The Chief European Economist for one of the global UK banks visited our offices recently as part of a tour of her firm’s institutional clients in North America. Before the formal presentation, a discussion broke out between her and several of our portfolio managers and analysts about which of the world’s financial centers is the gloomiest.

I told them that if they want to meet gloomy investors, they should travel with me away from the airports with big international flight hubs. I’m betting that people in Frankfort, KY will sound even more worried than those in Frankfurt, Germany.

U.S. investors do have reason to worry, no question. Issues like the Greek government’s debt that didn’t concern us a few years ago now roil our financial markets. And, as if the financial problems weren’t big enough, figuring them out means we have to try to understand the language of European politics that few of us speak. In fact, it’s a language that European policymakers themselves are inventing as they go along.

Then there’s our own political circus and its potential to throw sand into our already-creaky economic gears. Job creation continues to lag and financial markets gyrate daily. So, we’re worried.

You may have previously heard me reminding you that much of our economic weakness is symptomatic of our recent asset bubble and its bursting. But, I believe like other hangovers, the ill-effects do eventually fade. Housing prices, on average, finally appear to be bottoming and housing starts have responded by accelerating in September. We may still have too many vacant houses, but builders seem to think that enough of them are in the wrong place or in the wrong condition to be salable.

Bank credit rose in the third quarter for the first time since its collapse during the recession. Apparently, much of that credit growth financed a healthy, rising trend in automobile sales, which in turn is leading to increases in domestic production and even employment. And although the latest Federal Reserve regional business survey revealed considerable uncertainty about future hiring and investment plans, most regions continued to report growth.

Are things great? Hardly! But when the prevailing mood is gloomy here and abroad, it’s probably time to ask what the pessimists are overlooking. As far as markets are concerned, everyone else’s pessimism is one of my greatest sources of optimism.

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