We were waiting for the end of the world,
waiting for the end of the world,
waiting for the end of the world.
Dear Lord I sincerely hope you’re coming
’cause you really started something.

-Elvis Costello, Waiting For The End Of The World


In today’s LA Times, Tom Petruno looks at the Zombie Bears: Still betting on economic doomsday — and still waiting. (I have a few choice words in it).

Despite the U.S. economy growing (5 Qs in a row), improving data, and a stock market making two-year highs, to some people, things are still bad and getting worse:

“On the Internet, there is an army of people who will immediately and bitterly dispute anything they read suggesting that 1) the U.S. recovery is real or 2) the global financial system has any hope of avoiding another meltdown.

Barry Ritholtz, head of investment research firm Fusion IQ in New York, calls these folks the “zombie bears.”

“They will not admit the economy is getting better, albeit slowly,” Ritholtz wrote this week on his widely read economics and markets blog, The Big Picture. “They insist the recession was a depression; they insist it never ended. These are the bears who cannot be killed. They will stay bearish, regardless of the data that all but insists otherwise.”

That ought to sting coming from Ritholtz because he was a hero to the bear camp heading into the 2008 financial and economic crash. He had predicted a severe comeuppance after the nation’s long debt binge, and we got it.

But by the time the stock market hit its low point in March 2009, “We already had a massive crisis and collapse, so the worst of what came before was already reflected in equity prices and trader psychology,” Ritholtz said. It was time to reassess.

By refusing to believe that a recovery would follow, the zombie bears have sat out a 70% rebound in the Dow Jones industrial average from its 2009 low — and far bigger gains in many foreign markets.

I spoke with the reporter about the recency effect, about how people’s views are disproportionately shaped not by long term trends, but by what occurred most recently: “It’s human nature to see our present situation, and the future, through the prism of our recent experiences. After living through what was (or is) for many people the worst economic nightmare of their lives, it’s not surprising that we’re now constantly looking over our shoulders, fearful that another crisis is imminent.”

For those of you who like to delve into the psychology of such things, the full column is worth reading . . .


Still betting on economic doomsday — and still waiting
Tom Petruno
LATimes, November 27, 2010


Category: Media, Psychology, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

100 Responses to “Waiting for the End of the World”

  1. Adam W says:

    Alex, I’ll take Zero Hedge for $100 please . . .

  2. Liquidity Trader says:

    Zero Hedge may be the ringleader in end of world money losing market commentary, but lots of folks are in this camp beyond ZH — Roubini, Schiff, Mish, Rosenberg.

    Read the Zero Hedge comments for some of the most ridiculous ill informed perma-bear nonsense you have ever seen. I gave up on them 6 months ago

  3. I wasn’t thinking about any specific person or site, but rather the crowd — all of these folks collectively — how the mass of people are always looking backwards rather than forwards.

    This is human nature. If you don’t become enlightened, you never give yourself a fighting chance to avoid getting caught up in it; you then are merely part of the herd.

  4. HelicopterBen says:

    Isn’t the ‘End of the World’ another market opportunity?

    Never the less all sing with me:

    I’d sell your heart to the junk-man baby for a buck, for a buck!
    If you’re looking for someone To pull you out of that ditch You’re out of luck, you’re out of luck
    The ship is sinking, the ship is sinking, the ship is sinking
    There’s a leak, there’s a leak In the boiler room,
    The poor, the lame, the blind
    Who are the ones left in charge?
    Killers, thieves and Lawyers
    God’s away, God’s away, God’s away
    On Business. Business.
    God’s away, God’s away, God’s away
    On Business. Business.

    Digging up the dead with A shovel and a pick It’s a job, it’s a job
    Bloody moon rising with A plague and a flood Join the mob, join the mob
    It’s all over, it’s all over, it’s all over
    There’s a leak, there’s a leak, In the boiler room
    The poor, the lame, the blind
    Who are the ones that we kept in charge?
    Killers, thieves, and lawyers
    God’s away, God’s away, God’s away
    On Business. Business.
    God’s away, God’s away,
    On Business. Business.

    [Instrumental Break]

    Goddamn ther’s always such A big temptation To be good, To be good
    Tere’s always free cheddar in A mousetrap, baby It’s a deal, it’s a deal
    God’s away, God’s away, God’s away
    On Business. Business.
    God’s away, God’s away, God’s away
    On Business. Business.
    I narrow my eyes like a coin slot baby,
    Let her ring, let her ring
    God’s away, God’s away,
    God’s away on Business.

  5. MayorQuimby says:

    As a proud zombie bear I take no offense. My bearishness is based upon reality, not cycles or trends. And I will be thrilled if time proves me incorrect.

  6. myopia says:

    Unless we really are in a world where massive and unsustainable debts don’t matter (have we?) I’m sticking with the bears for now.

  7. Someday, maybe, the people will understand that it is paper that makes their world go ’round until the confidence in it goes away.


    On a related topic:

    Did you see this Barry?:

    Dying with debt: A dirty little retirement secret

    By Cindy Perman, CNBC.com

    Retired Americans are racking up credit-card debt like never before, be it
    for vacations or medical expenses, and a surprising number have no intention of
    paying it off before they die.

    Nearly 40% of retired Americans said they’ve accumulated credit-card debt in
    their twilight years — and aren’t worried about paying it off in their lifetime,
    according to a survey released by CESI Debt Solutions…


    I’ll bet many are doing it as an act of financial war. People are looking for every way possible to stick it (back) to the banksters

  8. It was the link. Your site doesn’t like to(dot)ly I see

  9. Joey says:

    I largely agree with your premise and admittedly have been sympathetic at times to the bearish case. If I wasn’t a system trader, without question, I would have royally screwed the pooch.

  10. pcurve says:

    It appears that you’re classifying the “zombie-bears” as people who believe in the notion that “this time, it’s different”. Like those who firmly believed that the market wouldn’t crash right before the dot com bubble, these zombie-bears are clinging to the notion that “this time it’s different”, because all of them are pointing to what they believe are extraordinary circumstances like, high debt level, momentum shift away from Europe, HFT tipping point, credibility issue of Feds, etc. All this despite the fact that negative growth trends have been long over. So you claim.

    Maybe you’re right. But one can easily argue that it’s “you” who believe in the notion that “this time, it’s different.” It’s just a matter of how one looks at things.

    And there is nothing that says that both groups can’t be right. They can both be right, eventually. Just not at the same time.

  11. Bernie X says:

    Columbia used Clover (a band already signed to their label) to provide the recording backup for Costello’s first album.

    Afterwards Clover got a new lead singer and changed their name…

    to Huey Lewis and The News.

  12. bena gyerek says:

    you don’t have to believe in a doomsday scenario to think that the stock market is way overvalued.

    stocks are pumped up because (a) the direct impact of monetary policy on asset prices, and (b) the effect of early stage recovery (stimulus, rate cuts, inventory cycle) on corporate profitability have raised recovery expectations too high.

    but experience (not recency) teaches us that after such a major financial crisis, with households deleveraging for many years to come and the financial system recapitalising for many years to come, the economy from here on is going to recover extremely slowly for many years to come. far more slowly than what the stock market is now pricing in. remember, japan didn’t suffer a meltdown, just two decades of moving sideways.

    if this is what the us faces, and the fiscal authorities will not and monetary authorities cannot do anything to rectify it, then the stock market is clearly overvalued and due for a correction sooner or later.

