Oct 9, 2008

Some Unexpected Good News For The Economy

One and a half years ago I criticized numerous economists for their rosy opinions of our economy. Life is great and there is nothing to worry about from here to eternity. There were hundreds of economists snubbing those of us posting our opinions that there were clear and distinctive warning signs that the leveraging taking place by the biggest and most successful investments banks, Freddie & Fannie and a handful of brokers, like Countrywide or New Century that wanted to act like an investment bank, were in serious trouble.

But last week Phil Izzo printed the results from a team of 56 economists that comprise the Wall Street Journal Economist Board. The board believes by a margin of 89% that we are headed into a recession of at least 2 quarters. That is negative GDP for 6 straight months; some believe that it will last longer.

That is the best news I’ve heard in a long time because this is the same board was wrong about the effects that the housing downturn. If they were wrong then it’s a good bet that they are wrong now. I’m going out and buying options for January.