Episode 1087 · May 1, 2004 · 2h 52m
May 1, 2004: Economic Armageddon - Joseph Meyer
Key Moments
Open transcript$31 trillion in debt and the foreclosure scenarioMeyer states America's total debt is approximately $31 trillion - three times GNP - the largest debt load any nation has ever carried, and explains that if foreigners stop buying U.S. bonds, banks could re-evaluate creditworthiness and call mortgages even from homeowners current on payments.
15 million manufacturing jobs lost; Walmart is China's 8th largest trading partnerMeyer reports the U.S. has lost 15 million manufacturing jobs since 1986 (2.7 million in just the last three years), shrinking the manufacturing workforce from 25% to 10%. Art reacts to Meyer's claim that Walmart is China's 8th largest trading partner.
Oil to $65 a barrel and $4 gasolineMeyer predicts oil will hit $65 a barrel within three years and U.S. gasoline will eventually reach $4 a gallon, blaming peak oil, no new U.S. refineries in 15 years, and rising demand. Art recalls 1970s gas-line fistfights.
Dow 3000 / Gold $3000 by 2014-2015Meyer says only 1% of Americans own gold or silver and forecasts a secular bear market that bottoms in 2014-2015 with one ounce of gold buying the Dow at roughly 3,000 each.
Warren Buffett shorting the dollarArt asks whether Warren Buffett is betting against the U.S. dollar. Meyer confirms Buffett has been short the dollar for some time, holds about $35 billion in cash, and has a sizable silver position.
Art welcomes Joseph Meyer, a Wall Street professional and industry arbitrator, for a sobering look at the financial state of the nation. Meyer lays out alarming figures on consumer debt, now at 9.3 trillion dollars, and warns that 18 percent of after-tax income goes just to servicing existing household debt. He describes a manufacturing base hollowed out by outsourcing, noting that Walmart alone has become China's eighth largest trading partner, and projects oil reaching 65 dollars a barrel within three years.
The two examine a chain of vulnerabilities from record federal deficits and rock-bottom savings rates to the possibility that foreign bond buyers could lose confidence in the dollar. Meyer warns that rising energy costs and stagnant job creation could trigger a cascade affecting housing, transportation, and everyday grocery prices, painting a picture of an economy sustained more by perception than by fundamentals.
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