This Housing Chart Destroys The Arguments Of The Economic Optimists

This is what happens during a Deflationary Depression – evidence from another 3rd Party.

This Housing Chart Destroys The Arguments Of The Economic Optimists

Chart - Public DomainDid you know that the rate of homeownership in the United States has fallen to a 20 year low?  Did you know that it has been falling consistently for an entire decade?  For the past couple of years, the economic optimists have been telling us that the economy has been getting better.  Well, if the economy really has been getting better, why does the homeownership rate keep going down?  Yes, the ultra-wealthy have received a temporary financial windfall thanks to the reckless money printing the Federal Reserve has been doing, but for most Americans economic conditions have not been improving.  This is clearly demonstrated by the housing chart that I am about to share with you.  If the economy really was healthy, more people would be getting good jobs and thus would be able to buy homes.  But instead, the homeownership rate has continued to plummet throughout the entire “Obama recovery”.  I think that this chart speaks for itself…

Homeownership Rate 2015

Of course this homeownership collapse began well before Barack Obama entered the White House.  Our economic problems are the result of decades of incredibly bad decisions.  But anyone that believes that things have “turned around” for the middle class under Barack Obama is just being delusional.

If the U.S. economy truly was in “good shape”, the percentage of Americans that own homes would not be at a 20 year low

The U.S. homeownership rate fell to the lowest in more than two decades in the fourth quarter as many would-be buyers stayed on the sidelines, giving the rental market a boost.

The share of Americans who own their homes was 64 percent in the fourth quarter, down from 64.4 percent in the previous three months, the Census Bureau said in a report. The rate was at the lowest since the second quarter of 1994, data compiled by Bloomberg show.

Rising prices and a tight supply of lower-end listings have put homes out of reach for some entry-level buyers, who also face strict mortgage standards. The share of U.S. homebuyers making their first purchase dropped in 2014 to the lowest level in almost three decades, the National Association of Realtors reported last week.

And it appears that this trend is actually accelerating.  During 2014, the rate of homeownership plummeted by a total of 1.2 percentage points for the year.  That was the largest one year decline that has ever been measured.

So why is this happening?

Well, in order to buy a home you have got to have a good job, and good jobs are in very short supply these days.

Over the past decade, the quality of the jobs in our economy has steadily declined as good jobs have been replaced by low paying jobs.  In addition, government policies are absolutely murdering small business.  At this point, small business ownership in the U.S.is hovering near record lows.

This has resulted in millions of people falling out of the middle class, and it has contributed to the growing divide between the wealthy and the rest of the country.

If our economy was working the way that it should, the middle class would be thriving.

But instead, it is being systematically destroyed.  If you doubt this, I have some statistics that I would like to share with you.  The following facts come from my previous article entitled “The Death Of The American Dream In 22 Numbers“…

#1 The Obama administration tells us that 8.69 million Americansare “officially unemployed” and that 92.90 million Americans are considered to be “not in the labor force”.  That means that more than 101 million U.S. adults do not have a job right now.

#2 One recent survey discovered that 55 percent of Americans believe that the American Dream either never existed or that it no longer exists.

#3 Considering the fact that Obama is in the White House, it is somewhat surprising that 55 percent of all Republicans still believe in the American Dream, but only 33 percent of all Democrats do.

#4 After adjusting for inflation, median household income has fallenby nearly $5,000 since 2007.

#5 After adjusting for inflation, “the median wealth figure for middle-income families” fell from $78,000 in 1983 to $63,800 in 2013.

#6 At this point, 59 percent of Americans believe that “the American dream has become impossible for most people to achieve”.

You can read the rest of that article right here.

The group that has been hit the hardest by all of this has been young adults.

Back in 2005, the homeownership rate for households headed up by someone under the age of 35 was approximately 43 percent.

Today, it has declined to about 35 percent.

From a very early age, we push our young people to go to college, and today more of them are getting secondary education than ever before.

But when they leave school, the “good jobs” that we promised them are often not there, and most of them end up entering the “real world” already loaded down with massive amounts of debt.

According to the Pew Research Center, close to four out of every ten households that are led by someone under the age of 40 are currently paying off student loan debt.

