Perusing the Wall Street Journal weekend paper edition on Sunday morning, I was shocked to see that multi-decadal bear as author of a bullish article. James Grant, editor of Grant's Interest Rate Observer and noted bear since the 1980s, is looking for a surprisingly vigorous economic recovery.
***Selected Quotes Begin***
"As if they really knew, leading economists predict that recovery from our Great Recession will be plodding, gray and jobless. But they don't know, and can't. The future is unfathomable.
"Not famously a glass half-full kind of fellow, I am about to propose that the recovery will be a bit of a barn burner. Not that I can really know, either, the future being what it is. However, though I can't predict, I can guess. No, not "guess." Let us say infer.
"The very best investors don't even try to forecast the future. Rather, they seize such opportunities as the present affords them. ...
"Americans are blessedly out of practice at bearing up under economic adversity. Individuals take their knocks, always, as do companies and communities. But it has been a generation since a business cycle downturn exacted the collective pain that this one has done. Knocked for a loop, we forget a truism. With regard to the recession that precedes the recovery, worse is subsequently better. The deeper the slump, the zippier the recovery. To quote a dissenter from the forecasting consensus, Michael T. Darda, chief economist of MKM Partners, Greenwich, Conn.: "[T]he most important determinant of the strength of an economy recovery is the depth of the downturn that preceded it. There are no exceptions to this rule, including the 1929-1939 period. ...
"To the English economist Arthur C. Pigou is credited a bon mot that exactly frames the issue. "The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born not an infant, but a giant." ...
"I promised to be bullish , and I am (for once)—bullish on the prospects for unscripted strength in business activity. So, too, is the Economic Cycle Research Institute, New York, which was founded by the late Geoffrey Moore and can trace its intellectual heritage back to the great business-cycle theorist Wesley C. Mitchell. The institute's long leading index of the U.S. economy, along with supporting sub-indices, are making 26-year highs and point to the strongest bounce-back since 1983. A second nonconformist, the previously cited Mr. Darda, notes that the last time a recession ravaged the labor market as badly as this one has, the years were 1957-58 —after which, payrolls climbed by a hefty 4.5% in the first year of an ensuing 24-month expansion. Which is not to say, he cautions, that growth this time will match that pace, only that growth is likely to surprise by its strength, not weakness.
"And that is my case, too. The world is positioned for disappointment. But, in economic and financial matters, the world rarely gets what it expects. Pigou had humanity's number. The "error of pessimism" is born the size of a full-grown man—the size of the average adult economist, for example. "
***End of Selective Quotes***
It's nice to have a silent reader pick up my thinking and add to it with his own research.
The environmental crypto-fascists have discovered the secret to meeting carbon limits: poverty. Watch out, common man, you and your relative prosperity are the target.
From the FT: "The recession has resulted in an unparalleled fall in greenhouse gas emissions, providing a “unique opportunity” to move the world away from high-carbon growth, an International Energy Agency study has found. "
By increasing poverty and lowering GDP, carbon limits can be reached. What a wonderful admission ! The battle of Man vs. The New Pagan Religion is on.
Word of the Day
"Proselytize" - verb [$10]; an oldie from the card file
Proselytize means to convert to a belief, life style, religion, etc.; to recruit
Sentence: As I daily proselytize my populist libertarianism and economic thinking in this blog, one of the joys is to see prominent writers accept and go on to propagate my ideas. Welcome, James Grant to the bunker !
La Parola della Settimana
"Benvenuto" - interjection (singular); "Benvenuti" - plural
Benvenuto! means welcome! Addressing more than one person, use Benvenuti!
La Frase: Benvenuto, James Grant, al Fortino.
Sentence: Welcome, James Grant, to the Bunker.