Karl pulls no punches, I enjoy his writings tremendously. He has superb market insight.
That's his problem. The issue isn't finance, which is why he's writing a newsletter instead of running a large investment bank and/or hedge fund.
The issue is the linkage between Wall Street & DC. US policy was/is to inflate the economy via (illegal) immigration & housing. We needed a growing economy to deflect attention away from Iraq. The players in NYC were more than happy to oblige. EVERYONE knew the score.
The price we're paying right now is the true cost of victory in Iraq. Because, after all, didn't the strategery work? If we had had a poor economy + anti-war propaganda, Bush would have had to back out.
Instead, we made it through. Was the price too high? How much did WWII & the Cold War cost? A stable ME will have a long-term calming effect on overall economic growth for many future generations.