It is hard to believe, but total student loan debt in this country is now actually higher than total credit card debt.  At this point, student loan debt has reached a grand total of 1.2 trillion dollars, and that number has grown by an astounding 84 percent just since 2008.

If you are already burdened with tens of thousands (or in some cases hundreds of thousands) of dollars of debt when you get out of school and you can’t find a decent job, there is no way that you are going to be able to afford to buy a house.

So we have millions upon millions of young people that should be buying homes and starting families that are living with their parents instead.

Back in 1968, well over 50 percent of all Americans in the 18 to 31-year-old age bracket were already married and living on their own.

But today, that number is actually below 25 percent.  Instead, approximately 31 percent of all U.S. adults in the 18 to 34-year-old age bracket are currently living with their parents.

Something has fundamentally gone wrong.

Our economy is broken, and anyone that cannot see this is just being foolish.

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The Currency War Has Expanded to New Fronts

The Currency War Has Expanded to New Fronts

By Elliott Wave International

Editor’s note: This article was adapted, with permission, from the February issue of The Elliott Wave Financial Forecast, a publication of Elliott Wave International. All data is as of Jan. 30, 2015. Click here to read the complete version of the article, including specific near-term forecasts, for free.

The “Currency War” we discussed in our October issue of The Elliott Wave Financial Forecast and again in the January issue has expanded to new fronts, as world central banks fought to remain economically competitive by trying to push down the value of their currencies.

Singapore became at least the ninth nation to “jump on the easing bandwagon” in January, employing loose monetary measures designed to reduce the value of the Singapore dollar.

Our long term bullish forecast for the U.S. dollar remains on track, and this month the Dollar Index jumped to 95.527, retracing 50% of its decline from 121.020 in July 2011 to 70.700 in March 2008.

Everyone Loves the Buck
Some chart labels have been redacted to preserve value for EWI’s paying subscribers. To get access to the fully labeled chart, click here.

Short term, the rally is stretched like a taut piece of rope: Prices have closed higher for 30 out of the past 39 weeks. Recently, a 10-day average of a poll of currency traders (courtesy trade-futures.com) showed 93.7% dollar bulls, an all-time record high. Also, Large Speculators in futures and options, who are generally trend-followers, now hold an all-time record net-long position of 72,897 contracts, as shown on the above chart.

The extreme in these measures shows the strength of the rally but also reflects a trend that is ripe for a correction.

Click here to continue reading the complete version of the article as part of a lengthy excerpt from the newest issue — including specific market forecasts, fully labeled charts and more — 100% free.


This article was syndicated by Elliott Wave International and was originally published under the headline The Currency War Has Expanded to New Fronts. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

FREE – DEflation report for you

I would urge you to buy the book that this info is from “Conquer the Crash” which was published in 1999! – What you are seeing develop is NOT something out of the blue, it has been forecast and known about for decades, if this is new to you then you really ought to be reading material from credible sources and not the rubbish that is out there in mainstream news channels.

Thought this might help brighten up your experience of Friday 13th!

Abenomics: From Faith to Failure
Why the biggest monetary stimulus effort in the world did NOT stop deflation in its tracks

By Elliott Wave International

When Shinzo Abe became the Prime Minister of Japan in December 2012, he was regarded with the kind of reverence that politicians dream about. He was featured in a hit pop song (“Abeno Mix”), hailed as a “samurai warrior,” and featured on the May 2013 The Economist cover as none other than Superman.

But in the two short years since, Abe as Superman has been struck down by the superpower-zapping force of economic kryptonite. On November 17, government reports confirmed that Japan’s brief respite from a 20-year long entrenched deflation was over as the nation’s 2nd & 3rd quarter GDP shrank 7.2% and 1.6% respectively.

In the words of a November 20, 2014 New York Times article:

I’d say it’s time to call Abenomics a failure. All that is left is disappointment.

Why did Abenomics fail? That’s the one question “being asked in a shell shocked Japan,” observes the same New York Times piece.

Their shock is understandable. Shinzo Abe spearheaded the boldest and biggest economic stimulus campaign to revive growth and reduce debt not just in Japan’s history, but in the world’s. To give you an idea of its magnitude, consider this:

Abe greenlit daily quantitative easing interventions by the Bank of Japan equivalent to $15 billion per day.

— VS. —

At its peak, the U.S.’s QE program authorized “only” $85 billion a month.

