One of the gloomiest economists I know has suddenly become a bucket of sunshine.
Robert Z. Aliber, an author and a University of Chicago professor emeritus who once worked beside economics icon Milton Friedman, predicts that in 2011:
It isn’t that I want the economy to flounder forever. It is just that I can’t stand people talking up the market as if they belong to an underground ring of penny stock promoters.
I am also influenced by emails I frequently receive from the economy’s victims — those who have lost jobs and homes, or who have had to file bankruptcy because of catastrophic medical costs.
On Monday, I received a survey by The Nielsen Co. in my email. It said: “45 percent of North Americans still expect the recession to last for another year.”
What? Didn’t these people get the memo from the National Bureau of Economic Research declaring that the recession officially ended in June of 2009?
“Some people are still hurting,” Aliber concedes. “But it’s almost as if there are two economies. The cruise lines are full. The airplanes are more or less full. The auto market is picking up The restaurant industry is picking up “
It has all been artificially propped up by the government and the Federal Reserve Bank, right? Oh, I wish I could dismiss Aliber as just another bow-tied, crackpot professor of the dismal science. But I can’t.
Aliber, who foresaw the Asian Crisis of 1998 and the bursting of the Internet bubble in 2001, has been something of a guiding light to me.
In February 2007, I saw him speak before a group of University of Chicago alumni. He advised them to sell everything and get into cash. (Cash? What is cash?)
Aliber warned the housing bubble was about to pop and that it would take down the economy and the stock market, too.
Economic trends don’t always outlive mindsets. People believed the boom would last forever. Now, they think the bust will do the same.
To hear Aliber tell it, the American dream is back. The bailouts worked, the Fed’s plan to flood the world with money worked, and even President Obama has a plan that will work.
Says Aliber: Not only is Obama serious about reducing our trade deficit with China, but he is reviewing onerous business regulations, he hired big, bad banker Bill Daley as his chief of staff, he put cost-cutting GE CEO Jeffrey Immelt in charge of a “jobs committee,” and he even invited Wall Street’s Prince of Darkness, Goldman Sachs CEO Lloyd Blankfein, to the White House when Chinese President Hu Jintao was in town.
“There’s no need for the Republicans to put up a candidate in 2012,” Aliber said. “The Republican candidate is President Obama.”
So as the U.S. economy theoretically prepares for its next big boom, Aliber has just published a new book: “Your Money and Your Life: A Lifetime Approach to Money Management.”
Looks like something recession-weary Americans should read. But I liked Aliber better, a couple of years ago, when he was working on a revised edition book called, “Manias, Panics, and Crashes: A History of Financial Crises.”
Al Lewis: 212-416-2617 or al.lewis@dowjones.com;
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