Glass almost empty, noted bear says

Gloom, doom, pain and much suffering are all in the forecast for at least the next five years, according to renowned market bear David Tice, founder and president of David W. Tice & Associates LLC in Denver. He spoke during a conference call this morning to address the current economic environment as it relates to the $700 billion federal bailout plan passed by the Senate and up for a second vote in the House. perhaps as early as tomorrow. Mr. Tice provided a litany of reasons why he believes the U.S. economy is headed toward recession, if not a full-blown depression. “We don’t believe these bailout packages will fix the Wall Street credit mechanism,” he said. “Credit will be restrictive no matter what happens with the bailout package.” Mr. Tice is the investment adviser to the $1 billion Prudent Bear Fund (BEARX) and the $500 million Prudent Global Income Fund (PSAFX). From his perspective, the credit squeeze, regardless of recent public and private bailout efforts, is only the beginning and consumers should be braced for tough times ahead. “Stock prices still have a long way to fall because they have not fully transmitted the problems we’re facing,” Mr. Tice said. “There will be year-over-year declines in credit extensions, and a severe recession is inevitable. And that easily could turn into a depression.” Mr. Tice cited such dire realities amid a rising rate of housing foreclosures and the 3.5 million excess homes on the market. “There will be a significant decline in real estate, and we believe we are only starting to see foreclosure activity,” he added. “We expect a lot more ‘jingle mail,’ with people mailing in their keys when they find out how far underwater they are.” While he predicted that “this will not be a fun time to be managing assets,” Mr. Tice offered the following advice to consumers. “Our whole system, as far as luxury consumption, will have to re-adjust,” he said. “We will have to get back to a simpler lifestyle of taking walks in the local park instead of taking trips to the Bahamas.”