Far be it from me to only post Economic Gloom & Doom-Forbes: "4 Wrong Reasons for Pessimism"

[El Pinko]

A bullish acquaintance sent me the link to this story, and hey, I want to find a silver lining as much as the next guy, so I jumped in and read it...


Here's the writer, Rich Karlgaard.



He looks, um, well, nevermind. I'm sure he's just dandy.




http://www.forbes.com/columnists/forbes/2008/0310/027.html


Four Wrong Reasons for Pessimism
Rich Karlgaard 03.10.08, 12:00 AM ET

If you think a U.S. recession is here or imminent, you're in good company. Most Intrade bettors believe this and probably 99% of journalists and all Democratic office seekers do, too. We'll soon see. For now, I still say the 2008 U.S. recession is oversold. Why the widespread recession fear when unemployment is low, interest rates are low and the Fed is on the case?


(snip - and now for his "Four reasons")


President Bush's unpopularity. George W. Bush is stuck with a 30% approval rating. It's nearly impossible to see what might lift Bush's rating during the 11 months remaining in his presidency. Seventy percent disapprove of the Bush presidency (or are undecided) and, amazingly enough, that's the same percentage as those who say America is on the wrong economic track. Does that too tight correlation make you suspicious? It should. When asked about their own individual economic prospects, half of Americans say they feel positive about the future. About their lives, 84% say they are satisfied. So which numbers should you believe--the 70% who say the whole country is on the wrong track, the 50% who are rosy about their own economic futures or the 84% who report themselves satisfied?



(snip - umm... okay...)


Presidential election year. This is the most compelling presidential primary season in memory. By far the superior drama is the Democratic race … and it is going down to the wire. The press coverage is huge. Both Democratic candidates describe the U.S. economy as in terrible shape.


(snip - drums fingers)


Business press incompetence and fear. Want to know the truth about business journalists? Most of us are failed sportswriters. There are exceptions, and a good many are found between these pages and at Forbes.com. Think about what it takes to be a first-rate business journalist. One must be facile with numbers and financial statements and have the confidence to talk to CEOs, high-level executives, board members, analysts and so forth. One must delve deeply into the industry one writes about--what is the competitive landscape, what are the technological disruptions on the road ahead? It is also critical that one have a coherent global economic view to be able to put a story into context. And one must be a good storyteller.



And his final "reason" why pessimism is uncalled for is that only $150 billion has been destroyed thus far by the subprime debacle - a fraction of the $700 trillion in bad debts in the S&L crisis, logic being that we survived that, so we will survive this.







I'm sorry Rich, but if this is the best you can come up with, we are in a LOT of trouble.

The first 3 reasons for pessimism aren't reasons at all. Has ANYONE you know expressed concern over economic developments in context with Bush's unpopularity? That son-of-a-bitch has been unpopular for 3+ years already. It's NOT THAT.

And it's not the campaign, or negativity on the part of the democratic candidates. If anything, their professed outlook is much sunnier than the average American's. I'd daresay that both Obama and Hillary have downplayed the very ominous economic developments of recent months.

And the business press being infested with liberal Chicken Littles? How did he type that without coffee-spraying his screen? Media covering business news has basically turned into chearleaders for the markets, downplaying bad news and hyping rallies with all their might. Any of you guys invest in any of the gems that CNBC's Cramer pushed on his show? No? Then you missed a once-in-a-lifetime chance to turn a dollar into 60 cents!

Then there's the last reason, the only one that might possibly have even a shred of validity. It is true that we can't know for sure how many billions or trillions of bad loans there will be, how many banks will fail, but the fact is that the subprime resets are only just now peaking, and option-ARM loan resets won't be peaking until 2008-2009, so we can look forward to YEARS of housing disaster before it improves.

But let's pretend that the subprime/option-ARM/HELOC mess only ends up wiping out $700 to $1 trillion.

The other fundamentals of the economy - soaring gas and commodity prices with no end in sight, a debased and plunging US dollar, no manufacturing base, weak job growth, no wage growth,consumers who are already maxed out and lenders tightening lenging standards - all of these point to a severe contraction. And Helicopter Ben keeps lowering rates, debasing the dollar further, and mortgage and other rates are still going up.


So as much as I would love to buy into Karlgaard's Romper-Room Magic Mirrror Happy Time view of the economy, it just seems like desperate spin based on nothing.

If anyone disagrees, please feel free to tell me why. I REALLY would like to see the bright side of this mess.

[catnhatnh]

1. This man is an innumerate moron

...who's off $699,840,000,000,000.00 on the cost of the S+L scandal.See the brief intro to the Wiki article below...


The US Savings and Loan crisis of the 1980s and 1990s was the failure of several savings and loan associations in the United States. More than 1,000 savings and loan institutions (S&Ls) failed in "the largest and costliest venture in public misfeasance, malfeasance and larceny of all time."<1> The ultimate cost of the crisis is estimated to have totaled around USD$160.1 billion, about $124.6 billion of which was directly paid for by the U.S. government -- that is, the U.S. taxpayer, either directly or through charges on their savings and loan accounts-- <2>, which contributed to the large budget deficits of the early 1990s. The resulting taxpayer bailout ended up being even larger than it would have been because moral hazard and adverse-selection incentives compounded the system’s losses.

I believe anyone who paints a rosy view of the economy is lying or delusional or both-with this guy I'll add-or stupid......or all three...

Editted to add:For comparison the "Chrysler Bailout" of the late 70's carried a price tag of $1.2 billion and was paid back in full and ahead of schedule.....

[El Pinko]

2. Thanks for that.

Maybe he's adjusting for inflation? LOL

[El Pinko]

3. kick

nt