Evidently some people feel I'm a bit (overly?) optimistic. And by someone I have in mind particularly my buddy-and (very) loyal Diary of Republcian reader-Nanute.
After writing this post http://diaryofarepublicanhater.blogspot.com/2012/02/dow-back-over-130000.html
Nanute commented:
"You get an entry level job in security, and all of a sudden you're bullish? LOL. Seriously though, I wish I shared your optimism. Still too much unemployment, excessive consumer debt, a depressed real estate market, and a batshit crazy wing of the Republican Party having a major impact on policy decisions in Washington and in state houses. And, let's not forget what's happening in Europe. The most recent kicking the can down the road with the Greek crisis, will come to a head sooner or later. Perhaps not before the election in November, but surely by the 1st quarter of 2013. All this additional austerity and additional debt will only increase Greece's debt to GDP ratio. (IMHO.) We may have dodge a bullet with the recent settlement on the mortgage mess, but here too, the devil is in the details. And we don't even know what the details are yet. See the Naked Capitalism post today "Will Expiration of Tax Break Render Much of Mortgage Settlement Moot?" I've got more, but I think this is enough for now."
Yeah, I'm an optimistic guy. But while his much less optimistic scenario is highly plausible, I think most of his concerns can be answered. Unemployment is coming down, and with under 350,000 jobless claims that is indicative of economic expansion. The drop in claims has been consistent not just coming out of the blue a few weeks so I don't think it was a fluke. The GOP is a pain in the ass, but it's my prediction that Obama already punked them in the debt ceiling fight last Summer.
Notice that no one seriously talks about austerity now. Prior to the debate the GOP had some level of a mandate-of course as usual they overplayed their hand-to push deficit cutting. Now it's wholly off the table. In that sense Laurence O'Donnel was right and the Obama haters were wrong last year.
Consumer debt is actually being paid down very well. The one thing I can't answer so definitely is Europe. Today the headlines at CNBC show that the Eurozone is expected to shrink this year-a yearly GDP of -.3% down from a prior estimate of .5 growth in 2012. Now the EU is not expected to grow till 2013. No doubt this could be a real problem as the EU represents 20% of worldwide output.
http://www.cnbc.com/id/46493981
The slowdown in the EU is what caused GM to miss its earnings per share target in the fourth quarter. If the EU does indeed shrink in the EU during 2012 can the US recovery survive it? I think so though it still remains to be seen.
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