What's going to happen?

I have a phrase I love to trot out whenever somebody asks me about something that hasn't happened yet. I assume the manner of a fortune teller and tell them "The future is cloudy, I cannot see." Maybe there is some witch doctor in my blood. So the economy still sucks, and the outlook doesn't look too good, neither. Are you hopeful? Do you see light at the end of the tunnel? Or we facing a black abyss of gloom and despair? Is it black or hope? Or maybe a black hope? Oooooh! I made a funny.

Anyway California Bob has a few words to say on the subject:

I too feel no good can come from this, but that has been my disappointing and unprofitable posture for 20 years now.

More recently, I "anticipated" the housing and stock bubbles, and sold off a lot of stock -- in 2006, thus missing out on the best 2 years of the run-up. Similar I sold a bunch in August, missing out on the last 2 months.

I think things look toppy now too. Specifically:

-Banks, typically, will drag their feet admitting bad assets and commercial real estate problems; suspect they'll start to grudgingly address reality in the fourth quarter and take huge write-downs at year end.

-Real estate seems fraught with land-mines of oversupply, Alt-A resets, shadow inventories, commercial defaults.

-Will consumer discretionary rebound? Seems like a handful will be shopping at Tiffany, and the rest of us will be at WalMart, counting out our pennies for discount bread. This morning, Johnson & Johnson showed weakness even in staples.

-Stock rally seems based on liquidity, not underlying business/economic prospects. Lots of liquidity, flight from dollar.

Question: What is behind "dollar weakness?" If it is oversupply of dollars, why aren't those dollars flooding into the economy, driving up prices? If it is fear of instability of the government, why are gov't bonds rallying, and why aren't the stock markets plummeting? I think the answer is, all the liquidity has gone directly into stocks and bonds -- in others words, another investment bubble.

The only things I feel comfortable about are:

-YUM Brands, and to a lesser extent, McDonald's -- emerging market growth, and weak dollar should help earnings.

-Emerging market generally, specifically China -- I don't think anything is going to stop the organic growth there.

So what defensive measures are you taking to prepare?

YUM brands owns a bunch of fast food outlets. Previously California Bob compared them to the western world's commissaries. If your time counts for anything, fast food is almost cheaper than cooking at home. I suspect they count on selling you soda pop to make any money, but they do sell a lot of it. I wonder if the SEC is going to give me any grief about posting this.

Anyway, I wrote this in response:

Not quite an oversupply of dollars, more of an overconcentration of dollars in the hands of people who only want to make more money, so they look around for "good investments". Instead of investing in a business, they invest in whatever pyramid scheme promises the greatest returns regardless of the underlying foundation. Of course, that's what got us where we are, but we have a whole generation of investment people who grew up with that mind set and that's all they know.

I think we need a 20 hour work week. That would double the number of jobs. Of course some people would be working 4 jobs instead of 2, but you know, they might be able to get by with 3 jobs instead of 4. Businesses won't like it, especially if they have to pay benefits, but if it is universal, and they all have to play by the same rules it might work. Hourly wages would have to come down to pay for the additional benefits and overhead. But how many people would really like a 20 hour work week? I know I would.

P.S. Is overconcentration a word? A search on Google turns up several instances of it, and several of a hyphenated version: over-concentration. It's not in the dictionary. I think it is a word. It looks like a word, it smells like a word. I think it's a word.