Transcript: Thom Hartmann & Dr. Ravi Batra: Economic depression is imminent. 9 August '11
Thom Hartmann: And welcome to America’s number one progressive talk show, three years in a row. Greetings my friends, patriots, lovers of democracy, truth and justice, believers of peace, freedom and the American way, Thom Hartmann here with you. And, well, the stock market is bouncing back up. Does that mean all is well in happy land? I’m skeptical. Very skeptical. And so is Dr. Ravi Batra. Friend of the show, economist, professor of economics at Southern Methodist University, international bestselling author of books like “The New Golden Age," his most recent and “Greenspan’s Fraud." His website: RaviBatra.com. Dr. Batra, welcome. Professor Batra, welcome back to the program.
Ravi Batra: Thanks a lot Thom.
Thom Hartmann: So, what’s your take on you know what’s going on with the stock market and what’s going on with the economy in general?
Ravi Batra: Well if you recall, in the last two shows that we did together, I mentioned again and again that once they have decided to cut the budget deficit and the debt ceiling question has been resolved, budget cuts, soon after that you will see stock markets starting to fall. And if I recall I said I gave you three or four months maximum and the market would start to crash. Now I didn’t know that it would take only three days for that to start crashing. But that was my forecast based on the logic that government spending has now become the life support of our economy, and the moment you start cutting it, demand sales, goods go outside, that means the market anticipates a decline in profits and we risk all of our market with this kind of bubbly market it won’t take long for it to fall. And that’s what has been going on. And thus of course the action taken by Standard and Poor should have been long anticipated because our debt is rising by 1.5 trillion dollars a year. And then the tea party guys just want to raise revenues, want to include large loopholes to cut the deficit while in other nations like Greece and Portugal, Spain, etc., they are making all sorts of sacrifices to cut the deficit, but our guys won’t. So naturally you can see that Standard & Poor and some other rating agencies would become edgy and downgrade us. So that should have been anticipated. In fact, I had written an article about it two years ago saying that the government is going to keep borrowing money and money and the consequences will be very bad in the end.
Thom Hartmann: So in Europe the millionaires and billionaires are sharing in the sacrifice of the average working people although in the United Kingdom most of the sacrifice, and this has provoked the UK on cut movement and it has provoked the riots in London that are now spreading to other cities around the UK today. Most of the cuts have fallen on working people and poor people. But in the other European countries on the continent, Spain, Portugal, Greece, the rich people are being asked to pay as well. And nobody is happy but at least nobody is rioting. Do I have that right?
Ravi Batra: Yeah, you’re right. But in our country, my lord. These guys, I mean you tell them cut all subsidies, even that they’re opposed to.
Thom Hartmann: Yeah. They wouldn’t even do away with accelerated depreciation for corporate jets that are owned by billionaires as opposed to airlines.
Ravi Batra: Yeah, this is total degradation, I call it degradation. Selfishness.
Thom Hartmann: Yeah. I have a friend who is very into the stock market and he went off last week on how he was moving into TLT, which is a bond fund, FAZ and FXX which are both funds that bet against the market, like the ones that Eric Canter owns, that, you know, they go up when the market crashes. And basically bailing out of everything except gold stocks. I’m not asking him for market advice, but isn’t, do you expect that we are going to see a substantial correction in equities and in the stock market and you know a downtown? I’m hearing it’s going to go to at least 9,000 it might be back to 6,000 by the time of the, in fact I’ve been suggesting that it’s going to be at 6,000 in time for the next presidential election, that’s where the republicans want it so that they can run against Obama based on that and that’s why they’re resisting anything that might be a stimulus and they’re cutting all these government programs. Does that make sense to you?
Ravi Batra: Well, first of all let me tell you how I have positioned myself, if anything what I believe is coming. I have bought gold which I have told a lot of people in the past to do, although right now it is so expensive you have to wait before, let it fall a little before you can buy gold again. And the second, I have been buying government bonds, even though the return is very low. But this economy is going to weaken and in a weakening economy, interest rates always fall. So that means not only you should expect a steady return but maybe some appreciation in the bonds as well.
Thom Hartmann: Yeah that’s that TLT fund, that’s the 20 year treasury fund.
Ravi Batra: Right. And by the way I have, I am also into TLT funds.
Thom Hartmann: Aha, okay.
Ravi Batra: Yeah. So, but, aside from that the main thing is that now November is coming up and they have this super committee going to decide what’s going to be cut and what’s not and I have a feeling that republicans will still drag their feet about taxes and so, and even if they don’t, spending is going to come down fast. And on top of that, by the end of the year, those extended unemployment benefits will disappear. So when they disappear you have a further cut in spending, and that means we are going to see a weakening economy, most likely a double dip recession. And if they are not careful we could go into a double depression as well, especially maybe towards the end of next year.
Thom Hartmann: Yeah. And that’s, you know, that’s consistent with my thinking about, you know, the republican election strategy, frankly. And tragically what we’re hearing, you know Politico is reporting that the Obama advisors are looking at the Bush 2004 campaign because they feel that they can’t run on Obama’s accomplishments so they’re going to take down Romney. Which of course has all the right wing talk guys hysterical today. But it looks like it’s going to be, you know, the republicans are going to say you crashed the economy and the democrats are going to say yeah you used to buy companies and strip them of their people, ship their jobs over seas and that’s how you made your 400 million bucks. And it’s going to be a really, really dirty campaign. What should the average person, what should the people who are listening to our program, what should people who have a job and are concerned about it, or who are unemployed and not sure what to do next, what should they be doing?
Ravi Batra: It’s a very, very difficult question to answer, especially for those whose extended benefits are going to run out by the end of the year. All I can say is become politically involved, we need to throw out the incumbent politicians, especially those who will not raise taxes even on the oil companies. Those kind of people have to be thrown out. What I’ve noticed is that once these tea party members were elected in 2010, November 2010?
Thom Hartmann: Right.
Ravi Batra: Ever since then the job market has been bad and the economy’s growth has been bad. Ever since then the economy has been coming down. So, this is, I think that’s what we need to do, we need to educate the people and those who are employed should save as much money as they can and stay away from the stock market. The market could rise, but you know who knows.
Thom Hartmann: Yeah, start to live frugally.
Ravi Batra: I don’t think it will rise. My expectation is it will fall more. Once November calls and even before then it could fall more.
Thom Hartmann: All right, dial it in. Dr. Batra. Okay. Dr. Ravi Batra. RaviBatra.com his website. Thank you so much for being with us.
Ravi Batra: Thanks a lot for having me.
Thom Hartmann: Good speaking with you.
Transcribed by Suzanne Roberts, Portland Psychology Clinic.