Alert: Nine Scenarios That Lead To Stock Plunge

Posted by M ws On Monday, November 5, 2012 0 comments
If you have shares or stocks, take note. Paul B. Farrell of MarketWatch Wall Street Journal wrote:

SAN LUIS OBISPO, Calif. (MarketWatch) — “Is the U.S. Condemned by History to Slow Growth?” asks Bloomberg BusinessWeek. Yes. But for traders and investors, it’s far worse than just bearish slow growth. Plan for no growth or zero growth.

Why? Wall Street, America and the world economy are in the early stages of a long era of “de-growth,” a reversal of economic growth and reduction in market growth as population growth adds new stresses on commodities resources, creates unrest, disasters and wars. Big problems ahead.

Please listen: Earnings growth is in a long slowdown in all of the following nine scenarios. Economy down. Earnings down. Stocks down. Trading down. Focus on the long term, on history, look past the noise about elections and fiscal cliffs.


You might want to check out Brendan Greeley's article on Is the U.S. Condemned by History to Slow Growth? in Bloomberg. He said:

On Oct. 8 the International Monetary Fund lowered its global growth forecast for 2013, from 3.9 percent to 3.6 percent. The fund also warned of an “alarmingly high” chance that growth would slip below 2 percent next year. The number crunchers at the IMF, like most economic forecasters, rely on the basic assumption that over time, growth will do what it always has done: It will trend upward, and the ups will be greater than the downs. A group of economists who take the long view of history—a very, very long view—are now challenging the conventional wisdom.

The standard theory of economic growth comes from two papers penned in the 1950s by Robert Solow that would eventually earn him the Nobel Prize. Before Solow, growth was seen as simply a function of population and capital accumulation: More money plus more people equals more growth. The Massachusetts Institute of Technology economist pointed out that technology had something to do with growth, too. Technological advances, such as the mechanization of looms or the computerization of spreadsheets, increase the economy’s productive potential.

In a new paper for the National Bureau of Economic Research, a private, nonpartisan research organization, economist Robert Gordon argues that there’s no reason to assume productive technology will continue to materialize and supply the economy with periodic boosts. The Northwestern University professor points to a surprising finding by economic historians. From the 13th to 18th centuries, the economy of the British Isles expanded at a per capita rate of just 0.2 percent per year. Then, with the dawn of the first Industrial Revolution in the 19th century, growth shot up, powered by steam engines and railroads, and the U.K. became what Gordon calls the “frontier” economy—that is, the fastest-growing nation on earth.


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