  13. Jo says:

    Lovin’ the hubris…it’ll be all the sweeter!

  14. Which shows more Hubris:

    Adapting to an economic belief that things are getting (somewhat) better when the data gets (somewhat) better —

    — or –

    Sticking to a dogmattic belief regardless what the data shows ?

  15. Ltdata says:

    I suggest not combining the effect of huge with the effect of recent (it was a huge & recent effect).

    So why are there permabears? I’m kinda with Bena’s post (3rd para). As you’ve mentioned in an earlier post, most people are influenced less by the stock market (and more by a high unemployment rate, or a bank that won’t lend, etc.)

    Rhetorical question: if the economy (as show by the stock market trend as leading indicator) is doing so well, why does a QE2 exist? I understand the short answer is liquidity issues. ..So the Fed is helping the banks deleverage (one way to adjust for asset shrinkage)? This is versus the “writedowns” you prefer?

  16. f says:

    Not everybody is a trader looking at the micro details of every release which, granted, have been a bit better lately. If you look at the ‘Big Picture,’ the Fed is in the process of implementing QE2 on it’s way to QE3, the EU is struggling to tape the cracks and running out of tape, a lot of the western world is still swimming in way too much debt, while the Fed is encouraging people to take on even more by keeping rates at ridiculously low levels. How is this healthy? You can get up and limp forward but if you haven’t healed from the previous injury, it’s only a matter of time before you fall again, and it will most likely be worse.

    People are sick of the boom and bust which are becoming ever more frequent. Barry, do you really think the solutions being implemented today are putting us on a path to long term, economic sustainability for the future?


    : No . . . but then again, they never are. Think about how Nixon f’d up. The economy recovered eventually.

  17. crunched says:

    It’s articles and opinions like this that will be the seed of so many people losing money once again. Claiming the market has had an authentic ‘recovery’ is like touting the recent success of an over-the-hill baseball player, only to find out later he was using steroids.

    The government has inflated the market using so many different methods, they’re almost not worth mentioning again. All of the ‘growth’ of our supposed recovery comes at the expense of debt being created somewhere else. QE2 is the only thing currently keeping the market from falling over the precipice. And that’s good? That’s what a ‘recovery’ looks like. Show me a ‘recession’ in the history of this nation that so much debt was needed to get out of. Not even the depression.

    Just try and back out of all this debt on the Fed’s balance sheet. It’s an impossibility with the current and future demographics. This market will go lower, and violently so when it becomes evident that QE2 isn’t going to save it.


    BR: Seed of so many people losing money once again? I doubt it.

    When I was screaming “overleveraged/derivatives housing collapse recession” no one listened . . . And few people listened to “the mother of all bear market rallies” discussion either back in Q1 09.

  18. Bob A says:

    excellent point and Liquidity Trader you can a certain person over at Minyanville to that list
    remember/// if you insist we’re going back to SPY 666 long enough it might even happen

  19. MayorQuimby says:


    The market can go up for two reasons:

    1. Economy is growing. People want to start companies and the ponzi fractional lending expands.

    2. Credit/leverage. Pump it up.

    Now – 1. is sustainable but 2. is not.

    However – BOTH require the ability to pay down debt. Sure we can grow GDP at 12% if we borrowed enough. But every dollar borrowed comes with the assumption that you will have sources of CONTINUAL revenue growth going forward.

    So…without that – it’s just kick the can.

    A ‘real’ bull would have to prove to me that we will go conquer South America, inhabit the moon or wage war with a few nations (ie Iran, N Korea etc.). Barring those sorts of events, we WILL see the recession not only reassert itself but things will deteriorate for ALL parties aboard the .usa ship.

  20. baychev says:

    Does Petruno have issues with Ben Bernanke’s views on the economy? Or maybe he’s trying to tell voters they had no reason whatsoever to oust so many incumbents from Congress? Haven’t QE2 news reached his cave?

  21. DrungoHazewood says:

    No respect for time: the World has to implode in the next 2 weeks! A lot of this crap is demonstrably wrong and/or just plain doesn’t mean jack. It just keeps spewing because there are those who lap it up.

  22. Three Things to remember:

    1. Markets are often disconnected from the economy.

    2. Massive government intervention almost always follows crises and/or economic collapses.

    3. The end if the world call has so far throughout history, been the losing bet.

  23. MayorQuimby says:

    “3. The end if the world call has so far throughout history, been the losing bet.”

    Agreed. I’m not THAT negative.

    OTOH – Show me a 75 year period without major civil war, world war etc. since this nation was founded.

  24. Eye Wall says:

    I loved the market @ 666, but fundamentally nothing has changed. The banks are zombies with engineered profits thanks to the FED / tax payers. If the Gov would have stood behind all individual depositors and small business depositors up to $1M and let the banksters twist in the wind while coming in behind their flaming deaths with supra-capitalization plans for the non-perpetrator institutions then I would be bullish now. Unfortunately the reality is we’ve rewarded the perpetrators, papered over the problems and keep acting like everything is fixed. Well, in my opinion very little has been fixed, therefore I can’t be bullish here, simple. And I will be wrong for some unknown period of time just like ’99-’00 and ’06-’07 until reality takes hold again. I shoot for risk-adjust returns that heavily outperform the market and I’ve been (mostly) successful at it for the last 15 years. Did I miss a big chunk of this ‘bull market’ – yes. Did I lose anything in the crashes of the last 15 years – no. It works for me, but I’ve probably been lucky. And I’ve missed the Gold rally completely because I see no use for it but, again, currency destruction wasn’t in my calculus 5+ years ago either…

  25. MayorQuimby says:

    Smart money will sell into good news when we eventually get it. Why? Because they know what they hold isn’t worth what the ‘going price is’. IOW – sell high. Smart money knows what ‘high’ is.

    So – I see a rollover coming from good news and really not before. Unless we get a panic of some kind. Bad news will just bring about more corrections which will turn into rallies.

    Interest rate rises are off the table or they would be a catalyst for selling as well.

  26. BusSchDean says:

    Imagine if we are all in a room eating dinner at Rules in London. Of course our minds will meander to when being in a room at Rules was more satisfying than discussions of money. Nonetheless, we are there. Now we want the question before us is: Does public debt matter? The answer, of course, depends on who you are. If you are Egypt and the British control your destiny than of course debt matters. If you are Argentina, maybe not so much — people expect it.

  27. Terry says:


    Despite the achingly slow statistical recovery, most Americans–the bottom two-thirds, say–have been a recession for a decade and remain there now. The ones that have work saw their real income stagnate and decline over their decade, and their wealth (esp. homes) decline steeply in the last three years. For the ones that have lost their jobs or find themselves under-employed since 2008, especially those who have not been able to garner a new one in the 99 weeks of benefits available, their lives have turned into a living hell.

