In an exclusive interview for "Financial Myth Busting," host Dawn Bennett sat down with Michael Belkin, research analyst and publisher of the Belkin report, to weigh in on the global economy. According to Bennett, the 2008 stock market crash was just a warm up for what's to come. And, with the poor global growth forecast, it just might be.
Meanwhile, Belkin believes everything is starting to work out. He noted JP Morgan, Bank of America and Citi bank are all down 6, 7 and 8 percent, and the gold stocks are increasing. Belkin, who has been recommending gold stocks for a while, said gold mining stocks represent a thumbs down approach on central banks. The Swiss Central Bank recently neglected the peg to the Euro, which shows a loss of central bank power. Belkin said the only thing that has him worried is the European Central Bank starting its QE Program. According to him, QE banks wouldn't help the market and will not help the European banks.
Also, Fitch recently downgraded Greece from to a negative outlook from stable. Belkin predicts the local country central banks will be allowed to buy back their own debt. The interest rates in government debt in Europe are already in the negatives, so they will likely prevent driving interest rates further into the negatives. There are negative consequences for negative interest rates. For instance, negative interest rates are already depressing Japan, and insurance companies there are saying the QE is harming them. Belkin says they will have to raise premiums because they can't offer a rate of return with negative interest rates to policy holders.
"So we're in this weird Alice in Wonderland world again where everything's turned upside down and I think that the Swiss Central Bank was really a significant move upon where other central bank policies that have been out there for a while will begin to fail," Belkin said.
Click here to view the full interview.