While Larry Summers Dreams, You Can Act
Lawrence Summers, the White House economics czar, paints a fuzzy
picture of a social compact between Wall Street and Main Street, an
agreement based on speed limits and guardrails, overseen by Washington,
with the goal of limiting risk and encouraging growth.
In my StreetTalk column for Forbes.com, "Larry Summers Has A Dream, But No Details," I noted that Summers lacks specifics and that such symbolic moves as limiting
compensation for a tiny group of executives at bailed-out banks is not
going to restore public confidence.
A more noteworthy Summers point: his prediction that "the incidence of
financial crises may be greater over the next 25 years than the past 25
years."
Yes, that means a return to the days of the 1987 crash in the stock
market; the liquidation of Long Term Capital Management; the default of
Russia and Argentina on their sovereign debts; serial monetary crises
in Asia, Latin America and emerging markets;
and the dot-com meltdown and the global subprime disaster that froze
financial markets, requiring trillions in taxpayer bailout money.
So what can an investor do? For advice, I sat down with Marc Harris of RBC, one of the few large banks that maneuvered a clear course through the economic turmoil. In the first part of our video interview, we discussed financial stocks.
Harris singled out Bank of America (BAC), KeyCorp (KEY), and Boston Private (BPFH). There will be more consolidation, Harris predicted, and Bank of America is going to be one of those making acquisitions: "It's time to buy it," he said, citing a single digit multiple on depressed earnings.
The co-head of global research for RBC Capital Markets, Harris is also high on gold. He noted in the second part of our video interview (Green Light For Gold) that RBC as lead booker just raised $4 billion for Barrick Gold (ABX) and added that RBC has a buy rating on the stock.
"The way to buy gold it to buy it through the equities," Harris added, emphasizing the importance of chosing the right operators.
The other factor to keep watching: the dollar.
As I said in my StreetTalk column about the inverse relation between the dollar and the stock market (Dollar's Depreciation Inflates All Assets):
Gold and oil, especially, have an inverse relationship to the dollar, underscores Frank Holmes, CEO and chief investment officer of U.S. Global Investors (GROW), a mutual fund empire headquartered in San Antonio, Texas, that focuses on hard assets. "When gold is up, the dollar tends to be down, and vice versa," says Holmes. "Looking at weekly data going back 20 years, this relationship occurs nearly 70% of the time."
Holmes, manager of the U.S. Global Investors Gold and Precious Metals (USERX) fund, believes gold mining stocks are cheaper than bullion. "If the price of bullion goes up 10%, gold mining shares like Freeport McMoran, Anglo Gold and Newmont Mining (NEM) should rise by 20%."
Summers will keep dreaming, but smart investors know that dreams alone offer scant protection in rough seas.
Watch: More Robert Lenzner StreetTalk interviews with top investors. Click here.
Arianna Huffington: Obama One Year Later: The Audacity of Winning vs. The Timidity of Governing
David Plouffe has written the most important political book of the year. The Audacity to Win arrives at a crossroads moment for the Obama administration -- exactly one year after the election. While reading it, I found myself wondering what Candidate Obama would think of President Obama. Would he wonder how the candidate who got into the race because he decided "the people were getting hosed" became the president who decided that the American people can only have as much change as Olympia Snowe will allow? How did the candidate who told a stadium of supporters in Denver that "the greatest risk we can take is to try the same old politics with the same old players and expect a different result" become the president who has surrounded himself with the same old players trying the same old politics, expecting a different result?
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Agreed and wondering if 2012 is just a paradigm shift that will take care of these corrupt profiteers' system of enslavery of the masses by creating an almost world-wide revolution ...
Unless you're a Wallstreet or Washington insider, you're better off taking your money to the local casino.
investing in this environment is easy. history shows an unbroken link to past behavior by .gov in these situations. it doesn't matter what the size, makeup, ethnicity or time in history the event has happened. the fact that fiat currency systems have a 100% failure rate is just confirmation of the path taken.
.gov will burn up the printing press to get out of the predicament it put itself in. invest accordingly.