    The fact that a the upper income/wealth groups are garnering the benefit of the current “recovery” is more like a rapid growing cancer than a return to economic health.

    You need to think differently about what is going on in America, or you will be bunched in with the same group of self-aggrandizing banksters you ostensibly loathe.


    BR: You are conflating income inequality (which has been expanding for 3 decades) with economic contraction and recovery.

    These are two very different issues . . .

  28. MacroEconomist says:

    Barry, I think I kind of understand what you’re getting at (make coin when you can instead of being dogmatic), but for Pete’s sake, it’s obvious to so many of us who recognized the unsustainability of the housing bubble that the current environment is totally unsustainable, it’s just a matter of how quickly the charade can last.

    Barry, let’s take a hard and close look at where we stand today.

    Emerging Market inflation is reaching similar levels we saw in 2007 and will only get worse in the coming months, thus ensuring a rapid tightening of policy in places like China. The slowing of China, as the center-piece for E.M. demand, particularly for industrial commodities, will knock-on effects across E.M.

    European credit conditions continue to worsen. Credit is all but frozen throughout Europe as measured by 3m Euro Libor.

    Admittedly this has not yet spilled over to the U.S. but does anybody think our banks are in good footing? Our banks are currently Japanese zombies with the freezing of Mark to market. And hey, by the way, did you notice 3m US Libor is up 3 days in a row now?

    Think there will be decoupling? Is there EVER decoupling? It’s fanciful thinking.

    This is no longer a U.S. centric world. If 2007/2008 showed us anything it’s that the Fed, while powerful, is not nearly as powerful as it once was as the U.S. % of global demand continues to shrink. It’s Econ 101 – big country vs. small country – and we are quickly becoming the small country.

    My proprietary models are calling for a retest of the summer lows over the 1st half of 2011 based on current conditions. The current up and down volatility we’re seeing is symbolic of a market in flux.

    If you think the next 100 pt move is up, I’d love to place a little wager.

    Always a fan, M.E.

  29. crankitto11 says:

    Thanks for the Elvis Costello cut. I had forgotten how good this song is. One of the few Dylan imitations that equals the master.

  30. Bill W says:

    I think the period of expansion that we are in now is similar to 2002 to 2007. It is not based on a healthy business cycle of over-capacity versus under-capacity. It is based on the FED inflating asset prices and providing easy money. When will it end? I don’t know. When it does, I think it will end in another debt crisis, not a healthy correction to inventories and production.

    Does that make me a zombie-bear? That’s fair enough. But I never thought the world would end if we didn’t save the broker-dealer community from there own stupidity.

  31. We decided to take a lighter look TEOTWAWKI with a Survival Cache original, Murphy’s Laws of TEOTWAWKI. If you know Murphy then you know, if it can happen…..it will.

    From Wikipedia: Murphy’s Law is an adage that is typically stated as: “Anything that can go wrong, will go wrong”.

    1. Food, you still don’t have enough

    2. People without back up shelters might be without shelter

    3. People with guns and no food are finding out that people with food have guns too

    4. Look hungry, they might leave you alone.

    5. Seed bank, the new source of wealth

    goes to 35.

    LSS: there’s a real Reason that the Boy Scouts’ motto is: “Be Prepared”.

  32. willid3 says:

    while we may have stopped the decent, we haven’t started back up. and we can’t repeat what we did in the last decade. if we try, it will be a failure. the top 1% cannot keep the economy going by themselves (and they won’t. but they were the only ones to do well all decade). we do seem to be on the path of trying to do just that too. doomed to failure. and i doubt China was ever really going to be the source of a lot of demand (outside of commodities) it just doesn’t fit their view of the world. they sell to us, we buy from them. thats it. well the US tried to rescue the top 1% thinking that would rescue the economy. that appears to have been a bust. now the new crowd will try to do it the same way. which will also fail.

  33. louiswi says:


    A wizened voice of reason in the wilderness!

    Consider: Debt has always been large and un-sustainable. Say a time that wasn’t true. Given a choice of taking cues from the federal reserve which has run our monetary system largely sucessfully for nigh on a hundred years or listening to babbling electronic bloviating bobbleheads; I know which way I’m leaning.
    As an aside, I have made an absolute shitload of money this year, thanks largely to the “naybobs of negativism.

  34. hue says:

    TEOTWAWKI, and i feel fine http://bit.ly/gh0VXE … but not my portfolio

  35. MayorQuimby says:

    Let’s just all be thankful BR didn’t post an REM video.

  36. machinehead says:

    Martin Zweig used to say: (1) Don’t fight the Fed [i.e., government intervention]; (2) Don’t fight the tape.

    As Barry R. stated above, markets can be out of gear with the economy. Permabullishness (a/k/a ‘buy and hold’) and permabearishness both impose punishing costs. Permabearishness costs more because of growth and inflationary biases.

    For those who have any edge in identifying market and business cycles, the objective is simply to be in gear with the market. It’s not supposed to make sense. Rational, pure-fundamental approaches may eventually be right. But the market can stay ‘wrong’ longer than you can stay solvent (pace Maynard Keynes).

  37. Jojo says:

    “1. Markets are often disconnected from the economy.”
    And yet, the politicians and the MSM DO use a positive market as a proxy for the health of the economy.

    With the markets up, it gives them cover to push the massive unemployment problem under the table. It is a lot easier to make Wall Street jump than it is to get people from all walks of life back to work.

  38. crunched says:

    Naybobs of negativism?? Actually, you probably made your money largely thanks to the government. Second in line would be the ‘average investor’ who’s been lured back into this market under false pretenses, and will sell at any price in the next panic. And then taking into account any future bailouts or further QE… the tax payer. Such as ponzis go.

    To Barry’s point –

    End of the world? Definitely not. But a complete re-structuring of our financial system, likely. Ultimately defaulting on our debt, maybe. Neither of these are market positive events.

    The historic difference this time is the world is GLOBAL. Much of the rest of the world has contempt or outright hostility towards America and its debt-ing ways. And many of those countries have far more productive and efficient economies than us. Our complete ponzi scheme is at the behest of China. A communist superpower holds more influence over our economy than any other entity.

    The only way we could get out of this current situation is if we could strong arm other countries into co-operating, which won’t happen.

  39. wally says:

    ” Markets are often disconnected from the economy.”

    And, you might add, from foreign events, follies of other countries and ‘injustices’ in our own country. The market is not a moral court that goes up or down on what ‘should’ be. Profits of companies that issue stock – now, that is probably within the market’s purview.

  40. rip says:

    @louiswi: No you did not.

    You made a shitload of money playing the bubble. Can you get out in time?

  41. stevefeiss says:

    ritholtz – long time reader OF your site and respect your writing as well as investing ability. proof is clearly IN the P&L … i get that one can have a certain set of economic beliefs and NOT make money trading or investing BUT i take issue with the zombie bear classification to some degree when your such a student of data and fact.

