Some Uncommon Common Sense About The Economy

Mr. Armentano takes, in our opinion, a realistic view of the 2007 economy without falling into the more common rhetoric of “business as usual”, in his article printed in the East Bay Business Times - December 29, 2006.

He emphasizes that poor economic policy causing an overheating of the housing market and the subsequent over-cooling, that we are experiencing now, as the primary cause for an upcoming recession. He then makes the case that autos will be the next sector hit which we are already seeing. In the last six months autos have laid off 95,000 people, and less published is the auto parts manufacturers that have been streaming their operations out of the United States.

Unlike other forecasts Mr. Armentano states that a hit on the exuberant stock market will be the spark that sets off the upcoming recession. I’d like add that even though this stock market rise is not a “bubble”, but is grounded in some solid corporate performance, the key indicator that is near it’s top is that every Joe and Jane out there is pumping everything they have into it. It’s just when everyone thinks that they are the world’s best investor, is when the world proves them wrong.

Dominick T. Armentano is professor emeritus in economics at the University of Hartford (Connecticut) and a research fellow at The Independent Institute in Oakland.