Japan’s QE was three times larger than the Fed’s! According to the mainstream analysts, there was no way the strategy could fail:

“With Abenomics, Japan Catches a Sense of Revival… The architect of this resurgence is Prime Minister Shinzo Abe. His plan reflects a breadth of vision and coordination that no leader until Abe seemed interested in.” (Washington Post, May 24, 2013)

But, despite its historic size and the widespread faith in its success, Elliott Wave International’s team of analysts foresaw an entirely different outcome — namely, Abenomics would not be the alchemical instrument of economic change:

January 22, 2013: The Bank of Japan ups its inflation target rate to 2% and makes an “open-ended commitment to buy assets until the target is in sight.”

February 2013 Elliott Wave Financial Forecast: “In the area of central bank intervention, the ‘juice’ continues to flow… The effort to escape gravity illustrates just how detached central bankers remain from the reality that their efforts are imprudent, unfair, and doomed to fail.”

February 2013: Abenomics is hailed as the catalyst for the yen’s collapse.

March 2013 Asian Pacific Financial Forecast: “Most conventional observers are convinced that Japanese Prime Minister Abe’s New Liberal Democratic Party (LDP) administration has caused the yen to plunge… simply by promising to do whatever it takes to stop Japan’s deflation.”

“Conventional observers are just doing what they always do: looking back to around the start of a financial trend, finding a significant event from around that time… and then assuming that the event caused the trend.”

Chart of JPY/USD shows, however, that the yen completed a large-degree fifth wave in November 2011, one year BEFORE Abe even took office!

May 18, 2013 The Economist cover of Abe as superman writes: “Mr. Abe is electrifying a nation that had lost its faith.”

May 2013 Elliott Wave Financial Forecast: “Faith in the power of central banks to stem the ebbing tide of [deflation] remains strong. Ultimately, however, all of these efforts will fail.”

June 2013 Elliott Wave Financial Forecast: “As Japan’s economy teetered, Japanese Prime Minister Shinzo Abe instituted an unprecedented spending and monetary easing scheme despite a gross public debt that projects to a whopping 230% of GDP. It follows at least a dozen prior ‘stimulus’ efforts all of which failed. This effort is simply larger, so it will prove to be an even more spectacular failure.”

It’s been 2 year since Abenomics began, and the November 20 New York Times article confirms “its failure.” Since its inception:

  • Japan’s government debt has increased to 250% of GDP
  • The index of Japanese industrial output is 96.8, the exact same reading as 1989
  • Real household income has fallen by 6%
  • And Japan has an 11 trillion yen trade deficit –vs.- a 5 trillion yen trade surplus in 2010

Now, EWI’s educational resource team has put together a new, free report titled “What You Need to Know Now About Protecting Yourself From Deflation” that explains why

“The psychological aspect of deflation and depression cannot be overstated. When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation. As creditors become more conservative, they slow their lending. As debtors and potential debtors become more conservative, they borrow less or not at all… These behaviors reduce the velocity of money, the speed at which it circulates to make purchases, thus putting downside pressure on prices. These forces reverse the former trend.”

A deflationary psychology has been entrenched in Japan for the last 20 years. It is now arriving in Europe. You will be inundated by news reports from all four corners of the globe on deflation’s progress, and what the world’s monetary authorities are doing to ensure it will remain a temporary, contained and manageable event.

The worst thing you could do is rest on their promises.

Our new, 11-page report “What You Need to Know Now About Protecting Yourself From Deflation” is 100% free. It takes your understanding of this complex economic shift to a radical level AND gives you the ultimate advantage of knowing how to thrive during economic downturns.

The best part is, the entire report is now available to you free — simply by joining Club EWI and its rapidly expanding community.Go ahead and click here for instant access!


This article was syndicated by Elliott Wave International and was originally published under the headline Abenomics: From Faith to Failure. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

What’s Scarier Than DE-flation?

I’ve been a personal subscriber to EWT for years and can absolutely confirm that for years they’ve been shouting and warning about DEflation rather than Inflation throughout – If things affect your personal wealth then you have a personal responsibility to yourself and your Investments to understand what is REALLY happening out there – because I can tell you, it’s NOT highlighted in the mainstream media until AFTER the event!!!!!

