As the year draws to a close I have some random thoughts about the economy;

I believe we are going to go off the "fiscal cliff". This is a bet on the inability of Congress to agree on what day of the week it is rather than any analysis of our economic situation.

I think it is time for the leadership of the House of Representatives to lay out their fiscal plan in mind numbing detail. This would start a much needed debate about the direction of the country.

I think the economy is doing better and the real estate market is showing signs of life. The American voter will always vote the economy so the takeaway from the election is that most people think the economy is doing well and are optimistic about the future.

I don't think going off the "fiscal cliff" will be that devastating. It will certainly be deflationary and push the economy towards a recession but since I believe the economy is stronger that the talking heads on TV are saying I think the country will skirt a recession and stay in positive territory. It will be close.

I think that nothing has been done about the Greek crisis other than that some near term liquidity has been provided. Two years ago I was quoting a senior government trader as saying it is a "liquidity solution to a solvency problem" and that is still the case.

I believe next year will see Italy join the ranks of bailed out Euro members.

I think 2013 will be a pivotal year for the municipal bond market as financial stress on cities, states and local entities will change the way the market looks at credit quality. I expect more Chapter 9 filings, more privatization and more conflict with public employee unions. How it shakes out is anyone's guess, stayed tuned.