Caution on the part of investors may be warranted at this point, but BW overlooks, intentionally in my opinion, the biggest hazard: the probable Democrat takeover of the White House, and Dem gains in both the House and Senate after the 2008 election. The Democrats haven't even been subtle about their war on the achievers who fuel the economy. Unless there's a major change in the political landscape -- and, try as I might, I can't see it -- look for a taxation and regulatory nightmare beginning in 2009. And that's what is likely to end, at least for a while, the bull market in U.S. equities.
Right, and a good reminder.
“the biggest hazard: the probable Democrat takeover of the White House, and Dem gains in both the House and Senate after the 2008 election.”
BINGO!
What you say about BW is true, but Barron’s is also very worried.
Steep recession in 2009 is what I have predicted. I see it this way also as one economist in the article suggested -growth based on Wall Street is happening more slowly then what it thinks. This statement in and of itself is false. Growth on Wall St. is based on numbers and numbers alone. Corporations in sectors such has housing just had windfall profits and still appear somewhat healthy, energy is at all time profit, steel and other building commodities still at great profits. Global outsourcing and corporate profits have been amazing.
What he is feeling as other economists mentioned is the status of our economy and the middle class. I have been conservative, never had lots of extra toys, always drove cars 2-3 years old, saved some cash. Guess what? The cost of living where I live has risen 42% in five years based on spread sheets I manage. I am a CEO of a business I own. My salary of $80k needs to be $125k. I put aside almost every pleasurable activity that costs pennies. Now I am putting some necessary bills on credit cards and will tap into my home equity for the first time.
Yes, I will find a way to make the $125k and am working 15 hours a day to do it and still working smarter. My wife is also going back to work. My middle class friends families now both work full time, six days a week (4.5% employment stat) and/or long hours and are defaulting on credit cards, mortgages because they already tapped their home equity. The middle class woes are beginning to be felt on Wall St. as nervous twitches. If anything, I will invest in real estate a year from now and buy up a duplex or two and rent them out.