Steve St. Angelo: Prepare For Asset Price Declines Of 50-75%

Authored by Adam Taggart via PeakProsperity.com,

Any sense of prosperity in today's economy is based on a falsehood, claims Steve St. Angelo, proprietor of the SRSrocco Report website.

Like we here at PeakProsperity.com, Steve is a student of energy. He shares our worldview that net energy per capita has been in steady decline, and a result, future growth will be limited. Also like us, he notes that the "growth" seen over the past several decades hasn't been due to surplus net energy (which makes being able to do more possible). Instead, it has been fueled by debt  -- which essentially steals prosperity from the future and consumes it today.

Any third-grader with a crayon can quickly tell you that kind of scam can't last forever. And it can't. Once the can can't be kicked any further and the next economic and/or financial crisis is upon us, Steve sees today's over-inflated asset prices quickly dropping by a gut-wrenching 50-75%:

What we have is a totally propped-up market based upon debt. Energy isn’t producing positive growth, really. So instead of having real economic growth, we have inflated economic growth and inflated asset values.

 

As the energy return on investment started to fall for the United States in the 1970s, we had to start off-shoring our manufacturing as a way to extend the US lifestyle. We couldn’t afford the manufacturing anymore because of our oil energy return on investment. It moved over to other parts of the world where labor was cheaper. And we started buying more homes, more things, more stuff. And we went into debt to do that. That has extended the "leech and spend" US suburban economy.

 

If you look at it on face value it looks like this is continuing. People are moving around, buying stuff, a lot of people are traveling -- but it is all based on a lot of debt. When the debt finally implodes, the really nasty face of this whole fraud will be shown to all Americans. I don’t think many people are prepared for it (...)

 

When growth starts to decline, I think we're going to see the valuations of assets decline considerably. It's anyone’s guess how quickly they can fall, but according to what I have been looking at, I think we are going to see a 50% increase in real estate values right off the bat. I am not saying this will happen in a day, but the first wave will be a 30-50% decrease in real estate values when the markets really start to crack. They are already at the edge of the cliff -- and I see prices falling down the cliff, struggling to recover, and then falling even further. Actually, I predict within the next 5-10 years, we can easily see a 75% or more reduction in real estate values.

 

What does that mean for stocks and bonds? The same thing. If we start going into more rapid disintegration, you are going to see the valuations of stocks, bonds and real estate really decline -- much greater than anybody has any idea.

Click the play button below to listen to Chris' interview with Steve St Angelo (60m:16s).

Comments

tmosley BLOTTO Tue, 07/04/2017 - 16:05 Permalink

This will only happen if the Fed is willing to crash the economy.It also happens to be the only way the economy can recover (absent radical new technology like AGI/ASI).Christ, it's one thing to be oppressed by evil geniuses, but quite another to be oppressed by bumbling simpletons.

In reply to by BLOTTO

itstippy ramon_espino (not verified) Tue, 07/04/2017 - 19:13 Permalink

Wat to go Ramon!  There are several other guys on here doing the exact same thing word for word, so it must be legit.  I wish I had the nerve to do what you guys are doing, but I don't so I just keep schlepping along getting nowhere.  I'd sure like to make $7K per month working part time, though.  I did have a part time internet gig for a diet plan where you'd lose 30lb per week on an all-natural diet of prune juice and hemp fiber.  It was through www.explosiveshits.com and it changed my life.  Then the company got bought out by Martin Shkreli and he moved the whole operation to Benghazi.  It's a good thing I kept my day job at the beet factory.

In reply to by ramon_espino (not verified)

canisdirus Bigly Tue, 07/04/2017 - 22:12 Permalink

Expect a drop on a par with real estate, perhaps slightly more. The main driver of value is demand and with a downturn like that, industrial demand will drop and debt-driven purchasing for jewelry will drop. This means depressed demand unless it becomes hip to buy the stuff up. You can't entirely predict that.

In reply to by Bigly

Paul Kersey tmosley Tue, 07/04/2017 - 16:30 Permalink

The Fed can create debt (money) out of thin air, so, therefore, the Fed can destroy it. The Fed is holding trillions in sovereign debt, and nothing can stop the Fed from forgiving trillions in sovereign debt. Nothing is real in a world with over $700 trillion in derivatives outstanding.

As far as consumer debt, except for a few short decades, the commoners have always been in debt to the rich. Feudalism is the default economy:

"Feudalism was a combination of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries. Broadly defined, it was a way of structuring society around relationships derived from the holding of land in exchange for service or labor."

The real unknown is, what happens when 80% of today's human labor is replaced by automation and brain power is replaced algorithmically? Even the serfs' labor won't be needed.