    ShopperTrak data AFTER black friday – sales UP 0.3% and that is off what i’d think are very WEAK comps and so saying NOT good would be understatement. How to reconcile THAT as good data 1.5yrs IN to the ‘recovery party’??

    ALSO and maybe more basic, many of your good friends on CNBC suggest that because foreclosures are UP, there is increase in discretionary spending and SO all is GOOD. Here’s Najarian on cnbc just the other afternoon:


    QUESTION IS – for everyone NOT paying a mortgage, isn’t there a person who’s looking FOR that payment that is NOT being made and SO this is all NOT a net positive?? I’m NO accountant here but seems to me that we’re just kicking the can down the road and you wanna talk about ‘sites’ that are ill informed (ZH, Rosie??), i donno … dont think zombie bear quite fits and there’s maybe TOO MUCH KoolAid being poured out by MSM and the marketing machine to sell books and ads on the tv as opposed to some more (possibly disheartening) truth??

    telling me that foreclosures frees UP cash flow and SO i’m supposed to buy retail stocks cause they had a mediocre (at best) black friday with $298 40″ flat screens, donno. TARP never bought one toxic asset and SO dont we still have some ‘splainin to do? eventually? to someone??

    I know, i’m probably a very confused interest rate strategy guy who knows nothing BUT … just saying. I learned there’s NO free lunch and at some point, things like walking away from a mortgage payment (to someone else) matters.

    Thanks for listening. Feel like i need to leave some money in a tip jar … Keep up the good work.
    Steve Feiss

  42. Jnavin says:

    Big difference between “the end of the world” and a “significant sell-off.” Big difference.

    I saw Elvis Costello in 1978 at the Glen Miller Ballroom on the University of Colorado campus. They sang the song and also “Radio, Radio,” “Watching the Detectives” and “I’m Not Angry.” They were so close you could touch them.

    Barry, I hope you get to read that last chapter in The Warren Buffetts Next Door…

  43. cortezj29 says:

    I would never trust a perma-bear or a perma-bull because they are both locked into their viewpoint. I respect a flexible analysis that attempts to forcast the direction of a market one to three months out with periodic reanalysis based on intervening information and events affecting markets.

  44. the pearl says:

    As a side bar to Petruno’s article, Mike Pento is a terrific contrarian indicator. He Luskin like.

  45. and, maybe, a data point, from the ‘Socionomics’-side of things..

    U.S. Shuts Down Web Sites in Piracy Crackdown
    November 27th, 2010

    They’re just arbitrarily hijacking sites via DNS now. They could redirect any .com, .net or .org site’s traffic to their takedown page. They could do it to Cryptogon or any other site using these top level domains.

    What other TLDs can the U.S. Government arbitrarily hijack?

    Via: New York Times:

    In what appears to be the latest phase of a far-reaching federal crackdown on online piracy of music and movies, the Web addresses of a number of sites that facilitate illegal file-sharing were seized this week by Immigration and Customs Enforcement, a division of the Department of Homeland Security.

    By Friday morning, visiting the addresses of a handful of sites that either hosted unauthorized copies of films and music or allowed users to search for them elsewhere on the Internet produced a notice that said, in part: “This domain name has been seized by ICE — Homeland Security Investigations, pursuant to a seizure warrant issued by a United States District Court.”

    In taking over the sites’ domain names, or Web addresses, the government effectively redirected any visitors to its own takedown notice.

    “ICE office of Homeland Security Investigations executed court-ordered seizure warrants against a number of domain names,” said Cori W. Bassett, a spokeswoman for ICE, in a statement. “As this is an ongoing investigation, there are no additional details available at this time.”

    the “168. Track ‘n Trace”-’Economy’ is, surely, in “Bull”-Mode — even if it is based on BS..

  46. crunched says:

    In defense of Zero Hedge… I think people who dismiss what they stand for as perma-bearish, etc., are missing the point. Their goal is to pull the curtain back and show those who care to listen what’s truly going on. Whether it be exaggerated BLS statistics, CNBC’s wreckless idiocy, the Fed’s doomed policies, or just exposing blatant market manipulation.

    Unfortunately, for the last couple of years ‘the truth’ has been bearish. And while Zero Hedge may attract some fringe perma-bears, who’s going to say CNBC doesn’t have a devout perma-bullish following? (I suspect most of which are senior-citizens praying to make their money back for retirement)

    I’m not saying I’m a huge Peter Schiff fan, or even know that much about him, but if you want to see the insanity for which ZH fights against, watch this:


  47. notakid says:

    You would think a guy that claims the smarts of a master top and bottom caller would know that without someone of a different opinion it’s going to be real hard to “make that gob of money”………………

    Ah and also, the economy and the market are often not the same is true enough and a load of shameful crap , for if a market of the type you seem to be crowing over doesn’t serve the economy(the peeps i guess) then that market needs to be BLOWN UP.


    BR: I comment on what I see. Its part of my “process.”

  48. carleric says:

    Its the same old tired crapola….only the permabulls know that we really do have a real recovery….yeah, right…I personally am agnostic….I have a few postions but mostly I am just flat and nervous…….Barry, are you really trying to sell the concept that the economy and the market are deeply and irrevocably linked? Even children know that is laughable…most of the markets exuberance is based on artifically inflated asset prices due solely to the Fed’s easy money policy. Am I willing to fight the tape or the Fed? Hell no but is it OK with you if I remain skeptical and worried?


    BR: I have said repeatedly that market and economy often head in separate directons — they are NOT are deeply and irrevocably linked.

  49. MayorQuimby says:


    NOTHING and I mean nothing is more annoying and disgusting than a perma-bull.

    Perma-bears are like parents that scold children – tough love if you will. Perma bulls are the children – no worse – they are the drug pushers (credit instead of heroine) pushing the drugs on the sheeple.

    Great for them – baaaaad for the sheeple.

  50. soloduff says:

    I am a zombie bull: Yes, we are in a mild economic recovery. I am a zombie bear: This, too, shall pass; capitalism never has been and never will be without boom and bust, crisis, unemployment, and so on. Prognosis: The trend line is not just cyclical. Stagflation is the medium-term ordure of the day. Then comes Nature’s payback for global warming; a payback that will also take political form in resource wars and intensification of class war at home. (In the USA, where political stupidity is ineffable, this latter will take shape in irrational forms, such as the Tea Party phenomenon, now just in its infancy.)

  51. gbgasser says:

    I’m still bearish, not because I think the numbers are fudged or anything but precisely because the companies are only protecting their profits by laying people off. This is a self limiting strategy. Companies are going to be hurting again real soon.

    In addition the GOP geniuses are determined to cut spending even further and since spending = income, incomes will drop making the debt load harder to service and consumption spending fall even more. No we havent had the depression……… yet…….. thanks to SS payments, UI payments which keep aggregate demand supported and FDIC insurance which has prevented bank runs. 2 of those 3 things are under attack as well. The other shoe is yet to drop. We are on the verge of 1937

  52. VennData says:

    The Zombie Bears who blame the Fed don’t understand that if we didn’t have the Fed we’d create one.

