I was watching CNBC tonight and couldn't believe an exchange I heard. The guys and girls from Fast Money were interviewing economist Milton Ezrati, the lead economist of Lord Abbott investments. In the interivew, Ezrati said that he thought the consumer-led economy was over for some time.
"I think the American consumer for 20 years has been piling on debt and it’s run it’s course and the subprime crisis is only going to reinforce it. The American consumer is going to have to cut back and it’s going to slow the economy and contribute to a global slowdown."
If you've followed any of my writing then you will know that I agree with this sentiment. Not only is the American consumer debted out, but the wave of cash that was once available has dried up. The old economic engine that relied on housing and international largesse to generate this financing has broken.
After Ezrati was done, the group, led by Dylan Rattigan discussed whether they agreed with his views. None of them did. They all said it was interesting but that it was far too pessimistic.
Jeff Macke even went on record saying he thought the recovery would begin in the next 6 to 18 months and that as soon as house prices started rising, consumers would be back to their old borrowing ways. Oh really?
I wonder if he's seen the growing backlog of houses? Or if he realizes that housing has another 10-15% drop in store over the next year? Or if he understands that the old bank lending model has been blown up.
The group then pressed Ezrati on whether or not the sales success of the iPhone and the popularity of the Olympics somehow indicated that the consumer was okay and was coming back. Ezrati politely deflected this silly question. After all, even in a depression, there will be popular products like the iPod. Olympics is free to watch so how can it be a barometer of consumer health?
This is only the second time I have watched Fast Money and hope the group will redeem itself on future episodes. But for me, it calls into question their entire outlook.
Comments
tightwad
August 19, 2008
Never watched it and never will now. Their either getting paid to say "the right" thing, or have their heads buried in the sand and need new careers.
Is this review helpful? Yes:0 / No: 0
JRodgers
August 20, 2008
Ratings come from excitement and excitement is much easier to build about the market going up. Unless it goes up soon, these guys will quickly go back to being nobodies and Jim Cramer as well will be pulled. These guys may position their portfolios for a down market (and Adami clearly does), but they won't call for it on this show.
Is this review helpful? Yes:0 / No: 0
thedorightman
August 23, 2008
After religiously watching the show "like a Hawk", as a part of my traing in the financial sector of life, i have concluded that this is a big "social club" dba financial advisors, and is just employment the same as being a realtor or any other highly organized fee based business. It is the ultimate "Dog and Pony" center ring show.
Is this review helpful? Yes:0 / No: 0
Add your Comment
or use your BestCashCow account