Thursday, August 11, 2011

We Are In A Depression That Will Last For Years

The United States isn’t merely double-dipping back into recession, but worse — it's in the early stages of a depression that will strangle the economy possibly for years to come, says Robert Prechter, president of Elliott Wave International.

That means investors need to stock up on cash and other funds whose strategy is to succeed in a bear market, Prechter says.

Excessive debt burdens will take years to shake off, and the problem is that many economists underestimate how long a debt-saddled contraction can last, especially when negative social moods hamper economic activity even more.
Robert Prechter
file photo)
"Some people are talking that maybe we'll have a double dip like 1980 to 1982, but I've been saying all along that this is the wrong perspective. You have to realize that we are in a depression," Prechter told CNBC.

"We're in the early stages, so we don't have the severe unemployment, the severe bread lines and that sort of thing. But since we are early in the trend, this is the kind of thing that the market is now beginning to look ahead and realize that the problem is deeper than just a minor recovery or a mild recession," he adds.
That doesn't mean investors need to run to the hills in panic and prepare for the end of days.

It means they should prepare for a bear market to last for about five years and look for opportunities in such a scenario.

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