    All the Fed’s doing is “BR’s 3)” what governments always do during crisis … provide liquidity, shore up demand, use unused capacity … until confidence returns. Oh and buy the extra debt created due mostly to lower tax receipts.

    The irony is the FOX News(s) and CNBC(s) use sensational negativity to get viewers … to sell ads to them by people who are saying things are getting better:

    “Will Obama’s Socialist Agenda sap America’s precious bodily fluids? What do you people at Fidelity and Merrill Lynch think?”

  53. beaufou says:

    This was the most defeated article I have read in a long time (( yes things are bad but if we wait long enough for things to get better, then things will get better eventually))
    We don’t have to consider third world poverty levels as a problem, time will heal it, especially corporatism.
    What a load of bullshit.

  54. SFClaws says:

    Okay, Full disclosure sat out on the crash and the rebound. I can only pay attention to the markets part time and could not get over what I believed to be the economic disconnect with the stock market recovery. Lesson learned; hopefully I can pass it onto my children for next time.

    I have been trying to put together the pieces of this wordly economic puzzle and think I see a fuzzy outline; please let me know what you think. Bernake is printing money to keep the banks a float (read just about everywhere); knowing that China will slow down within the next year or two (supported by recent Minyanville China real estate bubble articles) which will drop the demand for commodities. This should build support for the dollar; just when he needs to reign in the QE’s and raise interest rates. I hope Ben’s timing calls are better than mine.

    Game Plan: Trading cash short on breakdowns, for long term funds, when we get close to 25% off the recent tops , wait for support then start legging in after support breaks to the upside.

    Hope you all had a Happy Thanksgiving.

  55. beaufou says:

    And this shouldn’t be called waiting for the end of the world.
    Brown nosing the Federal reserve, I wonder if Elvis would be up to it.
    I’ll mail him now.

  56. Pantmaker says:

    Hussman’s a smart guy…he is very tightly hedged here.

  57. ronin says:

    I believe I qualify for a perma bear, but I look at it as perma angry!

    Let’s face the facts here, the game and cards are stacked against every single one of us who is not an executive at Goldman or JPM. These crooks engined this crisis, set us all up to fail, fleeced the pubic coffers and no one went to jail accept for Madoff–who in the end doesn’t mean squat to the “big picture.”

    The system is incredibly broken and the use of the word “recovery” basically implies that everything is back to the way it used to be–the fraudulent way it used to be. So Barry, is it any wonder people are pessimistic, jaded, and permanently bearish?

    Not to mention, Bernanke and the boys from Jekyll island keep blowing bubbles with QE deuce and the coming QEs, so why should a perma bear put on the rose colored glasses and dance with the ferries with lolypops in our mouths when we are being set up for another round fleecing?

    It appears that people who want us to forgive and forget are the same type of people that keep going back to their abusive husbands time and time again–and we all know how that ends in almost every made-for-TV movie!

  58. bulfinch says:

    I suppose you could label the parsimony and caution that emerged as a hallmark of the depression generation as a sort of recency effect as well, albeit a lasting one.

    There’s a big fat chomp mark in the backside of the American investing public, and it’s still very fresh. I think reticence is quite rational.

  59. beaufou says:

    “If you don’t become enlightened, you never give yourself a fighting chance to avoid getting caught up in it; you then are merely part of the herd.”
    I guess you chose your herd BR, and please don’t use “enlightened” for this kind of behavior.

  60. Tom the Trader says:

    I am amazed that you guys have the cojones to even argue with this guy — who has been more money than Ritholtz over the past 4 years? No one.

    I work on a desk of a billion plus hedge fund. We have our own model, but at our weekly investment committee meeting, the head trader always asks me “Tom, what’s BR saying?”

    How many times do you clowns have to get this wrong — and BR right — before you wise up?

  61. “…Yes, they are getting ready for another war. Why shouldn’t they? It pays high dividends.

    But what does it profit the men who are killed? What does it profit their mothers and sisters, their wives and their sweethearts? What does it profit their children?

    What does it profit anyone except the very few to whom war means huge profits?

    Yes, and what does it profit the nation?

    Take our own case. Until 1898 we didn’t own a bit of territory outside the mainland of North America. At that time our national debt was a little more than $1,000,000,000. Then we became “internationally minded.” We forgot, or shunted aside, the advice of the Father of our country. We forgot George Washington’s warning about “entangling alliances.” We went to war. We acquired outside territory. At the end of the World War period, as a direct result of our fiddling in international affairs, our national debt had jumped to over $25,000,000,000. Our total favorable trade balance during the twenty-five-year period was about $24,000,000,000. Therefore, on a purely bookkeeping basis, we ran a little behind year for year, and that foreign trade might well have been ours without the wars.

    It would have been far cheaper (not to say safer) for the average American who pays the bills to stay out of foreign entanglements. For a very few this racket, like bootlegging and other underworld rackets, brings fancy profits, but the cost of operations is always transferred to the people – who do not profit…”
    –Major General Smedley D. Butler

    Tom, (@ 02:09)

    you know, for the next time a ‘Water Main’, or some such, breaks..

  62. pennyless says:

    Recovery my ass!
    Everything you own, every penny of equity in your house, car, bank account, retirement, toys…everything…is loosing value, and fast.
    As Bernake and Obama tank the dollar, your buying power and hence standard of living go down, down, down.
    But if you are in debt up to your eyeballs, your standard of living in the future will be higher than it OTHERWISE would have been.
    And that is the Obama game.
    Collectively we need a hell of a lot more people living under bridges, in cardboard boxes, and out of their cars if we are to get out of this mess.
    We need the unemployment to stop and we need a little social unrest.

  63. Arturo says:

    Why don’t you post an Amazon wish list? Those of us who have profited from your calls would love to show our gratitude with a holiday present . . .

  64. Terry says:

    “BR: You are conflating income inequality (which has been expanding for 3 decades) with economic contraction and recovery.

    These are two very different issues . . .”

    Not really. An economy can not be healthy, whether in contraction or recovery, if income and wealth inequality are constantly expanding. Especially as the situation worsens at an accelerating rate like now.

    Simply put, the economic health of America is not measured by a positive sign next to the GDP percentage growth. A healthy economy, like a rising tide, lifts all boats. OK, maybe some not as much as others; but at least their are both headed in the same direction during recovery.

    What is happening in the US is a secular economic distortion that will–not may–lead to political upheaval. The Tea Partiers are part of that, but they haven’t really figured out the economic drivers; its not the gumint, it’s the wealthy (starting with the banks) buying influence–and cheaply at that.

  65. gbgasser says:

    Tom Trader

    Barry has made a lot of good calls no doubt. He is an astute trader and pretty much knows where the noise is and where the signal is (Faux and CNBC are ALL noise ALL the time).

