Dr. Siegel Has At Least One Intelligent Critic

Dr. Siegel has produced another sunshiny column for Yahoo!Finance:

All of this means that, although the first quarter of 2009 will see negative growth, GDP should stabilize in the second quarter, earlier than most economists now anticipate. In real terms, housing prices have already retraced most of their gains from 2000, and by midyear prices should stabilize in this low-interest-rate environment. Year-over-year inflation should sink to zero, especially in the first half of 2009.

This year, as the economic slide abates and investors realize a catastrophe has been avoided, stock prices should enjoy a 20 percent or higher return. All equity sectors should recover.

It appears he's sticking to his guns on the 20% increase in the stock market. But compare that with his confession about his predictions for 2008:

Ouch!! That's how I felt when I read my stock market prediction for 2008. Not only did I think that the market would do well last year, but I thought financial stocks would lead the way. Instead, 2008 turned into the worst year for the markets since the Great Depression, and financial stocks led the way down, not up.

Most of the rest is standard permabull boilerplate. "How could a $3 trillion dollar market take down the global economy?" he asks (my words, not his).

The total value of subprime and Alt-A (slightly better) mortgages was about $3 trillion. This is a hefty sum, but even if all these securities went to zero, the capital markets could have absorbed such losses without undue economic stress.

His statement overlooks the obvious answer: that clearly, it must not have caused the crisis! It's a bit more involved than that, and once again, a Keynesian confuses an effect for a cause. The very best part, though, is the comment I found just below the column:

Dr. Siegel, you should stick to teaching your socialist agenda, not try to predict the market. We are in a deep recession and with the far left dems. in control of government, the economy will sink into deflation worse than Japan did. Keynesian economics is nothing more than socialism, and it will fail as it has everywere in the world. Greenspan has blood on his hands, his easy money policy caused the housing bubble. There will be no recovery until housing prices bottoms.

A bit on the caustic side, even for my taste, but it does bring me some hope that at least one lowly commenter on Yahoo!Finance seems to understand things a bit better than most. He's wrong about deflation, wrong about the Dems (they're more likely to inflate than deflate, but hey, its not like the Republicans are any better), wrong about the recovery, and unnecessarily crude and abusive. But at least he knows where to look to find the source of our troubles: the Fed.