In the Rick’s Picks forum, Gary Leibowitz is a square peg in a round hole. A steadfast Obama supporter, his outlook for the economy is almost as annoying. He actually thinks we’ll muddle through 2012 without a global financial collapse and believes the U.S. economy is on the mend. Here’s Gary in his own words, posting to the forum yesterday: “As Obama is being bashed for his outrageous spending spree over these last three years, the economy is showing improvement across the board. The dollar has to do well in this scenario, which will place pressure on commodities. The corporate earnings picture is a bit more cloudy. Overseas exposure will certainly hurt the bottom line.” Crazy, right? In the first place, where would economic growth even come from, given the shrunken state of America’s manufacturing sector and the death spiral globally of our former bailiwick, grotesquely leveraged financial “products”? Factor in an apparently intractable deflation in the housing sector, and the best we could hope for in 2012 is to keep the Second Great Depression at bay for another year. Right?
And yet, is it possible he could be right – that 2012 will end, just as 2011 did, with no world-shaking financial catastrophe to end these tolerably hard times? In fairness to Gary, we should note that he is not all lollipops and roses. “I am not proclaiming all is well, or that we will come out of this unscathed,” he continued in his post. “I just don’t see the Armageddon everyone is expecting. If we do hold off a recession this year, then the odds of a severe recession in 2013 increase greatly. Real estate and other ‘assets’ will most likely take it on the chin. Deflation pressures will mount. Can’t see many winners except cash.”
We’d have to concede that this sounds like the voice of moderation, even if it’s apostasy to the mostly gloomy bunch, including your editor, who post regularly in the Rick’s Picks forum. In any event, based on a purely technical reading of stock and commodity charts, we’d have to concede that a dull 2012, economically speaking, at least seems possible. We’re already on record as saying the euro looks like it will fall no lower than $1.08 at the outside, notwithstanding the fact that we expect Europe’s PIIGS to renege on most of their debts. With regard to the Dow Industrial Average, the technical evidence is as persuasive for new record highs as for a collapse below 10000. Could Gary be right? While we continue to doubt it, we’ll keep an open mind.
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