The Ten Things That Would Make David Rosenberg Bullish On America

Tyler Durden's picture

David Rosenberg submits a list of the ten things that would make him bullish on the US economy. As precisely zero of these have a snowball's chance in hades of happening, we are not too concerned about Rosie leaving the "realist" fold any time soon.


  1. An energy policy that truly removes U.S. dependence on foreign oil (shale case, coal, nuclear).
  2. A complete rewrite of the tax code that promotes savings, investment, and a revamp of the capital stock. Cut tax rates, eliminate loopholes and costly tax breaks. Tax consumption, promote savings and investment. That is crucial. But it will take political courage (ask Brian Mulroney).
  3. A credible plan that reverses the runup in the debt to GDP ratio. This includes not just on-balance sheet items but new rules governing entitlements too. We need delineation of the future of Fannie and Freddie if there is any … they became wards of the government nearly three years ago and there is still no clarification on this file (slightly more important than these periodic consumer spending gimmicks that have surfaced over the past few years). We need a complete rewrite of social contracts and a reversal in sacred cows that have been created over the years that are completely unaffordable. Plus, people are not going to learn to live within their means if our politicians continue to set a bad example. The act of dipping into Social Security, incentivizing companies who are already cash-rich to spend more on new equipment and extending a Bush tax cut that always had a 10-year expiry date at the expense of the already severely strained public purse was political expediency at its worst.
  4. A massive mortgage write-down by the banks — a Jubilee of biblical proportions — that provide much-needed equity to upside-down homeowners.
  5. A creative strategy to put people to work instead of paying them to be idle — having nearly half of the unemployed ranks out of work for over 15 weeks and a 25% youth jobless rate is unacceptable at any level.
  6. Tort reform. The only way to rationally bring down health care costs to more manageable levels.
  7. And from six — use whatever proceeds they can save to enhance their education skills, especially in the sciences and mathematics where the U.S.A. is sliding down the global scale.
  8. Financial sector regulatory reforms that actually have some teeth.
  9. Change tax policy to free up the hundreds of billions of dollars of corporate cash sitting in reserve in overseas accounts — bring this money home!
  10. Our Republican friends may not like this too much but in Canada, we understand the importance of immigration inflows and the U.S.A. should be doing more on this front to stimulate its long-run growth potential. This is where Japan’s decade of lost growth became two decades but its decision to resist immigration rule changes is more cultural in nature. The U.S.A., like Canada, is already extremely diverse. But as economists, what goes into economic growth is both simple and complicated. The simple part is merely identifying the two ingredients: growth in the population (more specifically, the part of the population that is working) and productivity (what most of the other nine ideas listed above would attempt to generate). But the dependency ratio is working against the U.S.A. and a smart immigration policy would help at least stem the runup.

And his commentary:

I refuse to be labelled a perma-bear even if I have been bearish for a long time. Having been a bull in the 80s and 90s I do know what it feels like to wear rose-coloured glasses. But the reality is that U.S. policy has been adrift for over a decade and it looks like all we have are measures that merely kick the can down the proverbial road. So it looks like 2012 will be the critical inflection point if there is one, not unlike, hopefully, what 1980 ushered in which was a complete about-face from the ruinous policies dating back to the early 1970s. What we have on our hands right now is a recovery built of straw instead of bricks. An economic expansion and bull market built on rampant expansion of the Fed and Federal governments’ balance sheet is neither sustainable nor desirable. I am desperately looking for reasons to turn more optimistic, but to do so, some major policy shifts have to take place, like the ones above.

I am convinced that we will, before long, be replaying something along the lines of the reversal of the tech mania and the reversal of the housing mania, which were equally unsustainable. Those fully invested in the stock market today thinking they
have it all figured out are going to be faced with a deep quandary and are putting their clients at huge risk.

No doubt there are some opportunities and we have identified them and they include large-cap companies with impressive cash flow streams, trade inexpensively, have nice dividend payouts and are non-cyclical in nature. We also like basic materials for the longer term, and hedging out the inherent volatility via long-short strategies makes perfect sense. And since corporate balance sheets are still in reasonably good shape, it also is completely sensible to be deriving income gains from the credit universe.

But now is the time, with the S&P 500 doing in 22 months what it took 60 months in the last bear market rally to accomplish (which is to double from the recession lows), to start reassessing the beta and risk in the overall portfolio and what your tolerance level is at the highs. Remember, we have witnessed a bear market rally, not the onset of a full-fledged secular bull market where you can close your eyes and go to sleep for 16-18 years as opposed to nimble trading strategies to get you in and out. If and when we see the sort of policy shifts that deliver secular growth, as we did in the 1950s and the first half of the 1960s and again in the 1980s and 1990s, then it will be time to re-evaluate the landscape and, dare I say …. become secular bulls!

