Permabear and RBS economist Bob Janjuah sent out an early warning today in his “Bob’s World” newsletter.
Janjuah reminds us that he called this 10% S&P sell-off back in late April in the last edition of “Bob’s World” and that things are about to get a lot worse. His key points include:
- “Sovereign limits and sovereign credibility concerns are not a future risk – they are HERE.”
- The UK and China are undergoing voluntary/pre-emptive tightening; one could argue it’s over concerns of inflation.
- “Outlook on U.S. Treasuries is bullish for at least the next 6 months.”
- China is in “official Bear territory.”
- “Europe in particular has signed off from the growth path and is now firmly placing itself in the Japan style multi-decade deflation/despair path.”
- “The political situation in the US is turning/will turn deeply RIGHT – the Tea Party folks will have a huge say on how the US is run post AND into mid-terms.”
- “Policymakers are (nearly) all in, some have lost all credibility (clearly Europe currently dominates this loss of credibility right now), others are close…”
The final debate from Janjuah is in regard to the Euro. He argues that for the Euro to have any hope of recovery, Greece must be put into restructuring “ASAP.” If Greece is the Eurozone country that is allowed to set and control the terms of a bailout instead of a responsible nation such as Germany, the Euro will again, undoubtedly fail.
Says Janjuah, “For now, the Eurozone has joined the club currently only occupied by Japan since the late 80s/early 90s.”