22

The World in 2013 – Some predictions

by Mitch Feierstein about 1 year 8 months ago

Bunga, Bunga is back!

Bunga, Bunga is back!

 

The return of the undead

Berlusconi to return to Italian politics. Mario Monti to quit (and return to Goldman Sachs for a annual honorarium of $50,000,000). The Italian long bond to go to 600 basis points over bunds. Investors to notice that Italy is still in the position of having massive debts and a completely stagnant economy. Panic to break out (again).

 

 

 

The bursting of the bubble

London property has been wearing anti-gravity boots for years now. Hey, the market has become so frothy that know-nothing footballers have been turning themselves into property developers (a sell signal if ever there was one.) But those anti-gravity boots are starting to lose their potency. Stand by for a massive fall in London prices. Property elsewhere in the UK will have a sympathy fall too.

 

Japan to have stable leadership

After too much calamitously indisciplined and indecisive leadership, Shinzo Abe has a real chance to holding onto power for a good stretch. He’s got massive problems to contend with. A structurally weak economy, massive debts and a prickly neighbour to the west. But just possibly, Abe-san is the man for the job. We’re wishing him luck: he’ll need it.

 

Francois Hollande to become most unpopular French President …

… since the last one. Hollande came to power on the back of anti-austerity promises, as though Sir Taxalot and his good steed Spend-Some-More was going to get France out of trouble. By now, Hollande has started to notice that France is in a fiscal mess, with chronically weak banks and far too much government spending. Will the French public enjoy Hollande’s conversion to the path of fiscal probity? We’re thinking non.

 

English middle classes to subsist on potatoes

Er, unless porridge is cheaper. As food inflation continues to skyrocket – beef up 75%,  lamb up 55%, fruit up 26% – and real wages continue to stagnate, more and more people will be forced to trade down to the cheapest (and least healthy) foods simply to get by. Oh, and as fuel prices continue to surge, we’re going to see a whole lot more people burning their floorboards to keep warm. But there is good news. The bankers are OK, people! And corporate profits are great! So you don’t need to worry about the FOGOs (Friends Of George Osborne). They’re all going to be fine.

 

The LIBOR scandal to grow

Three minnows arrested so far in the LIBOR scandal while the whales remain at large. That number’s going to rise faster than the yields on Spanish debt. If we’re lucky, we’ll start to see the stirrings of similar enquiries into the market for US Treasuries market. That market is stitched up tighter than Tony Soprano’s waste management business … and involves less savory individuals.

 

The whale was a "tempest in a teapot"

London Whale a "tempest in a teapot"

More of the same

Ever noticed that central bankers – ivory-tower academics for the most part – have been wrong about virtually everything for thirty years? Ever noticed that the same old advisors (take a bow Larry Summers) are recycled again and again, making the same failed policy prescriptions? Yep, well, 2013 is the year of no change at all. Same faces, same policies, same failures. Our big tip for the next big appointment: J.P. Morgan’s Dimon will smash the Goldman-only rule in Washington politics by leaving Wall Street for public service (that is: looking after his friends on Wall Street at the expense of everyone else.)

 

 

 

‘Triple-dip’ to become phrase of the year

If 2012 was the year of double-dip in the UK, 2013 has every chance of making it a recessionary hat-trick. Of course, the phrase is a con: it suggests that another recession now will be like some kind of temporary setback before the economy’s inevitable resurgence. But we had ten years of growth built on debt. Now we’ve got ten years of stagnation as we pay that debt back down. Triple-dip? How does quintuple-dip sound?

 

Civil unrest in Spain

Super Mario Draghi saved the world in 2012 (by promising to buy shoddy debt without limit for as long as needed.) We can’t even think what’s wrong with that policy … but here’s our bet: that Spain hits another crunch in 2013. Catalonian unrest grows. Unrest among those 50% of youth unemployed grows. And all of a sudden those – totally understandable – expressions of discontent force a financial, political and economic crisis. How will you escape this time, Mario?

 

Wanting to be head of the EU......

Wanting to be head of the EU......

Merkel to be re-elected with 99% of the vote

Angela Merkel is Ms Reliable in German politics. Unfortunately she’s achieved that position by shirking every major decision in the Euro crisis, as a result of which the continent has racked up massive, unsustainable Ponzi-ish debts aided and abetted by lying bankers and southern European politicians who are either corrupt or incompetent. (Or, Silvio, both.)

