Tags: dohmen | recession | us | economy

Dohmen: We're Headed Back to a ‘Serious Recession’

By Forrest Jones and Ashley Martella   |   Thursday, 01 Sep 2011 04:55 PM

The U.S. economy is headed for a fresh recession and arguably, never really left the one that began four years ago in the first place, says author and contrarian investor Bert Dohmen, founder of Dohmen Capital Research Institute, an economic and investment research firm.

When asked by Newsmax.TV what was the best-case scenario for the rest of this year, in terms of growth, Dohmen replied simply, "I think we are going into a serious recession again."

"It has been our contention for some time that we never really emerged from the recession of 2008," Dohmen says, adding "the language out of Washington is 'We had a great recovery, we created 2 million new jobs,' etc. But in fact if you correct the GDP numbers with the right number for inflation, we are right now in a serious contraction of the economy again."

Excessive regulations continue to keep the economy from greener pastures, especially by hampering smaller businesses, which normally account for 90 percent of hiring amid times of economic recovery.

"Small-business people — it's in their DNA to be entrepreneurs, to start new businesses, to expand their current businesses and so on. It's just that the government is stopping them from doing that," Dohmen says.

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"In the state of California, they've figured out that if a small business has to post all the posters that are required to be posted on the walls of the business by the local government, they wouldn't have enough wall space to do so."

Filling out forms and complying with regulations like Dodd Frank prevents the otherwise small-business owner from hiring.

Furthermore, the problems that threw the United States into recession in the first place weren’t due to a lack of regulations on the books but rather a lack of enforcement of regulations, especially on derivatives tied to the housing market.

"And this whole contraction or the bursting of the bubble were caused by these derivatives that were invented on Wall Street. And of course the enabler was a very easy Federal Reserve monetary policy. Now the economy is being burdened by excessive regulations," Dohmen says.

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"You basically need a team of lawyers on your staff just to cope with the regulations," Dohmen says.

"What they should do is really exempt all small businesses from these excessive regulations and then you could see some job growth."

Meanwhile, turning to gold, which Dohmen said would enter a 20-year bear market back in the early 1980s, he said today the precious metal is just a decade into a 30-year bull market.

Excessive debts on the part of governments worldwide and loose monetary policies that have made it easy to service those debts will catch up with the global economy.

"Eventually the only real money will be gold."

Officially, the economy is in recovery and on the path to growth but experts debate that, with one camp predicting a new recession on the horizon while another camp saying a fresh contraction will be avoided although they admit growth will be sluggish at best.

Either way, don't expect robust growth and economic sunshine on the horizon.

Joel Prakken, chairman of economic consulting firm Macroeconomic Advisers, tells US News and World Report that the likelihood of a double-dip recession "has risen over the last couple of months, but I'd put it at 1-in-4, 1-in-3, maybe. It's certainly not a slam dunk."

"I think a much more likely forecast, one that will prove to be the right one, is a period of sluggish growth," Prakken adds.

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The U.S. economy is headed for a fresh recession and arguably, never really left the one that began four years ago in the first place, says author and contrarian investor Bert Dohmen, founder of Dohmen Capital Research Institute, an economic and investment research firm....
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