Long-range economic forecaster Harry Dent says he predicted the GFC well before its arrival and claims we are in for a rougher ride in the next 12 months than we ever imagined.
Long-range economic forecaster Harry Dent says he predicted the GFC well before its arrival and claims we are in for a rougher ride in the next 12 months than we ever imagined. Contributed

Economist puts dent in optimism

HARRY Dent arrived in Australia on September 11, and the news he brought was just as ominous as what happened on that date a decade ago.

Another serious global economic crash is due early 2012, real estate is in for a rougher ride in the coming two years as the property bubble truly bursts and the China steam train will run out of puff a lot sooner than we all think.

House prices are set to plummet - especially in attractive coastal regions like ours, interest rates are likely to tumble to 4% and our export accounts will suffer when China takes a hit.

Welcome to the world according to long-range economic forecaster Harry Dent.

Before you write him off, know that he predicted the 2008 GFC in 1992 by looking at demographics and consumer life cycles.

"We know when people enter the workforce, when they get married, when they buy houses, spend money and save it," he said.

"I found one of the simple indicators in 1988. If you look at peak household spending, take the birth index and move it forward 46 years, it will tell you when a generation will drive up the stock market and property prices and when they will stop spending and drive it down.

"In 1992, I came out and said this coming boom will be stronger, but around 2008 to 2023 we will get in a downward spiral. The babyboomers will stop spending, the generations below them are smaller in numbers, so they are buying property in smaller numbers and the economy will slow down.

"This happens every 39 to 40 years. It happened in 1929 and again in '68 when stocks peaked and a long recession followed."

Any good news?

"The government stimulus programs in the US and China are failing and they are running out of bullets," Mr Dent said.

"We are already seeing Europe on a slow down with debt problems, China will be next and then Australia. But I do think Australia will weather it better. Australia has the best demographics going forward, we think this crisis will hit here, but you will come out of it quicker and stronger.

"Consumers have extreme pessimism, but they spend money for their human needs. The thought that consumer sentiment affects the economy is overstated; demographics affect it. Older people don't spend any money because they don't have kids at home or they don't have a mortgage and they are saving for retirement, not because of their attitude."

China?

Mr Dent was quick to rain on the China parade.

"They're ageing faster than the US or Australia because of the one-child policy. Their workforce will peak in 2015 and start to decline. And the government is driving 30 - 50% of the economy.

"They are massively spending on railways and cities...they've got cities built for one million and there's not a soul in them. They are building as if they will grow forever and that's not going to happen."



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