What’s Scarier Than DE-flation?
As early as 2011, our analysis warned that Europe’s deflation was coming — here’s why

By Elliott Wave International

For the economies of Europe, the past few months have felt like one long ice-bucket challenge that never ends: A perpetual state of shock induced by the bone-chilling fact that deflation

“…has become a reality in many European countries.” (Oct. 24, New York Times)

At last count, eight European nations are now in outright deflation, including:

  • Italy’s -0.1% annual inflation, the country’s first descent into deflation since 1959
  • Spain’s -0.3% annual inflation, the most serious deflation of any larger eurozone economy
  • France’s near 0.0% core inflation, the lowest in modern history

And no, in case you were wondering, it’s not the warm and fuzzy kind of “good deflation” being touted here in the United States, where the only consequence is lower prices. In Europe, it’s the

“…pretty awful kind.” “Titanic Europe headed for shipwreck” KIND OF awful (Nov.14, The Telegraph)

So, we ask you: What could possibly be scarier than deflation? How about — not even being able to foresee it?

Yes, deflation was a surprise to the financial authorities. Says one Oct. 12 financial blog post:

“It seems the entire world is cooling off in ways most political leaders and central bankers never saw coming. Global finance ministers are now up against a beast none have known in their professional lives.”

That’s what should keep adults like you and me up all night — the “never-saw-it-coming” part. Just how safe is our future if the people whose job it is to keep the world’s economies stable lack the tools to predict one of the most dangerous economic conditions?

This recent lack of foresight jives with what former Federal Reserve chairman Alan “The Maestro” Greenspan said in 2008:

“We can tell a bubble only after it burst.”

It also jives with what some big wig at the Organization for Economic Co-operation & Development said in 2012:

“The responsibility of the ‘latest’ financial crisis, which no one saw coming, should be borne by all of us.”

But the fact is — there was — and is — a way to see these deflationary economic sea changes coming.

This chart of the UK Consumer Price Index is a reliable bellwether for inflation in Europe. You can see that price expansion peaked in September 2011 at 5.2%:

At the time, the “D” word was completely off the mainstream radar. Soaring oil, grain, and commodity prices, alongside a stimulus-happy European Central Bank fueled widespread fears of runaway inflation.

One month before the top, Elliott Wave International’s August 2011 European Financial Forecast laid the opposing groundwork:

“We maintain our stance, however, that the looming threat is not inflation but deflation. Far from a sense of relief, the Banks’ paramount feelings should soon develop into an unrelenting dread.”

Here’s what made us take a contrarian stance (among many other reasons):

[In the August 2011 issue,] for instance, we showed a chart of eurozone manufacturing production and British GDP growth. Both were falling, not rising, indicating Europe’s likely return to economic contraction.

[This] chart is another key piece of deflationary evidence… It shows the relentless downward trajectory of Swiss, German and British 10-year bond yields, which is one of the thorniest problems for those who take the inflationist worldview.

Bond yields aren’t just falling: 10-year Swiss, German and British yields collectively dropped to record lows last month. The unrelenting demand for Europe’s safest debt is a smoking howitzer that is blowing the inflationists’ case to pieces.

The European Financial Forecast, Sept. 2011

However, the widespread call for inflation only continued to intensify in the mainstream finance. In fact, in February 2012, when the U.K. producer price inflation came in higher than expected, it prompted this word of advice from economists:

“PPI: Another wake-up call for apoplithorismosphobes, the clinical term for those who fear deflation. We recommend that sufferers ‘seek therapy.‘” (March 12, Wall Street Journal)

Yet, our July 2012 European Financial Forecast remained committed to its counter claim:

“Our models say that inflation rates will keep failing until they’re again measuring the rate of deflation as they last did briefly in 2009.”

So, it’s now 2014 and deflation in Europe is no longer a specter or a figment of an unbalanced imagination. Here’s a comment from the September 2014 European Financial Forecast:

“The central bank’s latest deflation-fighting contrivance is a €400 billion package of targeted LTRO loans, which are designed to compel banks to lend to ordinary business owners… The ECB has slashed its main refinancing rate to 0.15% and now charges for banks’ overnight deposits. The result? Shown below, Europe’s largest economy, Germany, just contracted 0.2%; French economic output has ground to a halt; and Italy just entered its third recession since 2008.”