 

Gold to hit new highs

What’s bad for money is good for gold. After a long bout of profit-taking, we expect gold, silver and other commodities to hit new highs. Meantime overvalued tech companies (we’re looking at you, Farcebook) will continue to lose value. And Exchange Traded Funds will increasingly be exposed as the new subprime market. Stand well back if you don’t want to be hurt.

 

Problem solved

The US fiscal cliff? OK, here’s what’s going to happen. The Democrats will sit down with Republicans. Both sides will call attention to the fact that the US fiscal gap (taking into account the oncoming medical and social security express train) is among the worst in the world. Both sides will set aside party differences and put together a plan which will be based on serious revenue increases and major cutbacks to entitlements. None of these things will be popular, but leaders from both parties will explain the logic truthfully and dispassionately to their electorates. Another US recession avoided. Also, pigs will fly.

 

Need a compact guide to the crisis?

Fortunately we have one for you: Mitch Feierstein’s Planet Ponzi. If only George Bush and Gordon Brown had had a copy …

If he had only read Planet Ponzi...

If he had only read Planet Ponzi...

22 Responses to: The World in 2013 – Some predictions

  1. Tony Warren says:

    I am very curious about your dislike of ETF’s. Can you direct me to further reading to prove why you are against very broadly held market positions that seem to me to be only available to retail investors through index based ETF’s.

    Cheers

  2. Mitch Feierstein says:

    Thanks Tony!
    Bet it’s cold in Canada… Its a matter of not investing in anything you do not understand 100% – For starters please carefully read every prospectus from cover to cover ensure that you understand the fees, basis calculations, risk factors, correlation and what happens when liquidity dries up in the underlying asset class or if the bank or entity who manages the ETF implodes. Case on that before Lehman’s went bust and needed capital they issued “Principal Protected Notes” hidden on page 400 odd (in small print) it mentioned liquidity and if Lehman went bankrupt the buyer would be entitled to nothing.. The case goes on.. Buyer beware!

    • Jim Goold says:

      I have a similar concern re ETFs and a similar view on the long term benefit of holding agricultural commodities. However I find it difficult to uncover simple and cheap ways to invest in agriculture other than ETFs. I live in Spain but invest via the UK and the options on agriculture vehicles are very limited.

      • Mitch Feierstein says:

        Thanks Jim,
        Unfortunately, many of the ETF products are not highly correlated to the underlying commodities and or some are terrible long term investments. Depending upon your risk appetite and financial management skills I would suggest options strategies on the underlying assets. Cheers. Mitch

        • Jim Goold says:

          Thanks Mitch. I’m reasonably financially literate but have never used options. I’ll have a look.

          I’m half way through your book and thoroughly enjoying it. The most depressing thing, which you alluded to, is that nothing will change unless the general population wakes up and elects politicians who are honest and willing to make the sweeping and difficult changes that the system needs. However the vast majority of voters have no interest in reading anything other than a tabloid headline or are now themselves totally reliant on the Ponzi scheme continuing so they will neither never understand what’s going or don’t want to, ensuring nothing changes. They might all wake up when interest rates inevitably rise and their mortgages are no longer affordable. Depressing!

  3. brendan felton says:

    you spoke about gold and commodities being good investments…what about the forex market with regards the DOLLAR and YEN pairs? thanks

    • Mitch Feierstein says:

      Thanks Brendan,
      I’ve been bearish on Yen for a while and still see it over 100 soon. No markets ever move in a straight line – too many traders think the central banks have done away w/volatility. Hmmm – With every crisis comes opportunity – I like long/short in FX, fixed income and commodities. Best, M

  4. Gary says:

    Enjoyed your spot on Keiser Report. Interesting that some of your predictions have proved accurate, already and we’re 5 weeks into 2013.

    Gary

    • Mitch Feierstein says:

      Thanks Gary! Hope you enjoy my book & you are only as good as your next prediction!
      Cheers
      Mitch

  5. Monti says:

    I am a financial advisor. I do income planning for retires and utilize indexed annuities a lot for this type of planning. I obviously am working with various insurance companies that offer these annuities. What is your take on insurance companies and indexed annuities ? They are contractually guaranteed …will they hold up as they always have in the past when we reach a financial collapse?
    Thank you

    • Mitch Feierstein says:

      Great question Monti,
      It depends upon which benchmark is being utilised. That said, I believe many of the insurance companies are grossly overvalued and several have potential for implosion. One trigger may be: a global bond market collapse followed by a few sovereign defaults. In today’s world, with Enron style accounting back in vogue allowing companies and government pension plans to remain massively underfunded I would not trust any “guarantee”. Moving the goal posts and adjusting the score after the game has a higher probability. Unfortunately, the FED and other central banks will try and transfer the toxic assets from their balance sheets to the “long-term” investors.

