Strictly: Drilling II Message Board

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Strategies & Market Trends : Strictly: Drilling II

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To: Frank Pembleton who started this subject	8/25/2001 6:11:37 PM
From: Frank Pembleton	Read Replies (2) of 36161

Ravi Batra Outlook: Sell stocks, buy some gold, expect the US$ to fall and inflation to rise. Dr. Ravi Batra is a professor of economics at Southern Methodist University and author of 5 best-selling books including: The Great Depression of 1990 and The Crash of the Millenium: Surviving the Coming Inflationary Recession. The great depression of 1990 turned out to be only a deep worldwide recession in 1990-91 because the Bank of Japan dropped interest rates to essentially 0% and capital flooded into the US. The capital inflow buoyed the US economy, reducing interest rates and the huge budget deficit at the time. In the Crash of the Millenium, Batra predicted the Dow would peak at the end of 1999 (in fact it was Jan. 14, 2000). Batra forecasts a full blown recession next year once the US consumer finally gives in. Interest rate and tax cuts won't have the same impact because this downturn is based on capacity overbuild rather than weakness in demand. Like the Japanese economy two decades ago, US economy made great gains by using technology to expand productivity. These gains have been funnelled into excessive capital investment rather than increased wages, creating an imbalanced economy with excess production capacity and overextended consumers, overexposed to the stock market. The recession next year will quickly become a depression characterized by a collapsing US$ and inflation in the US and probably Canada. Batra predicts hard times will extend until 2008 or 2010 while the economy works off the excess capacity. There are few strategies to avoid the downfall except to reduce stock exposure, or more speculatively buy put options on the market. The silver lining is that the extreme hard times will bring about a new form of economic organization, "economic democracy". United Airlines is a good model of this structure. More on Dr. Ravi Batra's views can be found at www.RaviBatra.com. canoe.investorcanada.com

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