Now that deflation in Europe is a reality, the question is — will it get better? Is this just a temporary economic condition that will be soon replaced with another one — the condition that economists are much more familiar with, inflation?

We don’t think deflation will surrender quite so easily. Want to learn more about deflation before it could potentially affect your investments?

Today, we invite you to read a free report from Elliott Wave International titled, What You Need to Know About Protecting Yourself from Deflation. This 10-page report will help you understand how you can better prepare yourself for its devastating effects.

Just follow this link to get your free report — and start reading now!


This article was syndicated by Elliott Wave International and was originally published under the headline What’s Scarier Than DE-flation?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

A GREAT Model to Understand Gold’s Price Swings

A GREAT Model to Understand Gold’s Price Swings
Starting with gold’s recent sell-off to a 3-YEAR low

By Elliott Wave International

What do the last three chairs of the U.S. Federal Reserve have in common?

Well, it’s not their taste in structured black blazers. It’s the fact that they all see gold as a kind of Winston Churchill-like nesting doll — a riddle wrapped in a mystery inside an enigma.

July 2013: Then Fed chairman Ben Bernanke told Congress he doesn’t “pretend to understand gold prices… nobody does.”

November 2013: At her confirmation hearing, Fed successor Janet Yellen concurred: “I don’t think anybody has a very good model of what makes gold prices go up or down.”

October 25, 2014: At the New Orleans Investment Conference, former Fed “The Maestro” Alan Greenspan explained that gold’s “value as a currency is outside of the policies conducted by governments.” (Wall Street Journal)

Translation: Folks, the highly revered institution I used to work for — the one whose policies are often cited by the mainstream as a “catalyst” for gold prices — doesn’t actually control the marketplace.

But wait! 4 days later, on October 29, Greenspan then told the Council of Foreign Relations that the Fed’s $4 trillion balance sheet is a “pile of tinder, but hasn’t been lit.” Once the central banks stop “sitting on” their reserves, said tinder will ignite, “inflation will eventually have to rise,” and in turn, “gold will move higher, measurably so.” (FXstreet.com)

Translation: Those policies actually do control the gold market — it just takes a while for their potency to kick in. Like, say, 5 years of quantitative easing, 10 rate cuts to 0%, and $4 trillion in “inflation”-producing stimulus.

It makes you think: For those supposedly at the helm of where gold prices are going, they sure don’t seem know how they got there.

But what if you could know? Not only how gold prices got to where they are, but also why and sometimes even where they are headed before they even turn?

Bernanke, Yellen, Greenspan, they’re half right: Gold prices are difficult to understand. And there is no such thing as a 100% fool-proof model to forecasting its price trends. But there is a “good model” — a great one, in fact: Elliott wave analysis.

Unlike conventional analysis, which looks outside the market for clues to future price action, Elliotticians look on the price charts themselves. There, when volatility doesn’t blur the lines, we can detect specific patterns that indicate where prices are likely moving next.

You can use gold’s 3-year-long sell-off as a prime example. Back in 2010-2011, gold’s bullish “fundamental” picture was allegedly in the bag. The U.S. Federal Reserve just launched its $1-trillion-a-year quantitative easing program, which was widely expected to fuel gold’s inflationary fire. An August 25, 2011 Gallup Poll confirmed:

“Americans Choose Gold as the Best Long-Term Investment.”

Also this May 10, 2011 Reuters: “Deutsche Bank Eyes $2000 Gold. We believe the main beneficiary of super low interest rates in the U.S., a weak US dollar … and ongoing questions over the stability of the financial system will be gold.”

Elliott Wave International, however, saw a different outcome for gold on the metal’s price chart: an impending decline. In theSeptember 2011 Elliott Wave Financial Forecast, our analysis included the following chart, which showed gold prices at or near the end of a decade-long, 5-wave advance.

“Gold’s wave structure is consistent with a terminating rise. [Elliott waves progress and therefore top out in 5 waves]. As this monthly chart shows, prices exceeded the upper line of the channel formed by the rally from the 1999 low in what Elliott terms a throw-over. A throw-over occurs at the end of a fifth wave, and represents a final burst of buying. The pattern is confirmed as complete once prices close back under the upper line, which currently crosses $1650.”

