As spending soared above even optimistic predictions this holiday season, small business owners are still far from optimistic about economic recovery as a whole, according to a survey by Discover Small Business Watch.

Discover's monthly index of small business confidence fell for the first time in three months in December, even as consumer spending soared. The index fell to 81.6 from 87.2 in November, a drop of 5.6 points.

Although the remarks of Carl Paladino, New York gubernatorial candidate, on gay people, along with the assertion from Rhode Island gubernatorial candidate, Frank Caprio, that President Obama could shove his endorsement, have made for some spicy headlines lately, small business leaders are taking a far more pragmatic view of the upcoming mid-term elections. Their focus is on the recent voting records of those stumping for office and the economy, according to a recent survey of more than 500 small business owners by Sage North America, a provider of business management software and services.

In fact, 61 percent said that a politician's recent voting record on legislation would drive their own voting behavior. That was nearly double the number (33 percent) that said they would be influenced by political party affiliation. For 52 percent, concerns over their businesses would drive their choices in the voting booth.

Bear with me here. This is going to be one of those "out there" posts. But Steve Randy Waldman takes an interesting stab at a problem I've been wrestling with, at least in the furthest reaches of the financial corner of my brain, since the financial crisis began.

And that is how to stimulate the economy without creating another asset bubble. It sounds easy enough to the Keynesians, but as Waldman has pointed out before, rebooting aggregate demand through traditional government action may simply create another bubble. And ultimately, the distinction between monetary and fiscal policy may be moot.

This piece published today by Project Syndicate is as insightful a critique as I've seen of the consensus that has emerged among policymakers that government deficits must be cut to restore economic growth.

Not that we haven't taken a stab at that ourselves.

Senior level CPAs have turned much more pessimistic about the economy. And somewhat surprisingly, they are partly concerned about deflation.

Just 21 percent of CPAs serving as C-suite executives said they are optimistic about the US economy, way down from 40 percent who were optimistic in May and the lowest level since April 2009, according to the American Institute of Certified Public Accountants and the University of North Carolina's Kenan-Flagler Business School's latest Quarterly Economic Outlook Survey. What's more, pessimists outnumbered optimists by a two-to-one margin.

China may be talking the talk of meeting energy reduction targets, but whether they will walk the walk long term remains to be seen.

And the impact of their energy reduction plan--to shut down 2,000 high-energy-use factories in heavy industries across the country--could have a big impact on the companies being targeted. Certainly a failure to comply will have a big effect.

Paul Krugman today once again bemoans the lack of Keynesianism in what passes for economic policymaking discussions these days, and I share that complaint.

However, Krugman may be missing part of the problem here, which is that those who pooh-pooh the prospect of deflation may actually not much care if it materializes, though they would be mistaken to do so.

I've avoided rehearsing the on-going debate over the bleak macroeconomic picture, because it quickly descends into endless political back and forth along with the usual name-calling, as my colleague Steve Taub and I have been discussing internally today.  But it's time to make an exception:

Is the private sector not hiring because it fears more aggressive action from the public sector, and so the public sector (read Obama administration) should leave the economy to itself, as those on the right claim? Or is the lack of private sector hiring a reflection of a lack of private sector hiring, and thus a vicious circle and market failure that requires the public sector (read Obama administration) to step in with a serious jobs program involving infrastructure, alternative energy and schools, as those on the left insist?

Not to speak for Steve, but my sense is he tends to agree with the first perspective, at least for the most part, and I can safely report that I agree with the second, and would recommend James Surowiecki's recent column to help make my case if I could find it. Since I can't, suffice it to say Surowiecki made the useful observation that the two sectors where hiring is picking up, banking and health care, are those where the government has taken the most aggressive regulatory action.

There's a political debate heating up about companies' hesitancy to invest the cash they're sitting on.

Essentially, the Democrats--or at least those in favor of further government stimulus measures such as a jobs program or at least extended unemployment benefits--argue that companies are wary of spending because of the lack of aggregate consumer demand.

A survey released today by the Association of Financial Professionals will do nothing to dampen the austerity versus stimulus debate.

To wit: Forty-three percent of US corporations had larger US cash and short-term investment holdings this May than they did six months earlier. Only 24 percent of respondents reported that their short-term holdings had shrunk during the past six months.