Dow Could Crash to 3,000 in 2013: Author

The recent gyrations in global stock markets are just the beginning, says U.S.-based economist and author Harry Dent, who believes the Dow will fall below 10,000 in the near term before crashing to around 3,000 in 2013.

He pointed to the selloff during the last global financial crisis, when the Dow lost around 8,000 points in the period between October 2007 and early 2009.

Dent based his bearish predictions squarely on the changing spending habits of global consumers.

"Baby boomers around the world, and all the developed countries — Europe, North America, Australia — they have peaked in their spending cycles...they've been driving up real estates prices and stock prices and the economy for decades, and now they're going to be saving and not borrowing," Dent said.

Accentuating the problem is the deleveraging of U.S. private debt, which has doubled to $42 trillion from $20 trillion in the last eight years, according to Dent, and is now valued at three times the size of the nation’s public debt.

"That debt is deleveraging, and that's actually causing deflationary trends. It won't matter how much stimulus the government throws at the system, because baby boomers with their already huge debt burdens will not want to borrow money and spend more,” said Dent.

"In the Great Depression, that's what happened — deflation came in such a deep downturn because so much debt was deleveraging."

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