Rest assured nobody is looking forward to that day more than yours truly. Until then, the bond-bullion barbell and S.I.R.P. strategies (safety and income at a reasonable price) are perfectly acceptable investment themes, and can be captured across every asset class, even in equities!

Finally, it is worth stating that my concern over the sustainability of the current economic expansion is not without support from some fairly impressive individuals, even those that worked for President Obama. I strongly feel that Peter Orszag’s column today on page 9 of the FT is a must-must read (America Must Brace Itself For Turbulence).

His conclusion:

“The bottom line is that there may well be U.S. public debt tremors this year, both during federal debate over raising the debt ceiling and with at least a limited number of crises in local and city governments. The bigger problem, though, lies beyond 2011, as the unsustainability of the federal government’s fiscal trajectory becomes increasingly clear. I hope it does not ultimately require a crisis to restore fiscal sustainability at the federal level, but I fear it will. “

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Alcoholic Native American's picture

1. Rampant Fraud



Oops I thought they were talking about wall street.  America done, stick a fork in her.

GeorgeHayduke's picture

Good video. I'd say he is dead on.

Hephasteus's picture

Yes and it goes to how massive the problem is. TOOO many awake people. Any sane person would fold and just go live quietly somewhere and think about what they've done. But not these people. Protect yourself.

SilverRhino's picture

Funny how little things like RULE OF LAW or maybe universal enforcement of said law would help out but aren't mentioned.

Glass - Steagal II would be a shot in the America's arm as well.  



GeorgeHayduke's picture

Good point Silver Rhino. Except that would make it way too obvious that there are TWO sets of rules and laws in this country. One set for us, and another set for them...and their set doesn't really include punishments. It would blow the whole "classless" society BS right out the window.

There is no way any high school or college civics or government class teacher can present the same shit I was taught in those classes in the late '70's & early '80's without complete cognitive dissonance.

I just wonder how long we wait until the peasants decide to impose their own laws on their owners. More strife is obiously needed...along with less high-fructose corn syrup and mainstream media propaganda.

caconhma's picture

It is absolutely incredible that brainless "experts" seriously think in BS that changing the Tax code will drive America to prosperity.

There is no bright future for America being a lawless society. Only country living by a sound Rules of Law has a future. Unfortunately, America today is a lawless society where theft and crimes are handsomely rewarded.

People must be encouraged to be industrious and the success must be rewarded instead of stolen away.

Gigliola Cinquetti's picture

The "cuisson" is not finished until you have turned it over .

pton09's picture

Can somebody ask Rosenberg why I want to hold longterm US paper in the face of these problems?

Ben has already told you he will print and print, I see no reason in holding an asset that has no intrinsic value or scarcity of any kind. 

pslater's picture

"Can somebody ask Rosenberg why I want to hold longterm US paper in the face of these problems?"

Because the deflation argument will rule the roost.  Notwithstanding the hyperinflationary effects of the Fed's money printing, the USD will be the last fiat currency to tank.  Until then, the Fed is a very powerful adversary.

Think about it.  Why is the bernank so afraid of deflation?  Because that's what's happening.  Much if not all of the recent rise in commodity prices is the direct result of the CB's money printing - not supply/demand imbalances.  When the Fed ultimately runs out of bullets and/or the banks are finally made to take the losses that mark to myth tries to hide, deflatio will rear it's ugly head in a big way.  This will push long term Treasury yields down somewhere around 2% producing 25-30% returns for those who buy at the rates we have today.

The Limerick King's picture

Rosie has got to be bold

Stop turning from hot then to cold

Stick to the knitting

And stop the bullshitting

All paper will give way to gold!

dick cheneys ghost's picture

how about ending the damn wars. 

Alcoholic Native American's picture

Are you kidding? Do you realize what the unemployment rate would be?  Ending the perpetual wars is off the table.

Not to mention some of our most patriotic globalist have a lot of stocks in the war industry.

Arkadaba's picture

I haven't done the math but yeah bringing all servicemen home would definitely swell the ranks of the unempoyed.

Oh regional Indian's picture

Wars rarely have negotiated endings. See WWII as best example. Had to finish it with a super wave of atomic killings.

War will start to become more overt in the months to come. Watch UN Blue Helmet fascist soldiers start to pop up everywhere.

It's in the script. Will make all this meaningless.


buzzsaw99's picture

No offense but I don't think I like rosie very much.

monsterfiver's picture

Revamp the lobbying mechanism to force it to appeal to the people, who then armed with information can vote accordingly how they see fit, ending corporate stranglehold on government.

