Economic predictions for the second half of 2011
My landmark economic prediction about will happen in the second half of 2011, written in a letter on April 14, 2011. The first time I made this assertion.
An excerpt from the previous letter to Stan, which I thought should stand on its own:
I believe the second half of this year will be particularly bad and that we’ll start to see the increased pinch in June or July. My basis is soft as I really don’t know when the government will back off on Q.E. because it has no more capacity to take on debt without increasing the interest it pays to debt holders. Maybe it will just do more of its own incestuous buying of its own debt at favorable interest as a way of creating money out of thin air. The moment it starts to get real, that is when we start to feel the pinch.
There is another factor looming that will make sure we feel the pinch soon: that is the downgrading of debt [of the U.S. credit rating] that will soon start to come as we go any deeper into this cycle. THAT can intensify the downward spiral quickly.