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Maybe Romney Did Win, It's Shaping Up to Be a Rough Four Years

By 2016, Mitt Romney may be sighing in relief that he lost Tuesday. The economic landscape for the next four years is likely to be filled with crises, and the president in office will be blamed for most of them, whatever his policies.

Romney's destiny of quiet retirement with his automobile elevator and his Cayman Islands investments will seem greatly preferable to the struggle that awaits the re-elected President Barack Obama.

Internationally, four more years leaves plenty of time for things to go wrong.

Japan's government debt, now 230% of GDP will be 270% of GDP by the end of 2016. And since the largest debt that has ever been handled was Britain's 250% of GDP in 1815 and 1945, a panic is likely, stopping the government from financing its operations.

The EU has also decided to bail out the weak sisters in the Eurozone debt crisis, rather than letting them escape the euro and face economic reality; by 2017 it will have run out of money, bringing either default, hyperinflation or both.

What's more, all four BRICs are running into crisis, because they are badly run socialist behemoths that have had too much money thrown at them – by 2017 crisis will have hit, with a huge economic downturn and possibly something worse.

Finally, in the Middle East, a non-economic problem: Iran will have built a nuclear weapon.

Domestically Ben Bernanke may retire in January 2014, but will be succeeded by somebody as bad or worse. That means more money printing, sky-rocketing commodity prices and probably a surge in consumer price inflation. One or other of the international crashes will likely produce a renewed recession before 2016.

Taxes will go up, without the deficit declining much, as they will slow growth. Higher taxes will however be less damaging to the economy than the tsunami of regulations produced by an energized Obama bureaucracy, who are in place and ready with bad ideas, but have been holding off for the last six months because of the election.

Thus, by the next election unemployment will be closer to 12% than the current 8%. One small comfort: since U.S. government debt will still only be around 150% of GDP in 2016, lower than Japan's, we may be downgraded by the rating agencies, but won't suffer a full fiscal crisis where the government can't borrow money.

For investors, the advice is clear. Buy gold, oil and miners/energy producers. Don't buy anything that relies on a buoyant U.S. consumer market. If Apple Inc. (Nasdaq: AAPL) is trading at $700 in 2016, it will be because the dollar is only worth 10 cents. Buy solid dividend stocks with recession-proof cash flows.

Buy emerging markets companies, but from solid, well-managed countries, not from the BRICs. And whatever you do, don't buy Treasury bonds.

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Join the conversation. Click here to jump to comments…

  1. Marcílio Franco da Costa Pereira | November 8, 2012

    How arrogant is exposure on the BRICs. But soon, thankfully, the undeniable truth will flow.

  2. Ray | November 8, 2012

    Your comment at the bottom does not make sense. If there won't be a fiscal crisis in the U.S., why are rejecting treasury bonds? Of course, I disagree with you that there won't be a fiscal crisis in the U.S. A currency crisis awaits the U.S.

  3. walt roginski | November 8, 2012

    Mr. hutchinson—I like your advice—-It's right on!.

  4. John | November 8, 2012

    In answer to Ray's question. Why shun T-Bonds? "Treasury securities represent the rate at which investment is considered risk-free." In other words "risk free" concerning the fed. govt. They have no faith in themselves by offering a mere 1.74% for a 10 year note. My money has more faith in precious metals simply because that commodity is one shun by the fed. govt! Yes, I am a contrarian!

  5. Steve | November 11, 2012

    Obama's legacy: Blame Bush and play small ball.

  6. Laurie Spencer | November 12, 2012

    These are comments that are not applicable. First of all it's been proven over and over again Cayman island investments are part of a blind trust. Romney is not the guy that sits back and relaxes as things crumble. With all the freud that went on and the lies that Obama and his goons
    said they flat out stole this election. Who loses us the real americians Not the people who voted 2-3 times and are illegals. Yes the climate is bad globally and Gov Romney would have helped. That
    is exactly what was said last go around. Look where Obama has brought us, On purpose. Read
    Obamas America newest book after 2016 movie. Get ready for an economic collapse. Some are thats why the sell off. What we should be doing is having a recount where only 300,000 votes in swing states is what seperates Liberty vs Tierney here.

  7. boot | November 12, 2012


  8. Carol McMillan | December 3, 2012

    If Romney had won which I believe he did. You would be singing a different song. If our forefathers had given up you wouldn't be living in a free America. But enjoy it while you can because Obama is destroying it. He has already divided our country is that the act of a good Christian man. No because he doesn't believe in God!

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