The idea that the credit crisis caught everyone by surprise is a convenient one. It’s also an idea that Bert Dohmen doesn’t buy.
In an exclusive interview with Dan Mangru of Newsmax TV, Bert Dohmen, president of Dohmen Capital Research Institute and author of the award-winning Wellington Letter, says the reason the credit crisis happened is not that regulators were asleep.
“It was that they were in collusion with Wall Street. Otherwise this never could have happened,” he said.
Now Dohmen says the government is trying to reflate the bubble.
“If you look at the leverage in our banking system, it is much higher than in 2007, when the crisis started,” he says. “All they’re doing is putting more debt on top of the debt that already existed.”
According to Dohmen, if you wanted to destroy our economic fabric, you wouldn’t do it any other way than the way it’s being done right now.
Dohmen says that he was able to figure out the credit crisis by looking at the availability of credit and realizing that “no one would be able to service the debt.”
He points to conversations with fund managers who told him that they were able to get as much as $15 billion worth of credit with just a single phone call.
“When things get that extreme, you know you are at a top,” Dohmen says.
Dohmen also says that commodity markets are being manipulated, in particular the price of copper and oil.
He believes that China’s massive commodity buying spree is creating the illusion of a commodity boom, one in which investors overlook the fact that China is merely stockpiling commodities for future use.
Oil speculators, he says, also are stockpiling, holding about $400 billion dollars of crude in tankers, waiting for price increases to make a killing.
“This is just one big casino right now. What we’re seeing in the (commodity) markets has absolutely nothing to do with fundamentals,” Dohmen says.
When the U.S. dollar rises again, commodity prices, gold included, will come down.
Dohmen also noted that “the bullish consensus on the US dollar is 3 percent, that’s about as low as anyone has ever seen it. In other words, there are no bulls on the U.S. dollar. “Usually when everyone is on one side of the fence you want to get on the other side of the fence,” Dohmen warned.
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