Interesting piece, considering it came from Barron's:
Parting the Mist
Up and Down Wall Street- Alan Abelson
AH, LUCKY US AND MAYBE YOU, too. For after what seemed like an eternity, we finally got back our crystal ball from the shop, where, badly cracked (no comments, please), it had to be sent for repairs. But it's back, and just in time to tell us what's on tap for 2006, a scant few weeks away.
We should point out that unlike a lot of crystal balls, ours is an all-purpose prognosticator, able to predict the outcome of just about anything, from the Super Bowl to elections, the Academy Awards to the what and when of the next pandemic (it'll be the flea flu, if you must know, and the sure-fire way to avoid it is not to lie down with dogs). And we're particularly proud of the fact that its predictions are always spot on.
Trouble is, we're all thumbs with excitement when we work the blamed thing and do have a tendency to drop the ball occasionally, which screws up its powers of clairvoyance. But we've been diligently practicing with a dummy (no one you'd recognize) and think maybe we've finally got the hang of holding on.
But enough of this folderol. Let's let the crystal ball have its say. Why don't we start with an easy one -- Iraq (although a lot of folks wish we'd never started with Iraq). The real question is not whether we'll leave, but when and how. And the answer to the when: starting next year; and to the how: just as fast as we can.
The handwriting is most distinctly on the wall. Our fellow coalitioners are beginning to go gentle into the night. When the war started, our 250,000 troops were joined by 50,000 soldiers from 38 countries. Today, reports the AP, our force of 160,000 has support from 24,000 non-U.S. personnel, most of whom are noncombatants, representing 27 countries, and their ranks continue to thin.
More to the point, the hints from the administration of withdrawal seemingly grow more insistent with every passing day. Yes, we know, the president's on a pep tour, pledging to fight on until victory. But the advice offered by John Mitchell, Richard Nixon's attorney general, is apposite for any administration: pay attention to what we do, not what we say.
Even that staunch advocate of staying the course, Donald Rumsfeld, made a guarded allusion to paring back our presence if the Iraqi elections go OK, although he didn't bother to define OK. The buzz, meanwhile, in Washington -- which, remember, typically is all buzz, no sting -- is that it's an open question as to what happens first: Our valiant guys and gals exit Iraq or grumpy Rummy exits his job.
If the bulk of our troops do come home in '06, that could obviously help the Republicans make a semblance of getting their act together before the citizens of this blessed land cast their votes on Nov. 7. An ominous sign, though, for the GOP is a Gallup poll showing that Tom DeLay, the once and maybe future House majority leader, would have trouble getting elected dog-catcher in his home district, which he has essentially owned for over 20 years.
More specifically, 52% of the registered voters in the survey have an unfavorable view of Mr. DeLay, versus 37% with a favorable view. Some said they'd vote for him again, while 49% vowed to vote for whoever happened to be running against him. Mr. DeLay is now on furlough from his post as majority leader while he defends himself against charges he played fast and loose with Texas' election laws. But even if he beats the rap, the hammer is beginning to look an awful lot like a feather duster.
Of course, the Republicans are extremely fortunate in that their electoral opponents are Democrats. As their recent history demonstrates persuasively, Democrats are distinguished by their uncanny knack of coming up losers, even when playing with a stacked deck. Nothing better illustrates the profound futility of the party than that Hillary Clinton is a serious contender for the presidential nomination in 2008.
Apart from the fact that a sizable portion of the population foams at the mouth at the mere sound of her name, Ms. Clinton suffers from the rather severe handicap of being politically tone-deaf. As witness her flip-flop to increasing militancy on Iraq, just as the public grows ever more disillusioned with our involvement there. So though things look less than promising at the moment for next year's midterm elections, Republicans should never underestimate the awesome ineptitude of the opposition,
The Bushmen evidently are banking on a buoyant economy to offset the increasing disenchantment with the war and a rash of scandals. And that cheery notion draws sustenance from the recent bountiful crop of upbeat economic news, from jobs to durable-goods orders and a pick-up in consumer confidence. But the prospects for the economy, it grieves us to suggest, are not entirely salubrious.
For one thing, the mounting conviction among professional soothsayers that next year will see GDP growing 4% or more is disturbing. For it reflects not a cool assessment of the outlook, but the deadly tendency of that set of seers to forecast by extrapolation -- whatever is, will be. It isn't that the majority of economists are always wrong. But they're much more often wrong than right. So all by itself, their bullishness on '06 makes the contrary view a reasonable bet.
More tangibly, the incorrigible optimists, as is their wont, are blithely ignoring the dark clouds plainly visible on the horizon. The great housing bubble is popping and the consequences are shaping up as dire, indeed. Not only is the value of the happy homeowner's house in jeopardy, but also obviously its ability to finance his free-wheeling spending; the end of the housing boom might even pose a threat to his job. On this score, the Anderson Forecast, conducted under the auspices of UCLA and released last week, bleakly predicts that the decline in housing will run a good several years, in the process reaping a grim toll on jobs -- possibly 500,000 in construction and another 300,000 in the financial sector.
Add to that potential sizable hit to both employment and the consumer's psyche such rather unnerving facts as that Detroit's in the ditch and hellbent on closing plants and handing out pink slips to its workers, whatever color their collars; that the federal government, on the basis of the first two months, seems a lead-pipe cinch to run up a $500 billion-plus budget deficit this fiscal year; that inflation continues to rear its insidious head, and you can see perhaps why we find it difficult to wax enthusiastic about next year's economy.
And let's not, as much as we wish we could, forget about energy. The recent perkier consumer mood and his greater willingness to consume has everything to do with the drop in gasoline prices. But last we looked, crude edged back over $60 a barrel and natural-gas prices shot up to a new all-time high north of $15 per mcf before easing off. Gasoline and heating oil are sure to follow. Sure to follow, too, are furrows and frowns on the consumer's brow and a desolate waning of the brief revival of his spirits.
Last but not least, gold continues to spiral upward, setting still another 24-year high as it closed in on $530 an ounce. Bullion's relentless rise, whatever is supplying the impetus, as we've lately lamented more than once, likely bodes ill for the economy.
online.barrons.com |
