Harry Dent: Oil Price Plunge Trigger For Next Global Crisis

harry dentGreg Hunter:  Economist Harry Dent says falling oil prices will be a trigger for another economic calamity. 

Dent explains, “Normally, oil prices falling in a good economy like the 80’s and 90’s, where we have falling inflation and booming productivity and good demographic trends, this would be a good thing.”

“It is a good thing for consumers and businesses, but it is a bad thing for financial markets and our whole debt structure.  We have the greatest debt bubble in history.  It’s the greatest asset bubble in history, including stocks, commodities, real estate and everything.”

“The last time this bubble burst was in 2008 because of the subprime crises.  A small tranche of loans went bad, and it triggered a whole debt crisis, that’s what I see.”

“I see a fracking bubble here.  What’s happened is because of demographic trends, which we predicted years ago, trends in developed countries are set to slow.  It will be aging baby boomers spending less money, very simple to see.”

“In addition to that, you get this fracking revolution with all the low cost money from the Fed stimulus and zero interest rates, and what you have now is we created two million extra barrels of oil a day just out of Texas and North Dakota.”

Dent, who has a new book out called “The Demographic Cliff,” goes on to say, “Now, the only way to counter this is if OPEC and Saudi Arabia said we’re going to cut production.  Well, Saudi Arabia said no, we’re not going to do that because we don’t like these frackers.”

“They are competing with us long term, and they are seeing this as an opportunity to squeeze out their competition.  The more the price of oil falls, the more of these frackers and other marginal countries like Venezuela go out of business when they can’t compete.”

“It’s a good long term move for the Saudis, but I think they are miscalculating that they could help trigger the next global crisis.  We have more debt than we had in 2008.  The demographics only get worse in more and more countries.”

“So, I think this is the trigger for the global crisis.  There’s $500 billion in leveraged loans with the fracking industry.  I think this thing is going to blow up.”

Who is to blame for the shaky economy we are in?  Look no further than the government, and Dent contends, “What’s happened is the government has created a bubble with all this low short- term interest rates and all this stimulus, and their only defense is to keep this bubble going.”

“We got the greatest bubble in debt in modern history by far.  We have the greatest asset bubble across the world in real estate, commodities, stocks; everything is in a bubble.  When these bubbles burst, the whole system comes down.”

“They are doing everything to prevent it, but everything they do to prevent it from blowing up is making it worse.  This is a game they cannot win–mark my words, cannot win, and we are going to see a major crisis especially over the next two years.”

“These falling oil prices trigger these fracking firms.  They have 20% of the junk bond high-yield debt in the United States, and that’s all it takes to trigger another financial crisis, just like the subprime crisis back in 2008.  All it takes is a trigger and the whole debt thing comes down.”

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