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Tags: Michael Lewitt | Brexit | Obama | Yellen

Michael Lewitt: UK Voters Gave 'Big Middle Finger' to Obama, Elites

Michael Lewitt: UK Voters Gave 'Big Middle Finger' to Obama, Elites

By    |   Thursday, 30 June 2016 12:17 PM

British people who voted in favor of a U.K. exit from the European Union “gave a big middle finger” to U.S. President Barack Obama and global financial elites who oversee fiscal planning and monetary policy, says investment adviser Michael Lewitt.

“This was not only a victory for democracy but a resounding rejection of the dismal economic and political leadership that is leading the world straight toward another global financial crisis,” he writes in the July issue of The Credit Strategist newsletter. “One of the reasons the global economy is so fragile today is because business and political leaders failed to move beyond the thinking that caused the 2008 financial crisis in the first place.”

The crisis followed a decline in U.S. home prices from a 2006 peak. That property bubble was the result of a complacent Federal Reserve and lax lending standards that allowed people with shaky income and credit histories to buy houses they couldn’t otherwise afford. Collapsing home values and rising defaults strained financial firms, eventually leading to the record-setting bankruptcy of investment bank Lehman Brothers and the worst recession in 80 years.

The Fed responded to the crisis by cutting interest rates to record lows while U.S. taxpayers bailed out banks, insurers and carmakers that paid billions of dollars to executives. The ensuing economic recovery was one of the weakest in U.S. history with inflation-adjusted gross domestic product never exceeding 3 percent a year.

Last week’s Brexit vote triggered the biggest sell-off in stocks since last year with the Dow Jones Industrial Average plunging as much as 5.2 percent before recovering some of its losses. President Obama in April warned U.K. voters not to leave the EU because of the potentially negative consequences in negotiating future trade deals.

“Markets were blindsided by the Brexit vote because investors surrendered the ability to think for themselves,” Lewitt says. “They were told that central bankers did the right thing by lowering interest rates to zero (or below) and buying back trillions of dollars of government debt (and in the case of Japan and other central banks like Switzerland’s, equities). In fact, these policies destroyed the fabric and resilience of the global economy.”

Lewitt singles out Federal Reserve Chair Janet Yellen for particular scorn among the central bankers who are losing credibility among investors.

“Along with its even more reckless (and feckless) European, Japanese and Chinese counterparts, the Fed helped saddle the world with more than $200 trillion of debt while the rest of the U.S. government buried citizens in tens of thousands of pages of regulations that intrude into every niche and cranny of their lives,” he writes. “It is frankly a miracle that the economy grows at all under the weight of ObamaCare, Dodd-Frank, and endless intrusions on free markets and free citizens by other government agencies.”

Lewitt repeated his forecast for a 10 to 15 percent drop in the S&P 500 stock index to a level of 1,875-1,900 points. The market benchmark traded at about 2,085 as of 12 p.m. Thursday.

He also recommends buying gold.

“The attraction of gold has never been higher (physical gold, gold stocks and gold mining stocks),” Lewitt writes. “Investors will no doubt discover that they can’t own enough gold in the years ahead as the damage caused by central bank policies becomes increasingly clear. They should follow the powerful lesson set by the Brits and buy gold and save themselves.”

© 2021 Newsmax Finance. All rights reserved.


RobWilliams
British people who voted in favor of a U.K. exit from the European Union "gave a big middle finger" to U.S. President Barack Obama and global financial elites who oversee fiscal planning and monetary policy, says investment adviser Michael Lewitt.
Michael Lewitt, Brexit, Obama, Yellen
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2016-17-30
Thursday, 30 June 2016 12:17 PM
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