Bubble heads, not Bobble heads. 

  

The pundits are having a very difficult time, and have had for many months, trying to decide whether there will be a recession, or if in fact we are in the beginning throes of one.   It reminds me of a back seat full of kids on a long trip whining over and over again “Are wee theeere Yet???”

  

Scott Sperling, the co-president of private equity firm THL Partners, was just interviewed by Erin Burnett on CNBC’s Closing Bell segment.  I love watching Erin, and Scott is definitely not in the Bubble Head category.  I found it useful to go back over the interview several times, learning something each time.  And freeze framing on Erin - but I digress...

  

THL Partners is in the process of negotiations for clients CITI, Morgan Stanley, Credit Suisse, Wachovia and Royal Bank of Scotland to buy out Clear Channel for 32.29 USD per share. 

  

While it was devilish hard for Erin to pry anything out of Scott concerning the deal in progress, he nevertheless had some interesting facts and opinions to share. 

 

From his prospective and experience with the markets that THL Partners has long been profitably involved in, his opinion is that “The market is in the midst of an astounding crises.”    That is an interesting observation  in view of the fact that Starbuck CEO Howard Schultz tells shareholders that “The economy is in the worst shape since World War II”.   I suppose that would even include the terrible decade of the Clinton Administration and the mess that George W. Bush inherited from that disaster.

  

And Scott spoke of bubbles: “The market has gone through a couple of legs of correction based on the bubbles that were created in the last four to five years.”   Of course these bubbles were created well within the seven plus years that the White House and Congress have been occupied by the Bu$hite regime, but I’m sure that it is Bill Clinton’s fault.  

   

Scott is in fact an optimist concerning the American economy, but while he is bullish on the long term prospect he is not so sure that a recession would be a bad thing from the standpoint of a swifter recovery.  He suggests that while the Fed’s intervention looks good short term, its effect may be to lengthen the healing process.   We are in for “12, 18, 24 months of both a recessionary environment and a need to be very careful about inflation.”

  

The Fed’s concentration on the immediate health of the economy (Wall Street) is disastrous for the USD, and Main Street.  I agree, and my money is on inflation big-time a year and more from now.  The current administration is simply treading water to get to the shoreline of the next administration.  Inflation is not the only dead herring that will be washed up on the next administration’s shoreline, but it is a huge stinky fish left high and dry by the frothy bubbles of the Bu$hite debacle.  

   

Of course we know that the Clinton Administration left the dot.com bubble on Bush’s doorstep, along with an $800B surplus bubble.  And we are all too familiar with the rich aged limburger cheese aroma of the housing/credit bubble.  And the stock market bubble which has only recently ripened.  But Scott mentioned a couple of bubbles that are floating our way:   

  

·         A commercial real estate bubble is coming on in the wake of the housing/credit bubble.     

  

·         He spoke of a potential 45T (yes, Trillion) USD default swap market bubble.  (Not sure what that is, but I suspect it is the SIV etc. sub prime repackaging mess that has resulted in the Bear Stearns/JPM/Fed. earthquake.)  The Fed, which has used 400B of its 800B Treasury Bond reserve, could not begin to handle that, in his opinion.   Depression anyone?

   

So what’s the point?  It seems like almost all of the bubbling, and all of the bubble puncturing, has take place on the Republican watch.  It would seem fitting that the Republicans are next in line to have their bubble busted in November.

   

And what about that Bush Bubble Head?  Why wait until November?!?