From its September 2011 peak of $1921.50, gold prices have plunged 30%-plus, hitting a 4-year low on November 3 — indeed confirming the Elliott set-up of a long-term tradable top the waves warned about three years ago.

An independent perspective like this gives you the opportunity to see financial markets in a radical new light; one that brings you closer to understanding the reason why prices move the way they do, and anticipating those moves before they take place.

Gold: The Big Picture and the Near-Term Outlook
You can better understand gold’s price swings when you know the big picture in this precious metal. In these two 5-minute video clips from his presentation at the San Francisco MoneyShow in August 2014, EWI’s Chief Market Analyst Steve Hochberg looks at a long-term chart of gold to demonstrate how extreme opinions cause most people, governments and central banks to act on a trend at just the wrong time. He then explains his current analysis, and he offers you his outlook for gold over the coming months. His forecast has already begun to take shape.

Watch his videos free now >>


This article was syndicated by Elliott Wave International and was originally published under the headline A GREAT Model to Understand Gold’s Price Swings. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Europe: The ONE Economic Comparison That Must Not Be Named… Was Just Named

Actually this article was written and produced in September 2014 – I just didn’t publish it on this site – and NOW Deflation is panicking all the finance chiefs of Europe – Predicted years ago and continually – WELL DONE Elliot Wave International for your bold and analytically stance throughout this Deflationary Depression we’ve been in since March 2000.

Very few people called it right – from recollection a handful – well done

Europe: The ONE Economic Comparison That Must Not Be Named… Was Just Named
The Continent is now teetering on the edge of a “Japan-style” deflation. Here’s our take on it.

By Elliott Wave International

It’s happened. The one economic comparison Europe has dreaded more than any other; the name that’s akin to Lord Voldemort for investors has been uttered: “deflation.”

And it’s not just “deflation.” You can still spin that term in a positive light if you get creative enough. Say, for example,

“Falling prices during deflation actually encourage consumers to spend.”

But once you add the following two very distinct words, there’s no way to turn that frown upside down. And those words are“Japan-style” deflation.

Japan has languished in a deflationary cycle pretty much since the late 1990s, its once booming economy reduced to ‘lost decades’ of stagnation. Europe is now teetering on the edge.” (Sept. 19, Associated Press)

Which begs an obvious question: Weren’t Europe’s central banks supposed to prevent this very scenario from happening via their unprecedented, 4-year-long campaign of “money-printing,” bond-buying and interest-rate-slashing?

The answer to that question is… yes. Those actions were indeed supposed to boost inflation.

What’s more, no one can say the European Central Bank didn’t utilize every available tool in their arsenal to try and accomplish that end. The problem is they were fighting a losing battle.

And, we are both happy and sad at the same time to report that from the very beginning, when the first rate cut was loaded into the save-the-economy cannon, we at Elliott Wave International foresaw that Europe’s retreat toward deflation was unavoidable.

Here’s a quick recap of what led us to that conclusion.

— 2011 —

January 2011: The “D” word is way off the mainstream radar. Soaring oil, grain, and commodity prices has fueled widespread fears of runaway inflation. Writes one January 22, 2011 LA Times article:

“Around the world, many countries aren’t confronted with the debilitating forces of deflation, but the opposite — inflation. Annualized inflation in the euro zone rose above the 2% target rate for the first time in more than 2 years.”

February 2011: The European Central Bank unveils its brand-new Long Term Refinancing Operations (LTRO), extending nearly half a trillion euros in 3-year loans to banks at negligible interest rates — to stimulate the economy (and inflation).

July 2011: U.K.’s consumer price index declines, prompting a sigh of relief, not a shudder of fear from the Bank of England, who says “we can now breathe a little easier.”

(VS.)

Our August 2011 European Financial Forecast:

“We maintain our stance, however, that the looming threat is not inflation but deflation. Far from a sense of relief, the Banks’ paramount feelings should soon develop into an unrelenting dread.”

September 2011: U.K.’s consumer price index peaks at 5.2% and officially sets the downtrend in motion.

— 2012 —

January 2012: The Bank of England adds another 50 billion pounds to its asset purchase program, bringing its 3-year campaign of “money-printing” to 325 billion. The European Central Bank is less than 14 years old, yet total assets at the ECB breach 3 trillion.

