A Long Economic Winter

PrudentBear.com ^ | 05-Feb-2003 | Richard Benson

[wideawake]

What - a website called PrudentBear.com is pushing the most radically bearish views? Amazing! (And quite a marvel of objectivity).

Note to the prognosticating Mr. Benson: If you actually published this on February 5th, why are you predicting two banruptcies that happened two months ago?

[ThePythonicCow]

bttt

I've been saying we are entering a serious depression. But this article says it far better than I am able.

[ThePythonicCow]

If you actually published this on February 5th, why are you predicting two banruptcies that happened two months ago?

Because he published it in October 2002, as noted at the top of this posting.

[wideawake]

Still unimpressive. UAL and Conseco were threatening to file way before October.

[ThePythonicCow]

Ah - so he "predicted" one thing that in your humble opinion was obvious at the time.

That makes the entire article unimpressive.

You set a pretty high bar there -- have you found an analyst with whom you are impressed -- I'd like to read them.

[wideawake]

Irrational moroseness is the flipside of irrational exuberance.

Everyone who bought the dotcom snakeoil was gullible, but everyone who buys the economic doomsday scenarios these guys are peddling are just as gullible.

For 50 years our tax system has encouraged borrowing and spending and penalized saving and investment. The Washington bureaucrats are beginning to realize that.

[wideawake]

have you found an analyst with whom you are impressed -- I'd like to read them.

I recommend Grant's Interest Rate Observer.

Here's a sample:

http://www.grantspub.com/samples/g20n17.pdf

[ThePythonicCow]

The gullible ones in the dot.com boom were not those who observed a huge runup in tech stocks and such; the gullible ones were those who saw a "new era" in which such a boom would continue unending. There was a runup, a big one. One of the biggest bubbles in recorded financial history. It just didn't last. They never do.

The analog would be predicting not that we are entering into a Depression, but predicting that it will last forever. I'd agree with you that anyone so predicting is a fool.

Neither the boom nor the bust was nor will be forever. It went up, it's going down. You've seen one. You will be seeing the other, when you depart the low state of denial in which you are currently trapping yourself.

Let me know when you finally exclaim "oh s**t - this really is a serious Depression!" For on that day I will know that we are one more investor closer to hitting bottom and starting back up again.

[the gillman@blacklagoon.com]

This author is a hopeless optimist.

In fact, we are at the start of a terminal depression that will lead to a global war unlike anything ever seen. Most of the world's infrastructure will be destroyed and the earth's population reduced by 70% or more.

The survivors will be left to struggle through a dark age of plague and famine that will last for centuries.

Nothing irritates me like a pessimist without an imagination.

[wideawake]

I'm not in a state of denial. There are real problems. There are also excellent businesses that are undervalued at the moment.

When I talk about dotcom mania I talk about the people who thought Akamai at $330 (that's right) was as good an idea as Cisco at $80. In 2000 I thought they were both far too expensive and I didn't buy them. I think that Cisco is cheap today at $13 and that Akamai is still too expensive at $1.25.

Two or three years from now there will be a return to economic stability, and it will driven by the Ciscos of the world.

Are you familiar with the Austrian theory of the business cycle?

[ThePythonicCow]

Cool - it's a pleasure to read a prediction more pessimistic than mine. Bring it on.

[MurryMom]

While the Federal budget is going into deficit, more of the deficit is coming from a drop in tax revenue than new spending. Moreover, state and local governments are headed for $80 Billion in deficits; except, these governmental entities are not supposed to run deficits.

It's good to see that there is a non-Kudlow financial prognisticator who doesn't buy into the Dumbya Administration's nonsense about how their tax cuts caused "only" 40% of the deficit. Anybody who buys a stock in today's market based upon confidence in the Dumbya Administration is a sure loser.

[ThePythonicCow]

Thanks for the link to Grant's Interest Rate Observer . I hadn't really paid attention to it before. He's rather bearish himself, though he focuses on different aspects of the overall economy and financial markets.

In looking into this Grants site a little bit, I stumbled on an excellent list of bearish newsletters and analysts, which includes Grants, and my current favorite three, Stack, Dines and Prechter (Elliott Wave). Check out the site bearmarketcentral.com for the page Great Bear Advice. It lists:

• Robert Prechter's Elliott Wave International
• Peter Eliades' Stockmarket Cycles
• James Stack's InvesTech Research
• Alan Newman's Pictures of a Stock Market Mania
• Arch Crawford's Perspectives
• Grant's Interest Rate Observer
• Doug Casey's International Speculator
• Don McAlvany's Intelligence Advisor
• Christopher Carolan's Calendar Research
• The (James) Dines Letter
• Dan Ascani's Global Market Perspective
• Jerry Favors
• Short on Value
• P.Q. Wall

[ThePythonicCow]

He's not saying that the drop in tax revenue came from taxcuts - at least I hope not. Most of the drop came from reduced income - lower corporate income, more unemployed not paying taxes, and much reduced capital gains to be taxed with the falling stock market.

What tax cut has happened so far is minor in comparison.

You are misreading this, blinded by your disrespect for a darn good President.

[The Duke]

Neither the boom nor the bust was nor will be forever.

The Roman Empire will be glad to hear that!

[Southack]

It might be worth noting (if you actually want to consider all of the evidence prior to making a "conclusion") that the U.S. economy GREW during the year and Quarter in which this article was written.

We've got record high worker productivity, reasonably low unemployment (~~ 6%), very low interest rates, and inflation is dead.

We've got a great infrastructure, university educational system, and superior research and development in this nation.

Our population is increasing and our average salaries are rising.

This is not data that warns of an impending doom in our economy.

Crying that the "sky is falling" simply because some techies have to learn new careers and that it's just so awful that our state and federal government(s) is/are getting less tax income hardly seems like a mature, manly response to the rational information at hand.

Let's not all be feminized by Leftist gloom and political correctness.

Buck up, gentlemen! We are at war!

[ThePythonicCow]

The world came back after the Roman Empire collapsed. It's just not called the Roman Empire anymore.

[ThePythonicCow]

Southack - you shouldn't take financial forecasts as necessarilyl having political implications. Both liberals and conservatives can predict both boom and bust. And both will be right, sometimes.

A huge boom in Clinton's reign doesn't make him good, nor does a major depression in Bush's term make him bad. Major economic cycles are bigger than one man - whether he be the President or the head of the Fed.

Don't fall for the leftist trap of responding to their cries that the economic sky is falling by claiming that it isn't falling. If the sky falls anyway, you're cornered, no fault necessarily of yourself nor of Bush.

Forecasts of doom (or boom) don't spin left, but leftist spinners can sure forecast. Don't go there with them.

[litehaus]

"A huge boom in Clinton's reign doesn't make him good"

Klintoon had the GREAT FORTUNE to be contemporary to Gates, Grove and Greenspan.....Nothing more than that!