They see the world dividing into two speeds.  The U.S. remains in the slow speed lane.  He expects our recovery to also remain slow speed.  Still, he expects our stock market to end the year in “high, single digits.”

He is not worried about inflation, as the velocity (V) of money (think GDP = MV = PT) has fallen to only 1.6X.  That means increases in money supply (M) are not readily causing inflation in prices (P).  What he didn’t discuss was that a surge in consumer confidence could create inflation before the money supply could be drained significantly.

The biggest obstacle to a strong U.S. economic recovery is our homes, which have already dropped in value more (percentage-wise) than they dropped during the Great Depression.  We still have 14 months of inventory, compared to a more healthy level of only 4 months.  While he didn’t suggest a solution for this, he did wade into the political arena when he stated our stimulus program clearly prevented a major depression.

With respect to the European financial crisis, he believes there will be an inevitable political solution, pointing out the Euro was originally created for political reasons, not economic ones.  Europe has always expected a crisis to bring them closer together.  Well, they got the crisis.  Now, get together . . . please!