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Bullish on America

David Rosenberg, the perma-bear economist whose pessimistic outlooks generally align with those of his fellow Cassandra, Nouriel Roubini, has caused “a mini sensation” in financial circles this week, expressing uncharacteristic optimism about the direction of the US economy. As the Wall Street Journal reports, Rosenberg, who explained his thinking in a newsletter titled “Parting of the Clouds,” sees the votes last week in Wisconsin—where public-sector union-buster Scott Walker defeated a recall attempt by a landslide—and liberal California, where voters in San Jose elected to cut benefits for public workers and where the population of San Diego voted to freeze wages and mandate private-sector style retirement plans for city workers, as a historical “inflection point” that give him reason to believe that the next 15 years won’t be like the past 15.

Rosenberg believes Americans are starting to wake up to the unsustainability of the blue model—with its attendant public-sector union problems and oncoming tidal wave of pension liabilities for cities across America—and are beginning to making this felt at the polls. He writes:

I may be cautious on the outlook for risk assets and cyclical securities over the near- and intermediate term. But change is always at the margin. And it usually starts in the political sphere. Within that realm, it is the local levels that tend to lead reforms at the national level. And that we could see the pension reforms take hold in California of all states — hey, isn’t that our “Greece”? — is a real bellwether.

For Rosenberg, the future is brighter than many think.  Rosenberg expects the change in attitude that is taking hold at local levels across the country in cities like Chicago and San Diego and states like New York and Wisconsin and California, to filter up to the top.

The loudest voices today are those of the hand wringers.  It’s comforting to hear some people out there who think that there is a light at the end of the tunnel and that this light comes from the Americans who are demanding better economic results, new ways of doing things, and a better future for the 80 million Millennials who, absent some badly needed changes and reforms, are going to be struggling with some ugly debts and social problems in the decades to come.

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  • Alex Scipio

    I guess this is interesting, but if Obama’s flouting of the rule of law, if his rejection of checks & balances, if his complete usurpation of the legislative function – which has nothing to do with immigration & everything to do with a constitutional republic under the rule of law – and for him to do so in an election year and NOT as a lame duck, are not immediately challenged in a separation of powers suit to SCOTUS by Boehner Monday morning, then any slow slide to socialism under the failed Blue model will be irrelevant as it will have been overtaken by the event of the overthrow of the rule of law by our emerging dictator. And no, that is NOT hyperbole.

  • NC

    The blue political model is overpriced, built on false assumptions, fails to deliver results and exploits the goodwill of the taxpayer. If not corrected, it will cease to exist.

    Mao is dead.

  • Anthony

    “But change is always at the margins” remains debatable; but hoping change may lie with the Millennials is aspirational (they definitely have a longer time horizon than other adults in our society and I believe will shape future going forward). Yet to be bullish on America – moderated by realism – does not require inflection points as much as recognition of inherent challenges and where we meet them – freedom implies choice, participation implies responsibility.

  • Robert Poyourow

    Still problematic — that while the Blue model might not be economically sustainable in the long run, its benefits are widely popular. The red model is not politically sustainable. Bush found that out, and Romney will, too. The path forward can only be achieved by some form of “shared sacrifice,” and a renewal of some sense of a commonwealth, neither of which is not forthcoming.

  • SteveMG

    It’s great to see these reforms being undertaken but the main problem still facing the US is growth. How do we get the economy growing again? And none of this 1% stuff either. Krugman’s answer to invade Mars is impossible but at least he is addressing the question of growth.

    Until we figure that out I’ll not quite yet join the bulls.

  • Jacksonian Libertarian

    The TEA Party RULES!!!

  • Kris

    “The loudest voices today are those of the hand wringers.”

    Wring them hands, Sweet Martha, for the poor man’s son.

  • Jim.


    There are easier targets than Mars. Some two thousand (and counting — ) Near-Earth Asteroids, reachable with current technology, are more easily reachable than Mars.

    Of course, a mission to Mars would be helpful. Our on-orbit capacity for processing asteroids into something useful is currently, well, non-existent — but that could change rapidly before the end of the decade. The fastest way is to provide an anchor customer for asteroid processing, processing that provides an easy, straightforward, useful, and profitable product.

    Jump-starting the retrieval and on-orbit processing industry would be very easy, simply by offering good money for on-orbit mass for radiation shielding for a human Mars mission. Other goods would follow quickly, culminating in space-built satellites (satellites being today a $250 billion / year business here on Earth.)

    The only reason “invading Mars” is impossible is a semantic one… there’s no one there to invade. However, if what you want is to expand the human economy by expanding the footprint of humanity within the solar system, that’s not impossible.

    Just unimaginable. For some.

  • SteveMG

    “The only reason “invading Mars” is impossible is a semantic one… ”

    Thanks but my comment was tongue in cheek.

    As you probably know, Krugman advocates a massive stimulus – several trillion over several years – to spur growth and he’s suggested, kiddingly, that we have a war against aliens. Or someone.

    That’s simply not possible (the trillion-plus stimulus) but he is correct that we need something to generate growth. Austerity may work in the long term but our economy might be dead by that time.

  • Kis

    Jim@8: Your comment (especially coming after the previous post) is as good an occasion as any to say R.I.P. Ray Bradbury.

  • Jim.


    I miss the guy too, but I’m worried that Europe took his advice to heart:

    “Go jump off a cliff, and build your wings on the way down.”

    I’m still hopeful that America can manage this feat; Europe, not so much.

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