LET THE GOOD TIMES ROLL?

4/20/09

The Pontificator has been quiet of late, primarily because I’ve been working on what are hopefully the final stages of getting my novel into print. But, having a tendency to get foul of mood when not pontificating, I felt compelled to take a break from editing to write this (and the immediately preceding, or following, depending on one’s perspective) piece, that one on the great Paul Volcker:

It’s awfully difficult for me to share the bullishness about stocks and the economy that seems to be all the rage of late. Reasons for my refusal to join the “Happy, happy, joy, joy” crowd whose Stepford approach to the U.S. economy had a great deal to do with dunking us in this economic gruel include:

--Maybe the housing market is coming back, but the evidence from the suburban paradise in which I reside is sharply to the contrary. The route to the field on which my son plays his “home” soccer game takes us through “tear down” country in Naperville, the section of town in which the sturdy, yeoman homes that served this town so well in its formative years have been torn down and replaced by gargantuan monuments to the fiscal obtuseness of their owners. Never have I ever seen so many “For Sale” signs on such a brief trip as I did heading to yesterday’s outdoor season opener. Even more ominously, many of those “For Sale” signs have been replaced by “For Rent” signs, signals that the owners have given up trying to unload their monstrosities but remain desperate for cash.

Sure, this is purely anecdotal evidence. But one of the skills that allowed me to call the market and economic debacle, from which we are not yet recovering, long before the coddled and comfortably ensconced “experts” was my ability to keep my eyes open and draw appropriate conclusions from what I was seeing rather than seek ways to turn up the volume on the Wall Street hosanna chorus.

--Even if the housing market is improving, some combination of the following four should blow up in the next several months with devastating consequences both for the real economy and for the psyche of investors who really think we have turned the corner on the aftermath of a twenty year display of financial foppery:
--life insurance companies, primarily through their variable life and annuity contracts.
--credit cards—big time.
--municipal bonds
--commercial real estate

These have already blown up, you say? Think again.

--On the public policy side, debasing the currency and demolishing the already ravaged federal budget in order to encourage the types of behaviors that got us into this soup in the first place is, er, not the way to solve our current problems.

Aren’t you happy that I’ve returned to spread my particular brand of boundless enthusiasm?