The tealeaves seem to point with 100% certainty of a new global recession starting in late 2012 or early 2013 according to Marc Faber, famed economist who makes many gloom and doom economists look positively optimistic by comparison. On a recent interview on CNBC’s Fast Money Halftime Report, Faber sees the slowing economy in China and India creating a tidal wave of worldwide economic problems that make the ongoing global financial problems in Greece and Spain look nearly inconsequential by comparison.
Faber warns that investors need to prepare as stock values could nosedive and U.S. unemployment rates could only skyrocket, at the same time the U.S. economy could also witness 100% yearly inflation. This is the new reality of these strange sort of new American recessions since the Gerald Ford/ Jimmy Carter Administration years of economic slowdown coupled with rampant inflation, especially among energy prices.
Further problems related to the severe drought, the worst since 1956 could send the price of many products soaring very soon, as the corn crop has been severely damaged this year by the extreme heat, creating less feed for cattle, etc. In the short term, it is possible that some meat prices could fall slightly as many farmers send more cattle to slaughter creating a temporary glut of meat on the market, before prices begin a sharp upward cycle of inflation with some standard grades of ground round going up from around $3.00 a pound to around $5.00 a pound during this inflation cycle.
In addition to all of this is the continued problems with Iran over their nuclear program, where some reports from Israeli intelligence suggest the country could develop a working nuclear warhead by 2014, forcing Israel to strike with or without the backing of the United States, which could not only create severely strained relations with both Russia and China, and could choke off oil supplies in the Persian Gulf, creating serious problems for the Western world economies as well until oil supplies are reopened.
American candidates for president, Barack Obama and Mitt Romney will only continue to argue who is the better of the two for the economy. Yet, it is highly likely that the economy will only worsen with either candidate for conditions beyond ether’s control related to the economic situations in China and India. Although the economy will be the most important issue between these candidates with the voters, who is more cool with foreign policy might be of actual critical importance due to any pending crisis with Iran. On the campaign trail, Mitt Romney often displays a nervous energy and sometimes offer nonconstructive views on foreign policy, while President Obama and Secretary of State Hillary Clinton display steely nerves in situations dealing with the raid on Osama Bin Laden and other situations. Some voters might believe that this gives the president an edge on this issue, although foreign policy likely won’t decide the election, but the economy will.