'Aftershock' Author Wiedemer to Moneynews: Economies Worldwide Are 'Slowing Down'

Friday, 31 May 2013 11:56 AM

By Dan Weil and Kathleen Walter

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The evidence shows that both the U.S. and foreign economies are stagnating, according to economist Robert Wiedemer, co-author of "Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown."

Speaking of the United States, "it's not just that macroeconomic data that's bad, it's the micro data on companies that's not very good either," he tells Newsmax TV in an exclusive interview.

"We're seeing greatly reduced earnings-per-share growth in industries like telecomm."

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While those numbers are dropping 10 percent or more, the Standard & Poor's 500 Index has risen 17 percent so far this year. "Revenues are declining for the S&P 500, yet stocks are up," Wiedemer says.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Poor economic data are definitely hurting companies, he explains. "It's hard to say exactly when, but clearly it can only go on for so long when you're getting increasingly [separated] from reality, just as the Internet [bubble] showed."

When it comes to the rest of world, "everybody is slowing down," Wiedemer notes. "Canada, Australia, Brazil, Peru, Denmark, Russia. So you're seeing a pretty broad overall slowdown."

In addition, "China is slowing down," he says. China's gross domestic product growth slumped to 7.7 percent in the first quarter from 7.9 percent in the fourth quarter.

"I'm not sure how much growth we're really seeing in China. Their purchasing managers' index is negative, and that country clearly depends on manufacturing."

While Japan may benefit temporarily from its massive monetary expansion, "overall you're probably just stealing exports from other countries," Wiedemer states.

And speaking of Japan, "Certainly [it's] kicking off a bit of a currency war," he says. "In reality, currency wars are started by printing money, and we've been printing money for a while, and so has Europe."

So can the yen fall further? "Yes, it could," Wiedemer maintains. "Fundamentally, Japan is doing exactly what it takes to push that down even further." So the currency wars will continue, he says.

When it comes to the euro, it "may or may not survive," he states. "We've seen how much people ... dislike it, but I've always said it's a little less of a euro problem and more of a debt problem."

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Even if nations such as Greece and Spain exit the single currency, they're "still going to have a debt problem," he explains. "That's just sort of another way of defaulting on the debt."

That kind of default would have serious repercussions for banks worldwide. So Europe's debt problem can't be "easily solved even by switching out of the euro."

While Wiedemer believes the long-term outlook for gold is bright, he is worried about instability in the short term.

So what's Wiedemer's investment advice?

"It's a time when both bond markets and stock markets are a bit unstable, and, sometimes, there's a role for cash in here," he suggests. "A little heavier cash makes sense right now."

About: Robert Wiedemer
Robert Wiedemer is a managing director of Absolute Investment Management, an investment-advisory firm for individuals with more than $300 million under management. He is a regular contributor to the Financial Intelligence Report, the flagship investment newsletter of Newsmax Media. Click Here to read more of his articles. Discover more about his book, "Aftershock," by Clicking Here Now.

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