Let TBTFs fail. Smaller pieces will lead to competition and innovation.

pat53's picture

AAhh, right on schedule.. LOL You can now count on the rally picking up steam whenever supermoron "Rosie" opens his yap !  LOL Why doesn't this clown go find a real job, he hasn't a clue what he's doing now...which is losing his clients money... great job dickhead !!!  LOL

satansanus's picture

some mind bending sexy florida ladies, to please him until he is hungry, would solve all his concerns about the greatness of the US


America is THE best

Mrmojorisin515's picture

none of that makes a difference without a reform of the currency, we'll just be back where we are now in a few short years.

e_goldstein's picture

Or we could end the FED, make it illegal for the government to borrow, and come up with a currency backed 1:1 by gold and silver.


onlymyopinion's picture

Perhaps he'll see the light when the Snp's are printing 1400+ later this year.  I doubt by then he'll have many clients left. 

TraderMark's picture

So Rosie will never be bullish on the U.S.

FoieGras's picture

"Remember, we have witnessed a bear market rally, not the onset of a full-fledged secular bull market"

Rosie has been using that line since SPX 850 in 2009. Who cares if this is a bear market rally? You go long when the trend turns and you stay long until it turns down again. And when it breaks down you go short and see how far it goes. I don't understand the benefit of analyzing if the "rally is overdone" or - in the opposite case - "the sell-off is an exaggeration". 

johngerard's picture

absolutely spot-on. just trade it. who gives a shit? apart from people on the other side of the trade going nuts because they got it wrong...

steve from virginia's picture

I don't like the list. Too money and credit centered. Too stock- market oriented.

Energy conservation has to be at the top of the list since that is what's coming like it or not.

Any list that doesn't include agriculture reform and getting rid of the carz is just entertainment, folks.

Plainview's picture

Absolute nonsense, move the cars to LNG and you're away again.

Kina's picture

"Remember, we have witnessed a bear market rally, not the onset of a full-fledged secular bull market"


We have experienced a Bernanke Market interlude of a bear market that will resume as soon as his printing press is confiscated by the adults at the asylum.

Fish Gone Bad's picture

It's January again, must be time for lists.

Pure Evil's picture

To sit there and say we need bookoo more immigrants just doesn't wash. We've allowed millions of legal and illegal immigrants to come to this country and we still ended up in a depression of monumental proportions.

We have millions of unemployed US citizens and we still have an open border policy of allowing approximately 1.5 million immigrants to move to this country legally per year. I don't even want to think about the number of illegals and visa overstayers.

If we continue to allow people whether educated or not to come to this country and take jobs of US citizens, then exactly what do the elite expect Americans to do. They've ship our jobs overseas and continue to insource foriegn labor to take our jobs in this country. What do I have to do to remain employed, move to China?

And to say that the Japanese immigration policy is what caused their 20 year economic doldrums is beyond incredulity. The one thing he failed to mention is exactly how importing millions of immi

Stuck on Zero's picture

Amen.  Immigrants fill the welfare rolls, fill the prisons, fill the hospitals and emergency wards, overcrowd facilities, require scholarships and government assistance at every level.  Watch California go broke under the crushing load. The biggest load from immigration aside from all of that is the need for huge increases in infrastructure to support a growing population. 

unununium's picture

You will get your wish.  Illegal immigrants will go home when we want their crop-picking jobs back for ourselves.

The Alarmist's picture

Come on now, immigrants are doing the "jobs" that many hard-working, honest American families won't do, like being on welfare, committing crimes and using up all the medical care at someone else's expense. As soon as all the decent citizens give up trying to avoid doing these hard tasks that our overlords demand of us, the sooner the immigration issue will be mooted.

Arkadaba's picture

What DR is referring to is longer term demographic trends. Sorry but the US does have a huge swath of people either about to retire or be retired. 

As someone who has worked in the states as a legal "immigrant" - we pay our own way and contribute to GDP. And honestly, after working in the US for almost a decade - your education system sucks. I met a few very bright people but the rest .... well? I'm looking at the rest of the world for both investment and job opportunities. 

And btw, on a visa you cannot get any social benefits. 


deepsouthdoug's picture

Maybe 1 of 10 - the tax policy freeing up capital for the corporations.  Bribe the Congresscritters enough, and this will get through.  


So Rosie can be a 1/10 bull!

DrLamer's picture

Looks exactly like a "Program of Communist Party, adopted by XXV Congress of CPSU".

I have read them a lot.

