The financial world — if not the entire economy — has been scary place recently. In keep with today’s “trick or treat” Halloween spirit, we asked some smart folks around town what spooked them the most about the current business climate …

• John Prichard, portfolio manager, Knightsbridge Asset Management: “The spookiest thing out there is inflation, maybe not right away, but with all the bailing out of the financial system, we are sewing the seeds of future inflation, pressuring our currency and creating inflationary pressures.”
• Mark Schniepp, economist at California Forecast: “The boy-that-cried-wolf mentality on Wall Street and in Washington that bank bailouts are absolutely necessary to prevent global economic disaster. The economy is weak and that weakness has been amplified by the events of September and October, but what spooks me the most is the extent of both the effort by (Fed chair Ben) Bernanke and (Treasury Secretary Hank) Paulson — and the willingness of Congress to agree — to 100s of billions of dollars as a preemption against catastrophe when any evidence of actual catastrophe has been absent.”
• Nancy Ulrich, Realtor at Century 21 Beachside: “All the ‘experts’ look like they’ve been stumbling around for years with pumpkins on their heads, blinded to the warning signs of economic trouble. And now they expect us to believe that they suddenly know what economic obstacles are out there, and how to fix it all. I still don’t think that they’ve cut out eye holes yet.”
• Mark Boud, principal of Real Estate Economics: “Since the government bailout, a lot of banks have been foreclosing on as many properties as they can in order to take advantage of the bailout so it’s done exactly the opposite of what it’s supposed to do — increased foreclosures. It drags the entire market down and that, in turn drags the economy down. That’s scary.”
• Chriss Street, Orange County Treasurer: “I do not think the pain and suffering in the stock or junk bond market is any more severe than the “October surprise” of 1987. What is stunning, is that there is always a new group of young people who come along and then repeat the same mistakes of their parents!”
• Charles Rother, invesment adviser at American Strategic Capital: “Counterproductive and destructive policy responses from Congress, Treasury, Federal Reserve and the White House is the spookiest concept to me. During the 1930’s, poor policy responses from both the Federal Reserve and the White House turned a two-year recession into a nine-year depression. Let us hope that policy makers do not turn the current economic crisis into a lifelong nightmare.”
• Gideon Bernstein, director of research, Leisure Capital Management: “The scariest thing my be the election — we may err on the side of being too drastic in our decision-making policies. The spooky part might be the government is given the absolute power of an overwhelming single party majority. That could create structural changes to our economy that could come back to haunt us and will have unintended consequences.”
• Steve Thomas, president of Altera Real Estate: “The length of time that the financial markets will take to thaw out. It is anybody’s guess at this point. I am hoping for a warm winter!”
• Michael Pento, senior market strategist, Delta Global Advisors: “That our government is seeking to spend and print their way out of this recession. Unfortunately, that is what got us in this condition in the first place. Now they are making significant intrusions into the banking system, auto and insurance sector. What they are doing is guaranteeing that the next downturn will be much worse than what we are experiencing now.”
• Rich Simmons, team leader at Nationwide Lending: “It spooks me to think that even in the plain site of day that corporations continue to blatantly rip off the shareholders. They are still clearly out of control.”
• Charlene Davidson, senior managing director at McGladrey Capital Markets: “I am concerned that US-centric minds can not see beyond Wall Street and Main Street. We live in a global economy and need to identify with many other influential financial centers. It is not just about the United States. Insulated thinking can risk our economy to enormous challenges, now and in the future.”
• Mira Farka, associate economics professor, Cal State Fullerton: “This election. If there’s a slight, slight chance of having a decision like the 2000 scenario, with no outcome.  The markets never like uncertainty.  On the 5th of November they want to know who it’s going to be.  If they don’t, the market could be a bit spooky.”
• Larry Roberts, blogger at Irvine Housing Blog: “Unemployment is rising, and many who are working are earning less. With the lowering of incomes, the disappearance of equity capital, and the near elimination of borrowed funds, the economy is California is going to contract severely. My greatest fear is that these problems will worsen, and the hardships inflicted on families will be enormous. Elevated stress levels, health problems, depression, divorces and even suicides will result from an economic catastrophe. I weep for the children who must endure the fallout from the problems we adults have created.”

More housing market news …

• Judge wonders if O.C.-run home projects are ‘DOA’
• McCain fans less realistic about housing than Obama’s?
• O.C.’s mid-section leads homebuying revival
• Falling prices spurred summer O.C. home sales
• More homeowners get help to avoid foreclosure
• LA/OC home values still up 71% under Bush

More O.C. business news …

• Fed cuts key rate by half-point to 1%
• O.C. Register to lay off 110 workers
• Allergan earnings up, outlook down
• September O.C. bankruptcies hit 3-year high
• Daily tip: What’s going on with the economy?
• O.C. clothing maker to shut down
• First restaurant closes at year-old Tustin retail center
• Christian Louboutin makes surprise visit
• What downturn? 3rd H.B. Home Depot opens this week

Posted in: Meltdown • Overall economics • Congress • economy • Federal Reserve • regulation |

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