    Trouble is, we cant all live our lives as traders. We shouldnt all even have to be traders to have a secure future and that is the reality that too many see I think. In this modern financialized economy your either making trades or your losing money. Trading has overwhelmed our real economy and has evolved towards a giant casino by the year. Many of us dont want to play that game. We just want to work some save some and LIVE a LOT. We arent juiced by the idea of figuring out how we can take some other fools money in a trade. Modern America has become that way and its quite disheartening to many.

  66. gms777 says:

    Meanwhile, the lawyers are discussing the Constitutionality of individual states declaring bankruptcy.


    One reader at the Volokh Conspiracy blog (he’s a law professor) suggest that ‘Any law that lets states be bailed out should require them to renounce their state status and revert to being territories, to be reorganised by the federal government as new states. That has the advantage of getting rid of the old, dysfunctional, state government, removing the state and its inhabitants from national influence until they’ve had a chance to learn some wisdom, and being enough of a penalty to make bailouts unattractive to other states.’ (via Instapundit)

    State bankruptcies would prevent federal government bailouts of states which would benefit public unions.

    I agree with Barry that the future is bright, except that I think we will have two or three states of California. Perhaps the President was prescient when he suggested that we have 57 states.

  67. The world’s largest GDP economy is now on life support via US Central Bank’s money printing and assumption of bad assets.

    While the US usually borrows a percentage of the current annual GDP, this time is distinctively different with a very large percentage of GDP based borrowing and a very large nominal amount. That large GDP percentage and nominal amount are occurring as there is macroeeconomic real deflation in housing which is the principle commodity in which the common citizen values his personal wealth. Unemployment benefits are ending for 2 million Americans with a coming demultiplier effect on the economy. Debt of college students is a thriving business for Sallie Mae privatized loan sharks. Economically large US states are the equivalent of PIGS for the disintegrating European Union. They cannot print their own money; in face of declinig property values they will not be able to repay bonds and they will not meet their payrolls or entitlement obligations both of which will diminish economic activity.

    By long term fractal analysis of asset saturation curves, this period of time November 2011 of lower high equity and commodity assets is analogous to 11 October 2007, the exact predicted high by the patterned science of saturation macroeconomics. The hubris that existed during the weeks surrounding 11 October 2007 is similar to that now and the referenced timely article.

    Paradoxically the US dollar which has been abundantly printed by the Federal Reserve to bridge the 1.4 trillion deficient and maintain checks to the military, medicaid, governmental agencies, politician’s retirements, and to the recipients which federal taxes are specifically earmarked, i.e., social security and Medicare – paradoxically by fractal analysis the US dollar will rapidly rise within the the next year over the Euro, Swiss Franc, and British Pound.

    The disintegration of the European Union is now occurring. Saturation of housing and economic growth is now occurring in Asia. This is a wonderland global economy that is still constrained by debt load and follows the patterned science of saturation macroeconomics.

    How about that GM IPO?

  68. dead hobo says:

    Yahoo says the NFP next week will be 130K. I’m guessing you should add 100K, more or less to that. My informal poll of people who look busy has told me that hiring is getting stronger and improving. An out of work relative (2 years or so) was rehired by his former employer because they’re getting busy. This is in rustbelt, but skilled work. A repairman who came by to fix something offered that his employer just hired 16 more repair people. Anecdotal stories of big contracts and orders that require additional hiring are starting to become common.

    The economic recovery looks real this time, as opposed to last year’s phony green shoots campaign that was primarily a Fed attempt to apply trickle down economics using printed money and a secret plan to pump the stock market. I think today’s media gloom is partially fed by depressed wall streeters who hate the fact the Fed’s pump the market plan is now common knowledge and not susceptible to insider profits.

    Anyway, the fact that so much media is so gloomy makes me giddy. They always get it wrong at turning points. This is a real example of the ‘magazine cover indicator’ that BR gets so jumpy about so frequently. The dumb ass media, and apparently many readers here, think that the a real economic recovery will happen only when leprechauns show up with pots of gold at every front door in the US. It doesn’t work that way and some people will be permanently left behind for many reasons. This is the beginning of a respectable buy and hold period.

    Or, we can have it this way: I think it’s going to rain. Today is bad and tomorrow will be even worse, forever. I feel sick. You look terrible. Your dog died and your kids hate you. You should have a doctor look at that mole. Your roof will leak and your basement will flood. You’re dumb, ugly, and stupid and getting worse every day. The economy will never get better and we’ll all die soon. Horribly.

  69. oldbluejeans says:

    PermaBear? How about the PermaBulls? When the Great Recession was miliseconds from pounding our noses in, indeed for a while after it arrived, the world was filled with economists and analysts who failed to see it. In fact they derided, or even laughed at, those who dared to say a day of reckoning was coming.

    As to “recency”, seems like the time period is in the eye of the beholder. Look back one or two decades, and yes it now looks like we are out of the woods. Look back two centuries, and a different picture emerges. 1930 looked to be a pretty good year for the Dow, I bet a lot of people thought: “Hey, the worst is behind us!”.

    Of course we are not making the same mistakes we made then. No Smoot-Hawley Tariff Act will be forthcoming. Instead, we will make new mistakes, currency and religious wars, money printing, and all manor of debt shuffling. And the US can go “off balance sheet” just like failing banks with all of those formerly implicit, but now explicit loan guarantees. We can try anything, throw enough sh** on the wall and something will stick is our new economic creed.

    Exporting is our cry! We will all export! In a world where every country wants (and needs) to run a trade surplus this will prove very difficult indeed. Ok, let’s all wait a few years and see what is still sticking to the wall then.

  70. dead hobo says:

    dead hobo Says:
    November 28th, 2010 at 9:31 am

    Or, we can have it this way: I think it’s going to rain. Today is bad and tomorrow will be even worse, forever. I feel sick. You look terrible. Your dog died and your kids hate you. You should have a doctor look at that mole. Your roof will leak and your basement will flood. You’re dumb, ugly, and stupid and getting worse every day. The economy will never get better and we’ll all die soon. Horribly.

    Or, in other words, we will experience what roughly 1/2 of the typical ZH posts predict, plus Europe will cease to exist and all ships at sea really will fall off the edge of the planet if they go too far out in that direction.

  71. ToNYC says:

    Yes indeed, the Perma-Bears are correct. The perpetual growth machine has clearly run into the law of large numbers and the shrinking Environment. The bank monoply managers have tried to play economic god, greasing the closest fantasy that has legs to the bursting point and the then the free TP . Before the P-Bears press their hand to the limit all-in, they ought to consider the P-Bulls Ace-in-the-Hole is that the US is the global leader in the protection of Intellectual Property rights. All that we crave comes unsung out of closets and garages populated by unsung future cultural heroes that had no conception of not getting the idea out there. We always find the money for entertainment. Democracy and Independence only work when people invest in systems that bring us there. The dollar is the real vote as Malcolm X knew to take back Harlem.
    Now if we can cram that over-growth of consumption into a US sustainable system and communities, the P-Bears will be back in hibernation in caves full of dusty books and old radios.
    Meanwhile I buy put spreads on over-reaching monopolies and let them play out if I must talk my book.