And .... "America" in title is written incorrectly. Correct writing is AmeriKa. This is a new AmeriKan English rule, adopted by the MAJORITY of US people and adopted by most Zerohedge readers.


Gigliola Cinquetti's picture

Fascist nations should adopt runic spelling to honour tradition

Jerry Maguire's picture

Nice, Mr. Rosenberg.  You can dream, can't you.

Still, the jubilee part shouldn't be a pipe dream.  It would, however, have to be a constitutional amendment for lots of legal reasons that probably are not that important overall.  You can read about it, if you haven't already, here:

And following posts.  This would be politically bottom-up.  That makes it far more unlikely, unless the populace develops some coherence and backbone.  But at least it's different from the usual.

On a related subject, I don't think it's possible or necessary for a state to go bankrupt; what are the creditors going to do - seize the statehouse?  in fairness they should explcitly repudiate debt, though.  Nevertheless, the fact that this is even being contemplated could generate more interest in the jubilee idea.  See here:


RobotTrader's picture

Poor Rosie.

Hosed down by The Ben Bernank's "Firehose of Infinite Fiat"

lieutenantjohnchard's picture

hey catfish mouth. did your gold and silver blowtorch run out of acetylene? i'm noticing gold and silver are up while your goog (down from $653.98 ah) and aapl (both of which you want us to think you own when they're up, but not when they're down) are both down.

sethstorm's picture

And from six — use whatever proceeds they can save to enhance their education skills, especially in the sciences and mathematics where the U.S.A. is sliding down the global scale.

Only if you believe in the flawed PISA tests.

imapopulistnow's picture

At the end of the day, #10 might in fact be the most helpful of all.  Unfortunately the linear thinkers simply cannot grap why this is so.

Blindweb's picture

Actually we want to start shrinking the population.  As fossil fuel prices explode  over the coming decades more land will need to be converted to farm land.  More people will not have enough food to eat.

Yes, I understand that will make the debt unpayable, but there's no way to escape that now.

imapopulistnow's picture

Less housing demand, less innovation, less capital import, lower living standards.


These people will live and consume somewhere.  If here, they add value and demand to our economy.

Blindweb's picture

More immigrants will lead to higher unemployment, lower living standards, and violence.  As the pie shrinks people are going to fight over the remaining pieces.   We want less demand not more.  Today's jobs are unstustainable and are draining our fossil fuels.  As our fossil fuels go, so do our chance at anything above subsistence living.

Although, I suspect immigration control will further break down as the federal government slowly loses power, and you will get what you want.

I'm going to assume you weren't the one to junk me for the legitimate civil comment I made.

e_goldstein's picture

bah. you're forgetting about soylent green.  that way, we can kill two birds with one stone.

CrashisOptimistic's picture

Rosenberg's position is a bond bullion barbell.

Simply that.  He's not short equities.  He largely ignores them.  He wants a bond position and a gold position.

He doesn't understand the oil disaster coming -- perhaps -- but such a growthless perpetuity would indeed dictate bonds as the place to be, simply because there is nowhere else.

If the Fed is thought all powerful and the Fed is the floor under bond prices, why is his thinking wrong?  For him to be wrong, the presumption would have to be that the creator of all money on earth cannot create money.  It Can!  It buys bonds and establishes a floor every day.

Rents are not going up.  That means inflation won't constrain the bond buys.  Rent is the largest portion of a monthly household budget and while it is flat **or declining**, food, gasoline and health care are partly or mostly negated.

I don't quite understand the rationale of people who want to declare him wrong.  Are they saying they see booming economic times this year?  


Salinger's picture

Rosie I think Jeff go the job, go back to your cave

Idiot Savant's picture

“The bottom line is that there may well be U.S. public debt tremors this year, both during federal debate over raising the debt ceiling and with at least a limited number of crises in local and city governments. The bigger problem, though, lies beyond 2011, as the unsustainability of the federal government’s fiscal trajectory becomes increasingly clear. I hope it does not ultimately require a crisis to restore fiscal sustainability at the federal level, but I fear it will."

I'm confused -


masterinchancery's picture

Short list: 1.Get nukes and oil and gas exploration. 2. Dump the EPA. 3.Ban public employee unions. 4.Dump the Dept of Education, teacher tenure, and the education bureaucracy. 5.Ban the use of off balance sheet maneuvers everywhere, including government. 6. Ban all Fed open market operations.  7. Eliminate Medicaid.  8. Eliminate all federal and state benefits for non citizens. 9.Eliminate all corporate and commodity subsidies and tax credits, in the budget or otherwise, with special emphasis on ethanol and "green" energy. 10.Ban HFT.