Looking at the news headlines this morning, I am struck by this simple fact: the American public is faced with two competing views of the economy and its future.
On one hand, you have politicians (notably, our President-elect) saying that they have a plan and they are going to make everything OK.
On the other hand, you have hard data showing collapsing spending, rising unemployment, and the worst housing market in eighteen years.
Who are you going to believe? A politician or numeric data?
Now, human emotions/values such as Hope and Belief and Trust are going to hold sway, because people are desperate for good news. That's going to push the market up. But there will come a point – – I don't know when, but let's just call in around April – – when people are going to realize the Emporer Has No Clothes, and we're in a world of hurt (or any other four-letter noun you wish to use).