  72. RC says:

    You can count John Mauldin in the “End of the world” camp too. Sometimes I dont know if he is in the End of the world camp or “still cant believe Obama is President” camp.

    In anycase if you had followed his advice you would have missed out on the huge rally last year. I saw BR’s call the day he made it on Yahoo Finance and it was so refreshing in those dark days.

    Way to go BR … Let the data set us free !!!


    BR: FYI: Mauldin is a hardcore GOP supporter

  73. MayorQuimby says:

    Okay. We’ve had the rally. 80%. Maybe another 10%.

    What are the contrarians saying nowadays?

    Or are we in perma-bull territory?

  74. canoles says:

    if it’s a gamed system, how can that be better? If cheaters and frauds are allowed to continue doing fraud, how is that recovery?

  75. mote says:

    Everybody having a good time
    Except you
    You were talking about the end of the world

    I took the money
    I spiked your drink
    You miss too much these days if you stop to think

    —–Until the End of the World, U2

  76. MacroEconomist says:

    @Economic Fractalist, amen brother. All you tactical bulls out there, take heed. You have a market that is eerily similar to October 2007.

    Financials underperforming
    Materials Outperforming
    Inflationary issues in Emerging Markets
    Potential double top in the S&P500
    Credit Stress indicators widening (in this case, Europe is the epicenter)
    A Fed engaging in futile expansionary monetary policy which is manifesting in bubbles – bond yields and break-even inflation rates at a lower plateau than Spring 2010, yet incessant cries of “inflation”

    And lastly, defeated bears and chest thumping bulls talking about how well they have done in the past 2 years.

    It’s so freaking obvious I can’t believe you guys can’t see it…

  77. Gaucho says:

    Barry, don’t you think that the US is following the path of Japan? Since their bubble blew up they had four 50% rallies and dives. I agree with you that smart investors should exploit market psychology but fundamentals are still pretty ugly and it’s hard to believe that we are in a sustainable path to recovery.


    BR: Yes, I do . . .

  78. louiswi says:

    The summary of this thread should be that you don’t have to be a perma-bear or a perma-bull.

    Being a perma-agnostic/perma-pragmatist will be much more fruitful.

  79. dead hobo says:

    Gaucho Says:

    November 28th, 2010 at 11:03 am

    Barry, don’t you think that the US is following the path of Japan? Since their bubble blew up they had four 50% rallies and dives. I agree with you that smart investors should exploit market psychology but fundamentals are still pretty ugly and it’s hard to believe that we are in a sustainable path to recovery.

    Japan blew up over 20 years ago by having their real estate bubble burst. Nobody wanted to borrow because they owed lots of money for assets that were now only worth a fraction of their value when purchased. THAT WAS 20 YEARS AGO. THE LOANS HAVE SINCE BEEN PAID. JAPAN’S CURRENT DEFLATION IS NOW A POPULAR MYTH. AN OPRAH LEVEL MYTH. A SOAP OPERA. THEY MAY BE FUCKED UP IN SOME WAY, BUT IT HAS NOTHING TO DO WITH WHAT HAPPENED 20 YEARS AGO.

  80. Understand this historical tidbit: This Fed engineered rally is not atypical of what we see after a 55% collapse. It will likely end with another hefty selloff, and if history is a guide it will be 20-30%.

    The odds are statistically against a retest of the 666 lows. Its not impossible, just a lower probability outcome.

    All that said, I have no idea when this rally will end. Could be this week, could be next August. As of today, the odds remain against it being tomorrow.

    All I do is try to take the high probability bet, and avoid the 40 to 1 longshot . . .

  81. Jojo says:

    @dead hobo said Japan blew up over 20 years ago by having their real estate bubble burst. Nobody wanted to borrow because they owed lots of money for assets that were now only worth a fraction of their value when purchased. THAT WAS 20 YEARS AGO. THE LOANS HAVE SINCE BEEN PAID. JAPAN’S CURRENT DEFLATION IS NOW A POPULAR MYTH. AN OPRAH LEVEL MYTH. A SOAP OPERA. THEY MAY BE FUCKED UP IN SOME WAY, BUT IT HAS NOTHING TO DO WITH WHAT HAPPENED 20 YEARS AGO.
    Seems your caps lock key got stuck. Japan deflation is a myth, eh? And yet prices keep falling – for 20 straight months!.

    Consumer Prices Fall for a 20th Month in Japan
    November 26, 2010

    Consumer prices in Japan fell 0.6 percent during the month of October, the government said Friday, marking the 20th straight month of declines as the country struggles to keep its economic recovery alive. Japan’s critical consumer price index, which excludes volatile fresh food prices, was down from the same month a year ago.


  82. dead hobo says:

    Barry Ritholtz Says:
    November 28th, 2010 at 11:55 am

    Understand this historical tidbit: This Fed engineered rally is not atypical of what we see after a 55% collapse. It will likely end with another hefty selloff, and if history is a guide it will be 20-30%.

    Thanks for the reminder. Fundamental economics supports this possibility. At this time, just guessing, I would think mid 2011. Green Shoots 2 may precede it.

  83. dead hobo says:

    JoJo, after 20 years of deflation, everything in Japan, except food, must be free by now.

  84. [...] Zombie Bear Redux as the LA Times picks up on Barry's taunt.  (TBP) [...]

  85. impermanence says:

    Barry Ritholtz Says:
    November 27th, 2010 at 4:14 pm
    Three Things to remember:
    1. Markets are often disconnected from the economy.
    2. Massive government intervention almost always follows crises and/or economic collapses.
    3. The end if the world call has so far throughout history, been the losing bet.

    Spoken like a true sell-out. Hope you enjoy the spoils.

  86. Bill W says:

    The greater the bailout the greater the future crisis. I’m stealing that thought from this blog, or at least the idea that present day bailouts lead to future crisis.

    I wrote earlier that we were in an economic expansion similar to 2002-2007, and that it would end with another debt crisis. I really have no idea if it will end in a debt crisis, but I’m sure it will end in a crisis that was born from the 2008 bailouts.

    When you consider the size of the 2008 bailouts, the size of the next crisis will be daunting. Don’t get me wrong, I’m sure the world will not end. I can only hope the deck will be reshuffled, and the status-quo replaced.

  87. Gaucho says:

    Barry, what’s the trigger for the correction? in my view, the Republican Congress. monetary policy, as bernanke stated is virtually ineffective in this environment. and with a republican congress, there’s no chance for expansionary fiscal policy. in addition, the external front does not look good either, the yuan is not moving and the euro is actually falling. what are your thoughts?

  88. Gaucho says:

    Bill W Says:

    I wrote earlier that we were in an economic expansion similar to 2002-2007, and that it would end with another debt crisis.

    Bill, are you one of those people that have been waiting (and still waiting) for the Japanese debt crisis? i don’t know it may happen some day. Japan is the best example for the current situation. anemic/no growht and high volatility in equity markets with a downward trend for many years. but to BR’s point, it’s good to understand the end game, however if you’re nimble you can still make lots of money.

  89. jad714 says:

    This is what I don’t understand. Why do people ENJOY wallowing in depression? It’s so strange.


