Commentary: Robert Aliber is suddenly Mr. Sunshine
One of the gloomiest economists I know suddenly has become a bucket of sunshine.
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Robert Z. Aliber, an author and professor emeritus at the University of Chicago who once worked beside economics icon Milton Friedman, predicts that in 2011:
the U.S. economy will grow 4.5% to 5%;
the stock market will rise 15%;
state financial crises will turn around as more vigorous economic growth benefits state revenue;
the "toxic debt" from the housing crisis will continue to be written down slowly, keeping the losses relatively low on an annualized basis;
the nation's unemployment rate will fall from its current haunt of more than 9% into the 7% range, as the United States reinvigorates its manufacturing sector by adjusting its trade imbalance with China;
China's economy will not overtake the United States any time soon, because the Chinese housing bubble is about to blow, doing the same thing to them as it did to us;
dire warnings about $4 a gallon gasoline are moot as commodity prices will fall amid China's sudden slowdown;
gold, that harbinger that all is not right with paper money, will plunge from its current heights of more than $1,300 an ounce to — get this — $874 an ounce as China gets margin calls.
"We will have restored our confidence in the resiliency of the American economy," Aliber declared. God, do I hate rosy forecasts.
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. via email. It said: "45% 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 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 propped up artificially by the government and the Federal Reserve, 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 mind-sets. 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 Barack 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 General Electric Co. (NYSE: GE - News) Chief Executive Jeffrey Immelt in charge of a "jobs committee," and he even invited Goldman Sachs Group Inc. (NYSE: GS - News) Chief Executive Lloyd Blankfein, Wall Street's prince of darkness, 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 added. "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 of a book called "Manias, Panics and Crashes: A History of Financial Crises."
Al Lewis writes Al's Emporium, a column, and Tell It To Al , a blog, which offer commentary and analysis on a wide range of business subjects through an unconventional perspective. This column originally appeared on Dow Jones Newswires.