this trend will grow and spread, it does have its limits. Remember, America is a first-, second- and third-world nation wrapped in one. And as the data prove, the second world — the middle class — is rapidly shrinking and moving to third-world status. Since to live, eat and think in a whole health fashion requires hard work, money and dedication, it is a trend mostly embraced by the more affluent and educated. But that is still a large market sector that expands well beyond the so-called “one percent.” You don’t have to be rich to live smart.
Another major driver behind the trend is that with most of the Western population’s post-World War II Baby Boom population aging, I foresee longevity centers closely tied to Whole Health Healing. In essence, you can’t have a long healthy life without it. Those who understand the trend, and supply products and services for it, will create more than entrepreneurial opportunities — they will create new market sectors and categories.
In October, The Wall Street Journal reported: “The odds that a young adult in the U.S. will become the head of a household, whether as an owner or renter, has fallen more between 1990 and 2010 than in previous decades.” What is your take on this now well entrenched trend?
It was a trend long in the making. And it was a trend forecast that I made back in 1995 when I wrote Trends 2000. People forget the great “downsizing” trends that ravaged the workforce when multinationals, hedge funds and buyout firms began to slash payrolls, consolidate operations and send jobs offshore with the passage of NAFTA and the deregulation of the financial/banking sectors.
This is what I wrote back then of the Gen Xers, who were the equivalent of today’s Millennials: “Overall, your generation makes 20 percent less in real income than your father’s generation. In 1973, 23 percent of households heads under twenty-five owned their own home; in 1990, only 15 percent did.”
I also showed how in the first half of the nineties, the temporary-help industry soared 50 percent. Fast forward to 2013. According to some studies, over 90 percent of the new jobs created in the U.S. over the past year are part-time. I wrote in 1995 that young people, unable to earn a living wage, would be forced to live with their parents. That reality is now a given.
Those who went to college are burdened with over a trillion dollars in debt with no way out. For those without college educations, the once decently paying manufacturing and production jobs that helped build our middle class were shipped overseas.
It will require radical socioeconomic and geopolitical government action to restore the policies and safeguards that were put in place over the last century, enabling young people to build households and move up the economic ladder. If that does not happen, I can forecast with complete certainty that household formation will continue to decline.
If you are under age 25, there’s a 40 percent chance around the globe you are unemployed, a trend that is now years in the making and holding steady. What is your long-term forecast? Any signs in the years ahead this trend can reverse itself?
No, the trend will not reverse itself. In fact, getting a good paying job will become more difficult. Even China, once the slave-labor capitol of the world, is losing business to even cheaper labor countries.
In fact, manufacturing jobs are being repatriated to the U.S. and Mexico because pay scales have fallen so sharply. And, when long distance shipping is factored, it’s cheaper to make it closer to the markets where the products will be consumed.
Summer and early fall months are showing a continued slowing of foreclosure rates across most of the United States. What does this mean? Will this trend continue?
The worst of the foreclosure trend is temporarily over. With interest rates so low and many mortgages refinanced, people have a better chance of meeting their mortgage obligations. I expect the foreclosure rate to spike again when the next economic crisis strikes. And, considering the underlying fragility of a global economy that has been propped up by the unprecedented tens of trillions of dollars, euros, pounds and yuan being pumped into the markets by central banks, an equity market crash, a bond market explosion or other economic calamity could happen at any time.
How are you feeling about gold these days?
As I said, this is an artificial recovery built on a house of fiat currencies. At some point the stimulus will stop, interest rates will explode and the economy will crash. I see gold as a safe haven asset for when currencies can no longer maintain their artificial highs. I don’t trade gold. I buy gold for my golden years.
A savvy investor friend of mine has what I believe is a sound precious metals strategy, especially for a young person. Each month he buys whatever he can afford in gold or silver and puts it away. Over the long term, the prices average out in his favor. While I see little downside risk over the decades with such a strategy, remember I’m a trend forecaster, not a financial advisor, so I do not provide financial advice.
China’s and India’s rates of inflation have been steadily rising for months. How much of a concern is this to the rest of the world?
What should concern the rest of the world are China’s slowing economy, rapidly rising real estate prices and debt bubble. As for India, its growth rate has nearly halved over the past three years and its rupee recently hit all-time lows against the dollar. The general fear among emerging-market nations is that when the Fed tapering stops, the hot money that flowed into their countries will flow out even faster. India is in worse shape than China. At a time when India’s economy is failing, it is forced to raise interest rates to protect its currency. A tight monetary policy as the nation trends toward dramatic decline will worsen an already bad situation.
As for China, they will try to build their domestic economy as exports slow. Will they be successful? Yes, but considering their overheated real estate market and looming debt, success will prove limited.
The early economic forecasts for 2014 are beginning to trickle out, and natural gas, on the strength of new technologies like horizontal drilling and fracking, is stirring high hopes in the energy sectors. Agree?
It is certainly good for some energy sectors, but not great. Gas prices are steadily dropping. And, if there is a deal to lift sanctions against Iran, which is estimated to have the third largest oil reserves in the world, that will mean more product flowing into the markets. This is at a time when supply is already growing faster than demand, which will mean even lower prices and thus, smaller profits.
For example, China, the world’s largest oil buyer, saw its crude oil imports increase 3.4 percent year to date, yet, as a result of weakening prices, its total cost of energy is down.