In reply to by tmosley

PT Paul Kersey Tue, 07/04/2017 - 17:18 Permalink

I've been waiting for real estate prices to drop 50 - 75 % since 2002.  The numbers were there.  If they haven't dropped yet I see no reason why they can't continue to stay up well until well after I am dead and gone.The maths does not work.  The Economists are actually Propagandists that manufacture bullshit "reasons" for the theft.  Like the first Die Hard movie - they won't come looking for the money if they think you are dead.  The plebs won't revolt if they think everthing is a legitimate transaction.  The numbers have already proved it is a scam.  But it doesn't matter because more than poverty, the plebs fear math.

In reply to by Paul Kersey

nope-1004 I am Jobe Tue, 07/04/2017 - 15:53 Permalink

Fair prices for houses is at least 70% lower on average.  But that doesn't sit well with the crowd of condo and rec home investors who are looking for someone more uneducated than they are to buy their box and (somehow) pay more than they did.  The notion, at face value, is pretty dumb if you think about it.Houses.... lmao!  The place you eat, sleep, shit, and raise kids has become commoditized to point where you bet on the home and the bank double bets on your mortgage.  Whole f'n thing is a ponzi. 

In reply to by I am Jobe

HRH Feant2 (not verified) nope-1004 Tue, 07/04/2017 - 16:17 Permalink

I prefer to not be homeless. I like shitting inside my bathroom rather than shitting outside as much of the population does in India. I like having a refrigerator and stove that doesn't give me lung problems, too.

I am sure you could get a good deal on a house with no toilet in India.

In reply to by nope-1004

canisdirus greenskeeper carl Tue, 07/04/2017 - 22:22 Permalink

Those markets should drop 80-90%, but the rest of the country needs a minimum of 50-75%. Nowhere is safe. The value of that indoor toilet simply isn't as high as people are asking/paying due to the Fed and FRB.

I'd also venture to estimate that 25% of the existing housing stock is such garbage that it should be demolished and replaced entirely. The only reason they aren't is house prices that are so high that it's not economically feasible to replace them. Housing in such bad shape should be depreciated to the point that it's worth the same as the land...

In reply to by greenskeeper carl

Oldwood nope-1004 Tue, 07/04/2017 - 16:22 Permalink

The value of our homes would be irrelevant if not for the debt we hold on most of them. People used to actually live in their houses....for most of their lives. Homes were NOT just another financial instrument to be flipped every five years, buy a place to live, sometimes for multiple generations.The issue is, as it always IS, DEBT.

In reply to by nope-1004

zzzz88 nope-1004 Tue, 07/04/2017 - 16:34 Permalink

yes, the housing price will drop a lot.why?as a society, the fortune need to transfer from one generation to next. if the younger generation can not afford it, the price need to drop.for whatever reason, the younger generation is much poorer than older generation,the logic is so simple. it is just matter of time. and now the turning point is closer and closer.otherwise, more other issues worse than price drop will come, such as society turmoil, more killing, more crimes, more suicide.but the stupid central banks and government are always late to act wisely

In reply to by nope-1004

Canadian Dirtlump I am Jobe Tue, 07/04/2017 - 16:07 Permalink

It will be interesting, rather refreshing for me to see any 1 thing SRS and his seemingly logical analysis predicts come to pass - much in the same way it would be refreshing to see any precous metals analysts' prognostications even come partially true. Us seeming "right thinkers" have been getting our faces blowtorched off ( like that former idiot on zerohedge trav used to say ) for years for doing the apparent "right thing."  

In reply to by I am Jobe

VK Tue, 07/04/2017 - 15:48 Permalink

Civilization is in overshoot and in bubble territory, followed by collapse. Lots of chaos and suffering to come unfortunately.

Thoresen Tue, 07/04/2017 - 15:53 Permalink

"... I think we are going to see a 50% increase in real estate values right off the bat......"

Predicting a 50% increase? funny how predictive text often puts the opposite of what you type.

b-sugar Tue, 07/04/2017 - 15:49 Permalink

When growth starts to decline, I think we're going to see the valuations of assets decline considerably.Yeah, what about central banks? what about them?

Vuke c2nnib2l Tue, 07/04/2017 - 16:50 Permalink

Gold is the most primitive, foulest, bestial thing to invest in if you think all is going to ashes, which may very well be the case. Your gold could be your salvation, or your end, if nasty people know you have it.  When currencies fail, you'll have the real asset.

In reply to by c2nnib2l

JD59 Tue, 07/04/2017 - 15:59 Permalink

I predict that if the COMMIE KKK HATE FILLED JIHADI DEMOCRATS ever take total control of this country, then the country is doomed, and rivers will flow red.

And no one will even care about the markets.