financialsense.com / FS STAFF / 10/14/2015
Michael Lewitt, author of the widely-read newsletter The Credit Strategist, warned listeners earlier this year on the dangers of negative interest rates and why such a policy amounted to “turning capitalism on its head.”
In a follow-up interview on Thursday, Lewitt noted that recent comments by Fed officials of possibly “going negative” in the US show how desperate the situation has become with growth weakening in the US, a global economy in trouble, and a whole host of geopolitical problems brewing overseas, he said.
“Something that didn’t exist in 2008 but exists in a big way today is a very dangerous geopolitical [situation] throughout the world,” Lewitt said. “In addition to having financial fragility because of too much debt and too little growth, you also have severe geopolitical instability in Eastern Europe, the Middle East, and in the South China Sea—so you have a really toxic combination of destabilizing forces that really place markets at risk.”
Because of this and other factors, Lewitt believes that we are in the beginning stages of a bear market and cautioned listeners against buying stocks at current levels except for areas selling at deep discounts, which he cited.
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