My Prediction of a Global Economic Depression by 2012 Is Being Terribly Vindicated

In 2009, I published a short book entitled "Global Economic Forecast 2010-2015: Recession Into Depression." At the time I made my original forecast, sovereigns across the globe were accumulating massive levels of public debt, unprecedented in economic history, with supposedly two objectives in mind: 1.) Stabilize the world's banking and financial systems, which were in danger of total collapse after the implosion of Lehman Brothers and the near extinction of other investment banks. 2.) Compensate for a fall-off in private sector demand through stimulus spending in order to halt the free-fall contraction in GDP.

The policymakers cheered their actions, which essentially transferred the bad debts of the private sector onto the public's balance sheet, and created a new modality in sovereign fiscal policy, which I named "structural mega-deficits." I did not share the optimism of the policymakers in the United States, United Kingdom and across the Eurozone. The premise of my forecast was that this massive rise in public debt to GDP ratios among the advanced economies would at best buy, at very high cost, a short period of stabilization at a level below peak economic performance. Eventually, however, the level of sovereign debt would exceed the capacity of the afflicted economies to sustain, leading to a full-fledged sovereign debt crisis towards the latter part of 2011. This would precipitate, by 2012, a global economic depression. Read more......