What Me Worry About the Economy, Stupid?

Alright, maybe he tells me what I want to hear, but I like James W. Paulsen's economic analysis for Wells Fargo. He's often said the thing that kills a stronger recovery is the fear of an absence in the recovery.

Lately, he's said that the economic recovery is broadening and in less danger of sliding back:

• bank lending is rising
• GDP is growing, and without the housing market which has fueled past recoveries.
• employment and unemployment trends are steadily progressing in beneficial directions (and if you look closely at the numbers, the private sector is growing while the public sector's shrink is keeping the unemployment numbers up).
• consumer confidence are at record recovery highs because of a warming housing market, low mortgage rates lower gas prices, and a strong stock market
• from the holidays on, consumer spending has grown by six percent, including some big ticket purchase growth.
• household debt service burden is near record lows which in past periods like this has meant that GDP will increase by four percent in the near future

He believes the Euro crisis is no longer a crisis but a chronic condition that will need to be managed for the next few years. Most European investments have probably been vetted and hedged. He also thinks there's a strong likelihood for four catalysts that will cause the stock market to have a second half rally.

Besides his caution to succumb to excessive fear, and fulfill your own prophecy, he's also a compelling speaker--rare for an analyst--with a sense of humor. So why I should I worry? Jim Paulsen isn't.

In Wisconsin

Last March, I wrote a post disparaging of the Wisconsin legislature. Today, the Wisconsin voters get to decide if their governor stays in office or not. I didn't think the move that Walker made was a good one, even if all the Republicans agreed with him. Here's how I thought of it, over a year ago:

Suppose you're a supplier to a conglomerate, with a contract for product or services. In many contracts, there's a clause regarding termination for cause. The cause is usually a failure to perform. You negotiated your contract with the ABC subsidiary in good faith. You may have given up some pricing or payment terms in lieu of a multi-year agreement. A new CEO is appointed in the conglomerate. He voids all supplier contracts because the conglomerate is losing money. He's decided that his corporation will no longer enter into any long-term agreements. Everything will be on PO-by-PO, or spot buy, basis. He has just voided any pricing, or protections you have that would allow you to sue/arbitrate for payments. Wouldn't you take action, at least to voice your concerns?

I would at least suggest that the current contract is in force until it expires and then it can be renegotiated.

Now all politicians do some boneheaded moves, say some silly things, but they hardly ever go crazy en masse. Apparently not true in Wisconsin. Many people agree with Walker. Many disagree. After today, we'll know if there's a majority.

However, when a politician creates a policy that borders on unethical, then it should come up to a vote by the populace. Hopefully, an informed populace. I'm sure there's been enough ranting and raving throughout Wisconsin. Hopefully, there's been some thoughtful debate too.