Dow 20,000 vs. ‘The End of America’: James Altucher Debates Porter Stansberry

08-17-2011 • Businessinsider.com

As you might imagine, Stansberry disagrees. He's recommending clients be 50% in gold and 50% in cash if they're not willing (or able) to actively short stocks. Stansberry believes Europe's debt crisis will only intensify in the coming year, predicting Italy's Unicredit will be "the next big domino to fall." If Unicredit fails, "Italy can't bail it out and Germany will not bail Italy out," he says, predicting Germany will leave the EU within the next 12 months. But Stansberry is even more bearish on the U.S., predicting the dollar will lose its reserve status and the Treasury "bubble" will burst. "There's a huge storm brewing," he says. "Everyone with any sense is leaving the [Treasury] market, including a lot of our trading partners and central banks." By his own admission, Stansberry has been wrong about the Treasury market, which showed incredible strength last week, even after S&P's downgrade. Altucher, of course, sees it differently. The "flight to safety" trade into Treasuries is a sign of "people's confidence in the dollar as the ultimate reserve currency," he says. "That'll continue to be the case as long as we continue to be the leaders in innovation, creativity, biotechnology, Internet technology. I don't see that changing at all; in fact I only see that growing." Stansberry's counter: Altucher is "mistaking liquidity for security," he says, noting gold also surged last week while last Thursday's 30-year Treasury auction was lousy, at best. As you'll see in the accompanying video, Altucher and Stansberry don't agree on much and could probably go back and forth with the point-counterpoints for hours, if not days.