"The Sky is Falling" A Garry Shilling Makes For A Different Stock Predictor

Garry Shilling, predict-O-matic 'get-off-my-lawn' econowonk, recently hinted to Tech Ticker that Paul Ryan/Romney's Austerity, rape-the-poor-and-middle-class budget plans would give confidence to the marketplace and essentially increase GDP.  

Actual data examining debt yields from countries like the UK and US point destroy these austerian mythologies.  See IMF study at bottom.

 The takeaway?  ..."fiscal indicators such as deficit and debt levels appear to be weakly related to government bond yields for advanced economies with monetary independence."

There is no data to support the "market faith" theory austerians use to justify creating further market downturns through cutting government spending. 

Shilling's Market Predictions Are Telling 

When not missing economic predictions, Shilling peddles stock newsletters.  You can buy one for $275.  In, 2010 Investment Strategies: Six Areas To Buy, 11 Areas To Sell, Shilling said, "7. Sell U.S. Stocks in General."  He went on to peddle buying bonds, which was a losing proposition, along with income securities in general. 

Stock Market Climbed 9.4% In 2010!

The DOW increased 977 points for the 2010 calendar year.    Mr Shilling did say to SELL stock!  I wonder if there is a fund that takes the opposite position of stock newsletters picks?  To be considered a stock forecaster or predictor, you MUST be mostly right inside of the time frame given!

Too negative?  He is correct in saying there needs to be time for the public to de leverage from all the debt incurred the last several decades.  Without govt spending, consumers and business are paying down debt, there are no other consumers in the economy.  

De facto these right wing econowonks are creating lower GDP and lower tax revenues by cutting government spending.  This leads to more supply of labor and less demand for consumption.  Just like in Ireland debt to GDP then increases along with higher unemployment.

In short, Shilling has been calling for a double dip recession since right after the first recession.  He also is a big fan of cutting government spending KNOWING consumers are deleveraging and not fueling the economy!!!  Talk about a self fulfilling prophesy...

Resources:

The IMF [IMF Country Report No. 12/190 - Staff Report] has researched above hysterical and mythological claims about investor confidence fueling low demand economies and has another idea.  See paragraph 43. below.

43. Further slowing consolidation would likely entail the government reneging on its net debt mandate. Would this trigger an adverse market reaction? Such hypotheticals are impossible to answer definitively, but there is little evidence that it would. In particular, fiscal indicators such as deficit and debt levels appear to be weakly related to government bond yields for advanced economies with monetary independence. 

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