Insofar as Summers' analogy of driving and guardrails & etc., I likewise suggest consideration of Bush's reference to Wall St. getting drunk. Therefore, numerous financiers should be taken off the proverbial road, locked up and their licenses to act in the economy removed.
Must see TV.........FRONTLINE.......The Warning!!!!
Summers is THE DEREGULATOR!!!!
http://www.pbs.org/wgbh/pages/frontline/warning/view/
If Summers', Rubin's, & Greenspan's goals were to destroy the buying power of the middle to lower class, and create the biggest fraudulent scheme in history, to help their select group of friends destroy hundreds of smaller banks & businesses and then buy (seize) all their assets for pennies on the dollar, then it worked like a dream.
It's kind of ironic that Larry Summers dreams and the investment advice from others is buy gold. Buying gold isn't exactly a vote of confidence in Summers and the economic policies of the Administration.
Summers is one of the people that did the dirty deed
Please...somebody, please...
Explain why Pres. Obama hired him???
Who put the gun to his throat???
Nobody did. Obama likes him.
We all just need to accept we were duped. Change fail.
Obama knew nothign about finance, Obama's campaign contributors told hem Summers was sooo smart and experienced, he's the guy to hire..Obama was a complete idiot on this one and we will suffer for years and lose so much "treasure" because of it. Wall Street owns the place.
Its gotten to the point I almost okay with the idea of an economic crash so bad that it finally takes Wall Street out , US population finally turns on them in appropriate outrage, if it is the only way to get rid of these parasites.
Nothing is "taking out" Wall St. Because working and middle class TAX MONEY IS BAILING OUT Wall St. and all "be big to be believed" CORPORATE PROFITEERS who are
sucking dry the US Treasury via WAR PROFITEERING (with your tax money!)
and their own irresponsible economic crash (bailed out with your money).
IT'S A WIN-WIN FOR THE CORRUPT-AS-USUAL CORPORATE world.
It's the Harvard connection.................old school ties. Though I have always and will continue to support the President, I am at a bit of a loss to why folks think of the President as a lefty liberal.
He continues to support right of center policies and is at best a centerist. Larrry Summers falls in line perfectly. Of course, seeing I would have supported the nationalization of both the banking and medical insurance industry my views may be considered a bit left of center.....LOL!
Summers is basically the worst possible person to be in the position he is in right now and we as a country will pay a heavy price for it, just like we have during his previous tenure with Clinton. He should find a one way ticket out of the WH and economic policy. However this column still has these Wall St. vultures saying to invest in finance/bank stocks. Any average investor taking their word for this is going to take a severe haircut. From things I have been hearing Bank Of America and Citi might not make it out of 2010.
Oil and gold is good but it will be extremely volatile for the next year or so and then soar when the dollar is devalued to the point that they no longer use it for reserve currency. Gold funds are going to be the next fraud market that will be oversold and need a severe correction in a couple years. Hopefully by that point, there will be some more bright spots to move your money into so people don't get caught in that market correction either, which is inevitable and going to happen. Also be very wary of buying any physical gold at this price point. They don't mention silver but it has outperformed gold since the crisis started and is poised to break through it's previous highs.
That and a dollar will get you a cup of coffee?
The way it's going it will probably get you the cup or the coffee,not both.
Just hold out your hands. : - )
Summers is not only useless but dangerous. He talks as if the banks have our best interests in mind. Clearly, they don't and worse, they'd just as soon watch people lose their homes than modify mortgages. They can not be trusted to self regulate. They can not be trusted to not lobby and lie to regulators. Big banks and institutions s need to be broken up so there is no systemic risk and lots of competition. But Summers isn't dreaming about that. He's dreaming about how his friends as GS will reward him for protecting them from us.
Everything you say is correct and has become the cold hard truth to almost every american.
Nothing is going to change until we all take it to the streets.
Seriously.
This country is angry and nothing is changing at the top.
I agree. So what does that say about Obama?
It says, he needs to support and push for real progressive policies. End the wars, single payer for all, financial regulatory controls, and for me the most important, re-establish the rule of law. Call for investigations, support indictments if warranted and demand accountability from all. It's hard to be America when you have torturers, war criminals and war profiteers running around free.
I realize none of this will come to be, but one can dream.
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