  6. SilverStallone says:

    Hello Mitch,
    Thanks to Max Keiser I found your site and so far enjoy it. I play the markets everyday they are open and would like to inform you that I make more money shorting stocks than I do long. I use technical analysis along with fundamentals and manipulation (The markets, not mine). I think you would be very amazed at all my predictions I’ve talked to people about for years now, and I’ve been damn near 100% accurate with what is unfolding before our very eyes. So I would like to add to your 2013 predictions if you wouldn’t mind, I believe that in order for the U.S. to weasel their way out from under this debt, we are going to see a cyberattack on the banks in such a massive scale that it will disrupt the markets to start the collapse. This way, “They” (Bankers and Politicians) keep their jobs while telling the masses it was some “Ghost” that created this atrocity on our country. The writings are on the wall, and this is something new and unheard of to the general public.
    Either way, a collapse is coming and they just need something to trigger it. If I can make more money shorting stocks, that should tell most that the markets are way over bought and the weight is becoming greater by the day. QE is running out of steam, and I also worry about 401′s, and pensions being managed by the Goverment to keep the Ponzi going until it can’t. I always tell folks that “Desperate people do desperate things, but desperate Governments do want they want.
    Take care and keep the sheep informed,
    SilverStallone

    • Mitch Feierstein says:

      Terrific overview Scott,
      Market investors should always be aware of long/short opportunities and I’m glad you do your homework. In my view, value investing (Warren, do as I say not as I do, Buffett’s philosophy ) is past its
      sell-by date. The world had permanently changed and the hundreds of trillions in out of control leverage will bite us all in the arse sometime soon. Our focus is more on long-term macro economic trends – please have a read of my article Capitalism Without Bankruptcy is Like Catholicism Without Hell – in our new normal of zero accountability and transparency governments and non-elected officials have lost the plot and this will not end well. My goal is to help in moving us all closer to achieving the real change we need before the implosion!

    • Mark says:

      I agree Sly,
      They are far more sly and cunning than even the most sociopathic psychotic sadomasochistic narcisitic macchiavellians. Just as their 9/11, or is it the police at 911, also, amongst so much more, wiped out the ability to have transparency on wall street and with the spooks, a false flag cyber attack would help them disguise their globalist take over off pretty much everything. Yippee, F’all we can do really, except educate the world though football games and “I just want an easy life” don’t help in that, do they?

  7. rosy says:

    Dear Mitch I am a small investor just trying to hold onto our hard earned money we have worked years for . I watch Max Kieser in the uk , and have seen you on his show and bought the book which I have enjoyed . Is gold the only safe investment and should I be buying more .
    Many thanks keep up the good work .

    • Mitch Feierstein says:

      That’s a great but very complex question – Quickly, I like gold, sliver and commodities. We are looking for a correction when stocks have a last blow-off “suckers rally” in our lifetime. This will provide a great buying opportunity. In my view, diversification is the key – the currency wars have begun GBP is down 5.5% in the past 2 months Vs. USD and has more downside. In short, what good are promissory notes or printed currency when those making the promises are printing infinite quantities as their value collapses? Investing in countries that have very little debt is also key to survival… In my view the crisis has a long way to go and those in power are trying to put out the flames with petrol.

  8. Micah says:

    Mitch: What’s your view on the Israeli economy in 2013? Micah

  9. Mitch Feierstein says:

    I’m cautiously optimistic and constructive on Israel, an EM gem! Israel’s housing bubble is long overdue for a serious correction. Equities will also correct as Europe and US markets collapse – but looking forward it’s an opportunistic economy with terrific growth potential rather than an economy destined for zero growth, 20 years of stagnation and or default.

  10. Declan Carolan says:

    just got your book and can put it down i am taking my money out of the banks putting it in the ground for safe keeping the people in Ireland are been screwed by the fourth reich i realy hope a default happens and the euro falls apart its autocratic to the core Ireland is broke.Dont belive the lies that are been told by the political set. They want to borrow more money of the markets i live here we have 50% unemployment and VERY high suicide RATES the banks are bust accontancy lies on balance sheets you need to do some radio shows over here. Its all lies were been told sorry to say. We need to hit the Default botton and reset the balance sheets whats your views. keep up the good work GREAT BOOK

  11. kurnia rosyada says:

    Mitch: What is your opinion on South East Asia economy this year? -Nia

  12. Mitch always look forward to your appearances on The Keiser Report will read the book asap.
    Keep up the good work mate.
    Kind Regards Paul.