Wednesday, September 26, 2012

Bob Rodriguez: Brace for another drop

First Pacific Advisors' CEO Bob Rodriguez, explains why he thinks the "Fed's economic forecasts have been overly optimistic," and why Bernanke should be replaced with a "less intrusive chairman."

Very much like prior to the last credit crisis where there were cancers developing in various areas of the credit market that were a function of unsound monetary policy in '03, but you didn't see it for several years. The same thing is happening with the Fed's QE policy, particularly with this QE3, since it's forcing investors to make what I would call riskier decisions...

We are coming into the most critical year, I believe, in the last 80 years in 2013. and it's something I've spoken about ... as I argued earlier this year that we would be going into recessions in Europe as well as Japan and that China was slowing and the international area was very much important to the growth. Secondly, labor costs as well as lower interest rates have been key drivers in the profit recovery. Those things may be tenuous at this stage of the game. I don't see a 3%-plus real gdp number. The cbo's real gdp base forecast of 4.2% through 2017 looks incredibly optimistic to me.

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