The Morning Report
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Speaking this morning to a group of students and businesspeople at Point Loma Nazarene University, Joe Quinlan, Bank of America’s chief market strategist, rejected the choice between being labeled bullish or bearish, preferring instead to jokingly call himself a “paranoid optimist.”
“I’m not worried about the housing market,” he said, “but I know I’m here, kind of in ground zero” for the headline-sparking trouble.
He called the nation’s housing trouble a “homegrown mess.” He contrasted the U.S. downturn to a housing bust following a huge 1980s run-up in Japan’s housing market, during which Japanese officials denied the fact that anything was wrong, and the building industry thundered on.
Here, Quinlan said, the markets have responded and some Wall Street chiefs of the offending mortgage securities companies have lost their posts — albeit with hefty severances, he wryly admitted. Still, the market has responded with some accountability measures, he said.
Stepping away from his official role and sharing a personal take, Quinlan spoke despairingly of the stimulus package proposed last week, which comes at a time when the national debt is at an all-time high.
“I think the last thing we need is a fiscal stimulus,” he said.
But Quinlan did see a silver lining in the package — the proven ability for bipartisan, quick action in a desperate situation.
“Why can’t we do that with health care?” he asked. “(Usually), we kind of bicker while, kind of, the economy’s on fire.”
I asked Quinlan if he saw any hazards to the economy in raising the jumbo cap, like the ones raised in SLOP earlier this week. He said he didn’t think we’d have the same trouble that caused this whole mess, because the stated-income, 100 percent loans have vanished.
“Lending is still slower, more prudent, than it was before,” he said. “[The measure] is more than symbolic, but it’s not the silver bullet” to pull the housing market out of its slump, he said.