Two weeks ago I presented my thoughts on the current economic situation at my 6th Annual Strategic Investment Conference in La Jolla (co-hosted with Altegris Investments). The speech was well-received, at least to judge from the comment forms. So this week and next, we are going to revisit that talk (with a few edits). Let's start with a little set-up to explain the first few paragraphs.

My speech was Saturday morning. On Friday, I wore a nice grey suit with a Leonardo tie. For those who know about Leonardo's, they are "statement" ties. I should note that Tiffani picked the tie out for me about ten years ago and persuaded me to wear it. It took some getting used to. It is 16 silk-screened colors, bright blues and pinks and grays, the central feature of which is a very vivid parrot. It is not subdued.

When my good friend George Friedman of Stratfor gave his speech on Friday, he commented rather derisively about my taste in ties, which got him a few laughs. This did not bother me too much since, while George is a brilliant geopolitical analyst, his sense of sartorial style is not exactly top-drawer. So now, let's jump into the speech.

This week as I am in Nova Scotia, where my bride "suggests" I will be far removed from any internet access, I am pleased that my friend Art Cashin is allowing me to reproduce a series he has been writing about in his privately circulated "Morning Comments" that I think you will thoroughly enjoy. Art's thesis, and I agree, is that we may be at a very important "tipping point" in the global economy. To help his readers understand why that may be, he has written an essay explaining how banking, money, central banking, interest rates and other factors "fit together." He has done a very good job of explaining this complex subject in simple terms. For those of you who already understand all these details, you will now have some simple ways to explain them to your friends or give to your kids. For the rest of us, it is nice to be able to see how the puzzle pieces fit.

No sooner is my Muddle Through 2003 forecast out, than we get a barrage of data which gives cause for concern. Can we still Muddle Through with an increase in taxes (you read that right!), higher oil prices, more medical costs, and a slowing world economy? Is the Fed actually winning the War Against Deflation? We look at all that today, plus I answer a few critics of my forecast.