Financial doomsayers continue to warn of another economic downturn of epic proportions.
When it comes to finance, especially as it relates to broader markets, doomsayers – analysts who warn of catastrophic economic events to come – are about a dime a dozen.
And while there are others who look forward into the fiscal future with unbridled optimism, the naysayers – some of them with reputable track records – paint a far less rosy portrait of things to come.
So, who are these doomsayers and what exactly has them so riled? Below are three of the most prominent.
Qualifications: Author of New York Times bestseller “Conquer The Crash,” which predicted the bursting of the US housing bubble and debt crisis in 2008.
Prediction: Stock market crash (a 100-year bear market)
Few other analyst’s forecasts conjure as much fear as Prechter’s claim that we’re heading towards a 100-year bear market, which on the surface seems like a lofty claim – that is, until looking at Prechter’s track record.
In addition to predicting both the housing bubble burst and the debt crisis in 2008, Prechter, who has been writing about finance since 1978, also correctly predicted the raging bull market of the 1980s.
Nowadays Prechter’s claims center most directly around the stock market, which he says could plummet in value between 2016 to 2017. Prechter cites investor complacency and a financial theory called the economic cycle, which is meant to predict the ebb and flow of economies, among his reasons for apprehension.
Qualifications: Harvard international economics doctorate, former economist at the IMF, the Federal Reserve, and Bank of Israel.
Prediction: US is in the midst of an inflating asset bubble that will soon pop.
Nicknamed (mostly affectionately of course) “Dr. Doom,” Nouriel Roubini, an internationally regarded economists, has some less than favorable projections for the future of financial markets.
Like Prechter, Roubini also correctly predicted the unraveling of the US housing market with almost omnipotent accuracy. Now, Roubini’s predictions are hardly any more optimistic.
The renowned economist claims that the US is in the midst of an asset bubble that is sizing up to be even bigger than the 2008 housing market collapse.
In specific, Roubini cites the issuance of “junk bonds” and a loose fed monetary policy (low interest rates created by bond purchasing) as a negative force in pumping up this bubble.
Fed policy, says Roubini, has merely bolstered risk taking in financial markets and has had little to no effect on the “real economy.”
Qualifications: New York Times bestseller who correctly predicted the Japanese economy slowdown in the 1980s and a DOW boom in the 1990s.
Prediction: Stock market crash due in part to aging demographics.
Like other financial doomsayers, Harry Dent, a financial analyst, newsletter and bestselling author, predicts a precipitous drop in the DOW – a forecast which he has made (albeit incorrectly) in the past.
Dent’s predictions have much to do with demographics. In part, his claims of an imminently imperiled stock market have been influenced by the aging baby boomers, who are leaving the workforce and entering retirement.
Additionally, according to Dent, the fed’s QE spending – a bond purchasing program resulting from the 2008 financial crisis – has artificially bolstered the stock market, which will decline after the fed policy ends.