Kass: False Sense of Security

“It’s the American economic boom. The greatest story never told.”

In 2007 and early 2008, I warned that the impact of unregulated, unwieldy and unpriced derivatives plus a speculative blowoff in residential home prices around the world produced a toxic combination that would bring down stock markets and economies worldwide.

There were few of us (naysayers) with this view back then — in fact, you could count them on two hands, with Bill Fleckenstein, Nouriel Roubini, Barry Ritholtz, Josh Rosner, John Mauldin, Dave Rosenberg, Meredith Whitney and Gary Shilling among the only disbelievers who sounded the foreboding scream of skepticism and economic warning.

I remember being one of those standard-bearers of pessimism in multiple business media platforms — on “The Kudlow Report,” when guest hosting “Squawk Box” and when interviewed by Alan Abelson in Barron’s. At times, even to myself, I sounded like a didactic Cassandra — after all, stocks were marching ever higher in an orderly fashion, crushing the shorts who stuck out like the proverbial sore thumb.

Back then, on Sir Larry Kudlow’s “The Kudlow Report,” I debated the uber bulls, Don Luskin, Dr. Bob, Brian Wesbury, Jim Paulsen and many others. Good people and hardworking analysts/economists who were no doubt nice to their mothers and certain in their views.

During that period leading up to the Great Decession of 2008-2009, my friend/buddy/pal, Larry Kudlow, taking a cue from wordsmith Peggy Noonan, coined a wonderfully crafted phrase, calling the U.S. economy “the greatest story never told.”

To me, at that time, I saw a domestic economy that appeared healthy but with foundations that were cracking. At odds with Larry, I adopted the conflicting phrase “the greatest story ever sold.”

Larry Kudlow, “The Kudlow Report” (2008)

Continued here . . .

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Doug Kass runs Seabreeze Partners, a hedge fund, and writes daily for RealMoney Silver, a premium bundle service from TheStreet.com.

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