Making the crash bear-able

For an economic outlook as shocking as a splash of ice-cold water, no one can beat David Tice. And I have to admit, there’s something about his unalloyed gloom that appeals to me.

For an economic outlook as shocking as a splash of ice-cold water, no one can beat David Tice.
Along with Jeffrey Kleintop and Scott Migliori, market strategists, respectively, at LPL Financial and RCM Capital Management, David Tice was our guest on Tuesday’s webcast that examined the state of the market. Although cautious, Mr. Kleintop and Mr. Migliori were practically euphoric in contrast to the glum outlook of Mr. Tice.
His view, radically condensed, is that after years of overspending by all sectors of the economy we’re now paying the piper.
As for the cure, Mr. Tice says, massive credit generation and direct corporate investment by the government is just a hair-of-the-dog palliative that will only worsen the long, hard slog out of the current mess.
I have to admit, there’s something about David Tice’s unalloyed gloom that appeals to me.
Instead of the namby-pamby numerology of some of Wall Street’s seers (“Past downturns lasted 14.5 months on average, so we’re probably ready to turn the corner”), our bearish David comes right out and tells us we’ll be stuck in the dumps for quite some time.
Having always feared that the Cooper family’s Social Security benefits and our humble nest egg would be decimated by inflation — my Weimar nightmare — or that the government would decide to tax Roth IRAs about two years after I converted (my “Twilight Zone” scenario), economic and market bears always make me feel as if I am not alone in my angst.
So what could warm a bear’s heart more than today’s lead article in the Wall Street Journal, “Rise in Rates Jolts Markets.”
It seems the world is coming to grips with our nation’s credit addiction and is starting to get antsy. That translates into higher interest rates, which means the stock market is likely to sink further and that business, in general, will suffer.
While consumer confidence is rising, which is terrific, you can’t beat higher interest rates for dampening home sales, dousing auto purchases and generally taking the wind out of consumers’ sails.
Score one for the bears.
But lest I leave you wallowing in my funk, consider this upbeat long-term view from Stratfor, a global intelligence consulting firm based in Austin, Texas.
Peter Zeihan, a vice president of analysis at Stratfor, was a recent speaker at a JPMorgan Asset Management gathering in New York, and had some positive things to say about the United States, especially vis-à-vis our international competitors.
One our nation’s great strengths, Mr. Zeihan maintains, is our internal maritime network (the vast, interconnected Mississippi/Missouri/Ohio/Tennessee River system) and our many coastal ports. We’re one of the few major nations with such a built-in, paid-for infrastructure, and the only one with a vast chunk of arable land.
Even if we continue to screw up massively, we will retain our edge over China, whose rivers are unconnected and prone to flooding, and Europe, whose geography encourages competition rather than cooperation.
Russia, according to Mr. Zeihan, will fall apart through population shrinkage over the coming decades.
If you combine the gloom of David Tice and the glowing optimism of Peter Zeihan, here’s what you get: a lot of pain over the short and medium term, but probably continued American dominance — albeit with a thinner wallet — in the long run.