Financial Apocalypse by Bert Dohmen Dohmen Capital


By Bert Dohmen
Monday, August 1st, 2011

 Bert Dohmen headlined his May 9th issue of the award-winning WELLINGTON LETTER, “RETURN OF THE DOUBLE-DIP.” It referred to the fact that the economy had already re-entered a recession.  

Dohmen made his case by adjusting nominal GDP using actual inflation, not the “deflator,” which is a defective number used by the government to make inflation appear lower than it is. As a result, headline GDP is overstated, and actually consists of price increases, not growth.  

On July 29, the government released its estimate for Q2 GDP growth and a revision for Q1. The numbers were dismal and confirmed everything Dohmen has been writing over the past several months, i.e. that the economy is already in a new recession.  

Second quarter GDP increased a modest 1.3%. Economists were looking for a number 50% higher. And even worse, first quarter  GDP was revised downward to an anemic 0.4% growth, from the original  1.9%. Adjusted for actual inflation, the economy is now contracting at a meaningful rate.

Consumption was an inflation-adjusted 0.1% in Q2. When you consider that the inflation adjustment is much too low, than “real” consumption actually had a large decline. 

Spending on durable goods fell 4.4% in Q2 due to a sharp drop in auto sales. One market commentary was that this was due to a “lack of supply because of the Japanese earthquake.” In other words, there was a “shortage of cars.” Dohmen says:  “Really!?  Have these people looked at the car lots?” 

The fact is that as early as February, Dohmen has been warning of a sharp economic slowdown and that the economic rebound of the prior two years had terminated. 

Bert Dohmen has called the start of every recession of the past 33 years to the exact month, or within one month of the determination by the NBER on year later.  

In 2007, Bert Dohmen wrote the book PRELUDE TO MELTDOWN, which predicted the global crisis in 2008.

Financial Apocalypse
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