  90. beaufou says:

    I was a little too harsh yesterday, I apologize but I’ll persist and sign with somebody else’s words.

  91. beaufou says:

    And Mauldin is a f-ing hypocrite.

  92. Captain Jack says:

    What’s amusing about all this is the incredibly broad-based, stereotypical, ad hominem brush that is being used.

    I mean why not just take all conservatives and lump them in with rabid Sarah Palin fans, or subtly brand anyone sympathetic to the Obama administration a Pinko Commie Marxist. Surely there are plenty of newspaper columnists who would eat that up.

    It’s basically a taunt — and a low brow, straw man, definitionally dubious taunt at that, given that many folks susceptible to the hand waving “zombie” label have made a killing in gold, silver, and other hard-asset related themes even as they have lamented what is happening to the global economy.

    (Take Eric Sprott for example — zombie bear extraordinaire, if one goes by his commentary and outlook, yet a billionaire hedgie who has been absolutely killing it.)

    Then, too, there is the question of how linear this whole process is and the small matter of cause and effect. I mean my god, if spending $47 kasquillion can’t at least BUY the appearance of recovery for a modest period of time, then what the hell is it good for?

    Give me a budget of, say, a couple hundred million bucks to blow, and I guarantee you I can turn around any failing medium-sized business in the United States of America — or at least create the temporary appearance of it for a couple quarters anyway.

    In my opinion every U.S. taxpayer should get a government-issued article of clothing that reads, “My trillions paid for a financial oligarchy and a weak-ass twinkie recovery (bought at the expense of bigger future problems) and all I got was this lousy t-shirt.”

    I submit this is still very much a trader’s market, in which complacency in either direction (bull or bear) is an invitation for a frying pan to the face. This goes double for all the tentative “back in the water” small investors who may be getting convinced by the Fed orchestrated “no really it’s ok” put-up job at possibly the worst time. But then, we’re all grownups here. You pays your money and you takes your chances.

  93. kenny powers says:

    I agree with Barry that this rally may have further to go. There are a few brighter spots in the US now. But not that many. And I also agree that the markets and the economy can be decoupled -but only temporarily. For confirmation of this fact, read Russel Napiers excellent book “Anatomy of the Bear.”

    I cannot for the life of me understand how you apparantly feel the seeds of a sustainable recovery have been sown, BR This is where my opinion differs from yours. This recovery is, in comparison to other post WW2 recoveries, undoubtedly sub-par. I challenge you to prove me wrong on this point, and I welcome it. Nothing would please me more than good reasons to be bullish and be very long stocks. Because nothing feels better than being very long, and being so with confidence. I hate being bearish. It just doesn’t sit right with me. This may be because of my personality, or because I first made “big” moiney on the long side.

    Unfortunately, I don’t think this recovery is very sustainable, and so I am long stocks ( because the trend is up) but with considerable trepidation. Historically, a credit crisis leads to lower growth and higher unemployment for years (see Reinhart and Rogoff etc). Are we to disregard this emprical record?

    I agree that permabears are annoying creatures, but so are permabulls. BR is neither, and I enjoy his blog. Personally, I am in this game to make money, and not to be right or be able to say I told you so. But I just don’t see the big upside from here. Full cycle valuation metrics (Q ratios, Shiller P/Es) do not support above average returns for the next ten years. So what we have are:

    1. Moderately unfavorable valuations
    2. Moderately to severely unfavorable macro pressures.

    It is just not a logical conclusion to be extremely bullish at this time, even if we do have favorable liquidty pressures for stocks due to fed injections and likely increased bond market flows.

    Finally: e.g. Peter Schiff has been long EM stocks and gold, which have outperformed the us indices handsomely in the last few years. So has Marc Faber, and so has Eric Sprott to name a few strategist “permabears” that have crushed the mainstream managers’ returns. Just my 2c.

  94. [...] data pointing towards recovery.  So why does the sentiment still seem so bearish?  Barry Ritholtz puts it best: “On the Internet, there is an army of people who will immediately and bitterly dispute [...]

  95. ToNYC says:

    When QE1 disappeared into covering the hull holes the toxic waste on banks balance sheets as did TARP 1 with GS and AIG in tow, there is a high-probability outcome projected: that the path is clear for more of the same until solvency is reached for the on the back of a diluted currency for the public who for 3 years are suffering an effective 90% tax on interest income. Ergo, the banks get clean, and the TPs get hosed.
    My conservative neighbor said that he’s glad they are doing something..the NYawker highlighted piece ends with “Right now, though, doing nothing would be doing damage. ♦

    Read more http://www.newyorker.com/talk/financial/2010/12/06/101206ta_talk_surowiecki#ixzz16gfQQn3S

    Laissez les bon temps roulez, but I’m saving my energy for planting season.

  96. GraffitiGrammarian says:

    I guess I’m a zombie bear. But until the markets start to price in the value of environmental degradation and loss of natural resources, then I still think the recovery is overrated and assets are generally mispriced.

    The loss of forests means loss of new medicines, the loss of species means livestock and breeding stocks are lost. Lack of emissions controls means ever-growing losses for agriculture.

    Did anyone read the op-ed in the Times over Thanksgiving by the Wisconsin farmer? The increased rains hitting his farm from climate change have basically wiped him out.

    Price in these devaluations to get a realistic view of world markets.

    cheers, GG

  97. Market sentiment is bearish? Really? Many of the sentiment indicators i follow – from options positioning to Rydex positioning to sentiment polls – show that speculators are currently as or even more bullish than at the top in 2007.
    I would in fact say sentiment is very lopsidedly bullish right now, which is quite a surprise considering all the well-known fundamental problems. Normally you’d expect to see a ‘wall of worry’, but the data do not show one.

  98. fubsy_cooter says:

    Does this article suggest that the stock market is an idicator of economic health? lol
    I guess I have to wonder where we will be when the spigot gets turned off. Surely, everyone here is leary of a recovery born of trillions of new dollars. Surely, many here wonders where we will be when interest rates reverse course and move toward the inevitable other side of the pendulum…double digit rates are likely in our future, and am I the only one here who is somewhat suspect of a recovery born of debt that will be over our heads for the next decade or two?

    Come on people. We may be growing at 1% per annum, but that is with the aid of 100 billion per month created out of thin air. Growth like that with unprecedented levels of stimulus is anemic at best. Sorry folks, but we hit a multi-generational high in terms of credit expansion in 2007. It takes more than a coupl years to cleanse the system of that kind of froth. The correction has barely got started.

    If we’re better off in three years than we are now, I’ll eat my shorts…candy flavored. BTW, I hope those who oppose my view are correct. it will make for a more pleasant quality of life for the masses.

  99. monkeylove says:

    Several comment writers are correct. What is considered economic “growth” is actually increasing debt due to credit injected into the system and investors speculating in one financial instrument or another. And what got us into trouble in the first place was….increasing debt.

    But this will be a walk in the park compared to environmental damage coupled with resource depletion, esp. due to oil demand from non-OECD countries.