I love to read Alan Abelson in Barrons each week. He's a good writer and always has some witty observations to challenge his readers. Whether you agree with everything he says or not, I can't help but add his prognostications into my thinking about the markets and where they may be heading.
And so it is, Abelson sounds an ominious warning in his weekly column of the current issue of Barrons:
"That pretty much the rest of the global economy has been humming along at a brisker pace than we have has given rise to the notion that the world is no longer dependent on us...that Europe and Asia can thrive quite nicely if we---the U.S. economy---hits the skids. But we don't buy it for a second. And we suspect it'll become painfully evident why we don't, as the months go by.
"We think the economy will slide into recession, as the drag from housing and the burden of unprecendented consumer debt make themselves increasingly felt. We think the dollar will continue down the slippery slope, complicating Mr. Bernake's life and inducing slumpfation.
"We think this overleveraged, overheated, overhyped market will blow itself out and touch off a chain reaction that'll rock global bourses. And all this will happen, if not tomorrow, then soon enough, we're afraid."
I tend to agree with Alan's assessment of future markets. I think the housing bubble which is far from completely burst, coupled with decades of profligate consumer overspending, is a train wreck waiting to happen and probably not that far off in the future.
Time will tell. But it certainly admonishes caution in all money transactions today.