February/March 2012: U.K. producer price inflation comes in higher than expected, prompting one U.K. economist to say: “PPI: Another wake-up call for apoplithorismosphobes,” the clinical term for those who fear deflation. The economist goes on to recommend that sufferers “seek therapy.” (March 12 Wall Street Journal)

(VS.)

Our July 2012 European Financial Forecast:

“Our models say that inflation rates will keep failing until they’re again measuring the rate of deflation as they last did briefly in 2009.”

August 2012 European Financial Forecast makes the first comparison of Europe to Japan:

“European leaders,” by slashing rates and printing money “seem determined to replicate Japan’s experience. Their efforts will not stop consumer price deflation.”

— 2014 —

May 2014 European Financial Forecast:

“The chart shows that British CPI accelerated lower after falling from a counter-trend peak of 5.2% back in September 2011, with year-over-year price growth just ticks above its late-2009 low.

“More than half of the 28 EU nations either teeter on the brink of deflation or have succumbed to falling prices already.

“The following chart shows that economic stagnation has reached even Germany, Europe’s most robust economy.”

September 2014 European Financial Forecast:

“In a related phenomenon, the press has now jumped on the slew of similarities between Europe’s flagging economy and Japan’s… Clearly, the parallel paths of the two regions have become impossible for the press to ignore.

“The central bank’s latest deflation-fighting contrivance is a €400 billion package of targeted LTRO loans, which are designed to compel banks to lend to ordinary business owners. Also like Japan, the ECB has slashed its main refinancing rate to 0.15% and now charges for banks’ overnight deposits. The result? Shown below, Europe’s largest economy, Germany, just contracted 0.2%; French economic output has ground to a halt; and Italy just entered its third recession since 2008.

The world has finally woken up to the possibility of a Japan-style deflation in Europe — years after the writing was already on the wall.

Now, you need to prepare for what’s to come.

The best part is, Elliott Wave International’s Founder and President, Robert Prechter, as written a book that can help you do just that. And you can read 8 chapters of Prechter’s bestseller, Conquer the Crash, free.


8 Chapters of Robert Prechter’s Conquer the Crash — FREE

This free, 42-page report can help you prepare for your financial future. You’ll get valuable lessons on what to do with your pension plan, what to do if you run a business, how to handle calling in loans and paying off debt and so much more.

Get Your FREE 8-Lesson “Conquer the Crash Collection” Now >>

This article was syndicated by Elliott Wave International and was originally published under the headline Europe: The ONE Economic Comparison That Must Not Be Named… Was Just Named. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

What’s Bigger Than a $1.4 Billion Mortgage Ratings Scandal?

You just cannot find better Independent analysis of the markets – I’ve been an EWI subscriber for years and although I don’t fully subscribe to their Elliott Wave theory I still value their research and analysis of the markets very very highly – The Hovis Trader

What’s Bigger Than a $1.4 Billion Mortgage Ratings Scandal?

The great “inflated” expectations for gold, oil, commodities — and now stocks

By Elliott Wave International

Editor’s Note: You can read the text version of this story below the video.

On January 21, one of the biggest financial lawsuits in recent history came to a costly end. The accused, ratings behemoth Standard & Poor’s, agreed to a $1.4 billion settlement for “inflating credit ratings on toxic assets,” thus accelerating and exacerbating the 2008 subprime mortgage crisis.

Settlement aside, there is a far bigger issue here than business ethics or conflicts of interests, which is not likely to get a hearing in the court of mainstream finance.

Which is: The professionals who are supposed to assess investment risks are no better at it than you or I.

Case in point: Think back to November 30, 2001. The world’s largest seller of natural gas and electricity has gone from cash cow to dry bone. Its share price had plummeted 99%, from $90 to just under $1. YET– the company continued to enjoy an “INVESTMENT GRADE” rating.

The company’s name: Enron. Four days later, it filed for the largest bankruptcy in U.S. history.

Enron seems like a distant memory, but what about the subprime mortgage debacle? Moody’s rating service slashed the ratings of 131 subprime bonds due to higher than expected defaults, in July 2007 two years after the market for non-traditional mortgages had already turned.

