June 17, 2012

AND LOCAL GOVERNMENTS DON'T EVEN GET THE PEACE DIVIDEND:

Market Bear Gets (a Little) Bullish (Paul Vigna, 6/14/12, WSJ)

[I]t caused a mini-sensation within financial circles this week when Mr. Rosenberg--the former economist at Merrill Lynch & Co. who's now at Canadian money-management firm Gluskin Sheff--wrote a morning commentary titled "Parting of the Clouds?" [...]

Mr. Rosenberg says his newfound optimism was crystallized by the votes last week in Wisconsin and California. He sees those representing a sea change in the way state and local governments are addressing their fiscal problems, and expects that attitude will sweep across statehouses and eventually filter up to the national level.

He said that those political events were an eye-opener, but the thoughts have been coalescing for some time. A few weeks ago, he published a note listing 10 "silver-linings" amid the dark clouds.

All of this leads him to believe the next 15 years or so won't be like the past 12 or so. Anybody who tries to project the future based on the immediate past is making a mistake of "gargantuan" proportions, he says. "I think we may look back at the events of last week as a real inflection point," he says.

One of the reasons a feared wave of municipal defaults never materialized, he says, is that pundits underestimated the resolve of mayors and governors to clean up their finances. It's that mindset he expects will eventually work its way to Washington.

Posted by at June 17, 2012 7:14 AM
  

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