Treasurer Freydenberg is rather chirpy about the economy, but he is a politician. Far from chirpy is a non-politician, non-Australian taking a worldview. He admits in passing that Australia is doing relatively well at the moment; but, his warning is that the world, including Australia, is heading for the biggest crash since 1929, with a drop of 30% to 50% in real estate, and a 60% to 90% fall in the stock market.

"This is going to kill most people's retirement portfolios", claims Harry Dent, the only commentator to predict Japan's 1989 bust and the dot.com failure. 'Sell before it's too late' is his advice.

The stock market at the present time is the most overvalued in history. Government stimulus is a joke: no amount of money is going to save the economy.

The Australian real estate bubble is the second highest in the world (after China). There will be a 30%-40% drop in value. Late 2022 will see the biggest downturn in our lifetime. The stock market will slump 70% to 80%. Dent is 90% sure of his predictions.

Hearing that Australia is the second most overvalued housing market in the world is not good news for investors using cheap money to buy up big. Stocks can be shed easily, but not real estate when the bubble bursts. People paying whatever is demanded to get into the market in, say Sydney, need to look sharp.

Dent believes that when governments have allowed the bubble to get so big, there is no way out. Things could start going bad as early as the end of July.

More from Harry Dent can be found at harrybdent.com.

I've got good news for you ttbn! If you've got great confidence in Harry's predictions then you could become very rich!! All you have to do is short the market. If your shorting with a "The stock market will slump 70% to 80%" forecast you will be able to make an astounding return if right.

So go on, I challenge you to put your money where your mouth is and short the market. Sell everything you own to post your margin (you could even take out a loan to increase your profits -doesn't that sound great :) ) and get back to us at the end of next year and tell us how you went. We'll all be here waiting to hear.

How about addressing the subject. I don't know whether Dent is right or wrong. The idea is for the intelligent posters to discuss. You are obviously not one of those intelligent posters, and making snide remarks to me is unlikely to get your mummy to give your dummy back.

It is truly said that one description of an economist is someone who knows exactly why his last prediction failed.

Reading Dent's bio he seems to be one of those who predicts everything and then claims validation when some come true. His type is described as someone who predicted 8 of the last three recessions.

Grains of salt all round.

However, it seems inevitable that the world in general and Australia in particular are headed for a heavy fall. Here, much of our wealth and optimism is predicated on a continually growing housing prices. The whole thing is based on historically low interest rates and people being prepared to pay what would have seemed ridiculous prices last year because they think the prices will be even more ridiculous next year.

Much of this has been based on a growing population. But with immigration now virtually halted population growth has also halted and may have reversed.

If housing prices drop even say 10% that will set a chain reaction of selling and prices may fall dramatically. However 40-50% seems over the top.

As prices drop so does buying power which in turn depresses economic activity which feeds into share prices which feeds into superannuation savings which feeds into economic activity.

Add that to the fact that the government has already achieved record debt and its a monumental disaster waiting to happen.

In the end though, it all comes down to the US. Even if our economy falls off the cliff, if the US continues to chug along, we could achieve a soft landing. But I have zero faith in the current US leadership keeping their economy on track in the medium term.

Forums like this ought not be giving financial advice. But for what its worth, I now hold no housing other than primary residence and all shares holdings are bluest of blue only. Most wealth is now in cash and overseas in the hope of being cashed up and ready to buy when prices fall. If that's 2 years or 7 years is no longer the point.

maze,

Thanks for the intelligent comment. Most of us don't know what's around the corner, but we have to listen and look after ourselves. Politicians certainly don't have answers. Unlike the professionals who are not looking for votes.

I just listened to a talk Harry Dent gave.
One of the points he made was that there is a demographic change and
that in the future not as many houses will be needed.
In a country like Australia with a high migration rate I do not see
that as a problem.
This occurs in some countries because of smaller families.
His argument is that smaller families will crash the housing market
and be part of a major crash coming because of extremely high
government debt levels.
He counters the argument that China will continue to grow by his
belief that China's economy is unstable and will crash its bubble.
He believes the crash will occur later this year or next year.

Bazz

I heard him say a couple of nights ago that China, with its top down management, seems to be handling the bubble better than democracies like ours.

Some dim Git on the ABC this arvo said that wages should go up now that there's record full time employment.
Just how stupid can people be, the pandemic is far from over & we still have the next flu season to get over with & some morons are already asking for more pay ?
We need to lower high bureaucrat salaries not raise wages !
Don't these dim wits have any sense about competitiveness on the international market ?

Financial advice should not be given in places like this. But, for what it's worth, I no longer own any real estate other than my primary home, and all of my stock holdings are blue-sky blue-sky blue-sky blue-sky blue-sky blue-sky blue-sky blue-sky blue-sky blue-sky blue-sky The majority of money is now held in cash and held abroad in the expectation of being cashed up and able to invest as rates drop. It doesn't matter if it's two or seven years.
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