Spot a trend here? The “experts” failure to anticipate huge trend changes in companies, and in the overall economy. In the first edition of his business best-seller Conquer the Crash, EWI president Bob Prechter wrote:

The most widely utilized ratings services are almost always woefully late in warning of problems within financial institutions. They often seem to get news about a company around the time everyone else does… In several cases, a company can collapse before the standard ratings services know what hit it.”

So here’s the question: What are the experts not seeing now that you and I need to prepare for?

What about gold? In 2012, with prices nearly reclaiming all-time high territory, the Federal Reserve’s quantitative easing campaign was supposed to keep the wind at gold’s back.

“Ben Bernanke has just offered gold investors a… gilded invitation to participate in the greatest secular bull market of our time.” (April 14, 2012, Motley Fool)

Then this happened:

The same goes for the 2008 peaks in oil and commodities — two more “safe-havens” that were supposed to benefit from the Fed’s money-printing campaign, but instead prices fell to lows not seen since the 2007 financial crisis.

So, that leaves the remaining outlier — equities, which have climbed to record highs. And, according to the experts, the path of least resistance remains up. A December 14, 2014 article in the New York Times:

“We don’t see a lot on the horizon that could derail the U.S stock market in particular.”

Our January 2015 Elliott Wave Theorist urges caution with this single chart of the S&P 500’s year-end valuations since 1927. Every major peak of the last 90 years landed well outside the normal range: 1929, 1987, 2000, and 2007.

We believe the precarious placement of 2014 sends a similar message: “The stock market and the economy are not in a new multi-decade recovery as economists believe, but very late in a transition phase from boom to bust.”


Deflation Rearing its Ugly Head report

Free online report from Elliott Wave International:
Deflation Rearing its Ugly Head in Subtle and Not-So-Subtle Ways Around the Globe.

You still have a small window of time to prepare for a scenario most investors don’t even know is possible — and now even more likely.

Get your free report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline What’s Bigger Than a $1.4 Billion Mortgage Ratings Scandal?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Heard about DEflation?

Heres further detail of the Deflation time bomb over hanging us at this time

Debt and Deflation: Three Financial Forecasts

There’s more to deflation than falling prices

By Elliott Wave International

Editor’s note: You’ll find the text version of the story below the video.

Inflation ruled from 1933 to 2008.

Yet in the just-published Elliott Wave Theorist, Bob Prechter’s headline says, “Deflation is Starting to Win.”

Take a look at this chart from The Telegraph:

… the number of countries experiencing ‘lowflation’ has been steadily rising from 2011 (blue line). The eurozone tipped into outright deflation in December, with Germany, Britain and the US also seeing prices rise at near record lows.

The Telegraph, January 14

But as Prechter explains, falling prices are an effect of deflation.

Deflation is not a period of generally falling prices; it is a period of contraction in the total amount of money plus credit. Falling prices in an environment of stable money is indeed a good thing. In fact, in a real-money system, it is the norm, because technology makes things cheaper to produce. But when debt expands faster than production, it becomes overblown, then wiped out, and prices rise and fall in response.

The Elliott Wave Theorist, January 2015

So a major debt buildup is a precondition of deflation. Do we see this today? The third edition of Conquer the Crash shows the answer.

Total dollar-denominated debt has skyrocketed since 1990. The upward trend turned slightly down during the 2007-2009 financial crisis, but has since crept higher.

How fast and how far can this nearly $60 trillion in debt dwindle?

It’s instructive to review the collapse of the 1920s credit bubble.

On the left side of the chart, note how debt deflation needed nearly a decade to unwind.

Today’s mountain of debt is far higher than in 1929, yet our indicators suggest that the next debt deflation could unfold much more rapidly.

The third edition of Conquer the Crash provides 157 forecasts. Here are three:

  • Real estate values will begin to fall again, ultimately more than they did in the 1930s.
  • Hedge funds, mutual funds, money-market funds, managed accounts and brokerage accounts will go out of favor — many will go out of existence.
  • Financial corporations previously bailed out by the Fed and the U.S. government will fail again, as will new ones.

Deflation Rearing its Ugly Head report

Free online report from Elliott Wave International:
Deflation Rearing its Ugly Head in Subtle and Not-So-Subtle Ways Around the Globe.

You still have a small window of time to prepare for a scenario most investors don’t even know is possible — and now even more likely.

Get your free report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline Debt and Deflation: Three Financial Forecasts. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.