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"We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008." "
The bigger they are, the harder they'll fall," he said in an interview with New York's Hudson Valley Business Journal. Celente -- who forecast the subprime mortgage financial crisis and the dollar's decline a year ago and gold's current rise in May -- told the newspaper the subprime mortgage meltdown was just the first "small, high-risk segment of the market" to collapse.
Derivative dealers, hedge funds, buyout firms and other market players will also unravel, he said... massive corporate losses, such as those recently posted by Citigroup Inc. and General Motors Corp., will also be fairly common "for some time to come," he said.
He said he would not "be surprised if giants tumble to their deaths," Celente said. The Panic of 2008 will lead to a lower U.S. standard of living, he said.
A result will be a drop in holiday spending a year from now, followed by a permanent end of the "retail holiday frenzy" that has driven the U.S. economy since the 1940s, he said.
China is similarly placed due to its massive holdings of US Treasury Bonds, estimated at $800 billion. Irritated by US pressure to revalue the Chinese Yuan, earlier this month two Chinese officials warned the US State Department that China possessed the "nuclear option" to off load its US dollar denomination assets.
And even though most Western economics believe such a step would similarly hurt China even its mention set-off a dollar slump.
Other countries planning to diversify their dollar holdings include South Korea, Sudan, Venezuela, Japan and Russia, which has ambitions to open an oil bourse trading in roubles. Italy, Switzerland and Sweden have already made adjustments to their foreign exchange reserves.
Billionaire investor Jim Rogers, Chairman of Rogers Holdings and a former partner of the man with the Midas touch George Soros, recently warned, "If you have dollars, I urge you to get out. That's not a currency to own".
July 2007 Iran asked Japan to pay for its oil purchases in Japanese Yen.
September 2007 Japan's Nippon Oil has agreed to buy Iranian oil using yen.