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The Levitation Trick Failed

Thursday, August 4, 2011
By: 
Michael Pento

Europe bond yields are soaring and the equity markets are falling apart. Last week, the dip-sticks in the MSM were telling us that Apple shares have replaced Treasuries as the world’s safe haven and that the market was cheap because it was only selling at 12 times next year’s bogus earnings. And many market gurus were assuring us that the market would simply levitate higher.

However, I was telling investors to keep an eye on European debt problems and warned about markets that seemed far too complacent about the consummation of a debt deal in the U.S. and were overlooking the high probability of a recession in developed markets around the world.

The copper and Treasury markets seem to agree with me that a global recession is just around the corner. Indeed, it was only held in abeyance by massive government borrowing and printing after the Great Recession was put on hold in 2009. Bernanke’s printing press hasn’t had a chance to cool off and is already being fired up as we speak. Only this time, he’ll get far less growth and a whole lot of inflation than last time. Buckle up your portfolios for a massive dose of stagflation in 2012.