Collapse of middle class means there's no fuel for recovery, Gerald Celente argues
The US economic recovery in recent quarters is little more than a "cover-up" and the world is headed for a "Greatest Depression," complete with social unrest and class warfare, says a renowned economic forecaster.
Gerald Celente, head of the Trends Research Institute, told Yahoo!News' Tech Ticker that there's no risk of a "double-dip recession" because the first "dip" never ended.
"We're saying there's no double dip, it never ended," Celente said. "We're looking at the Greatest Depression. There's no way out of this without [rebuilding] productive capacity. You can't print [money to get] out of it."
Celente, who has been credited with predicting the 1987 stock market crash, the collapse of the Soviet Union and the subprime mortgage crisis of recent years, said the US and other developed countries can expect to see the sort of social unrest the world witnessed in Greece this year once government attempts to shore up the economy fail and lawmakers turn to "austerity measures" to plug gaping budget holes.
"You're going to see it all over the world," Celente said. "What they call austerity programs ... What are they doing? They're bailing out the banks and they're making the people pay for it. And the people don't like that."
Celente pointed to a near-riot that took place last week in Atlanta when 30,000 people showed up to be put on a housing waiting list, saying that the event is a harbinger of what's to come.
He also argued that the way unemployment is measured today masks a much larger joblessness crisis because "once you're off the unemployment rolls, you're no longer unemployed."
Celente said the current unemployment rate, if it were measured as it was measured during the Great Depression, would be around 17.5 percent. And he expects that number to rise to around 22 percent in the coming years.
"One of the good businesses to get in to may be guillotines," Celente quipped. "Because there's a real off-with-their-heads fever going on. People are really fed up."
Celente argued that the conditions needed for an economic recovery simply don't exist. "Let's go back to the 1990s. We're in a recession. What got us out of it? The Internet. It wasn't a government policy, and Al Gore didn't invent it."
But today, Celente argued, there are no new booming industries pushing towards economic expansion. And the US middle class may not have the right skills to take up the challenge.
"We went from a country that used to be merchants, craftspeople, manufacturers, to clerks and cashiers," Celente said. "We have to bring manufacturing back to America."
Celente agreed with his Tech Ticker interviewers that the green economy, which seeks to replace fossil fuels with alternative and renewable energy sources, is a good place to start on an economic recovery, but he said the Obama administration's handling of the issue was misguided.
Celente pointed out the US has committed $54 billion for nuclear power expansion, and has also committed to "clean coal" -- neither of which he sees as being large drivers of the green economy.
The government is "not putting money where it should go," he said.
The following video was posted to Yahoo!News on August 20, 2010.