I Am an Optimist!!

Seriously I am. I am the half glass full kind of guy. I frustrate my wife with my up beat view on things. Yet for three or so years I have been "a the sky is falling" kind of guy on the economy. Now I am looking at long term fundamentals and will be the first to admit my timing on what is going to happen has sucked big time. This is why, in part, I have posted little in the past couple of years as the markets have not behaved rationally given what I view as reality. But I would be remiss to diss the markets when nonsense is boosting them.

I have begun posting again as I think things have finally gotten to a critical stage where the positive hype is not going to win the day and my predictions are coming to the front, perhaps later than I expected. Let me spell out a few factors here:

• housing in the U.S. is still sucking wind and with shadow inventory will likely do so for a couple of years;


• China is trying to cool down real estate and other bubbles forming there (my hat is off to them for trying to do so) so its economy is bound to cool a bit, which will have a chilling effect on the world economy;


• Greece and the other PIIGS have really no alternative in the long run other than to default (but I have no doubts they (as in EU and IMF) may kick this can for a few years before their toe hurts);


• unemployment is not improving in any significant way soon (Ben supports me on this)


• the economy is sluggish at best and will continue so this year (Ben agrees); and


• Ben ain't doing squat to support us for now (I do however see QE3 late this year or early next)

All said and done, the next six months are difficult at best. It will be interesting!

Disclosures: None.