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Wilbur Ross -> Consumer Leveraging a 'Giant Ponzi Scheme'


berkshiremystery
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Watching one investor after another go on television with these new revelations is quite fascinating.  The facts have not changed.  In Fortune magazine (article entitled Crises Council) Wilbur Ross foresaw no fallout from subprime lending.  Obviously he is not prescient with economics.  Nor do you need to be to invest successfully -- given the chance I would invest in some of his vulture investments.

 

The primary argument housing bears have used has been stalled incomes.  You cannot explain asset explosion from income growth.  The same goes for commercial re.  Money spent in shopping centers must come from disposable income.  If disposable income goes sideways (I have argued it has actually gone down due to understated inflation) how has the value of shopping centers skyrocketed? 

 

In the summer of 2006 I would try to discuss economics with people -- their ears were closed.  Today EVERYONE wants to discuss economics.  Opinions that I had people thought were radical.  Today they are actually FAR more bearish.  Frankly I am sick of hearing about it -- especially from people who had no idea what was coming in 05-06.  If they couldn't see the future then - they can't see the future now.

 

Economics really is not that relevant to the investment process.  I only study it out of a nerd like fascination -- and frankly I saw many bizarre imbalances in the world.  I have never made a dime of an economic prediction though.  They simply are not actionable -- I would have gone broke trying to short this market to soon.  I'd be penniless if I invested based on economics.

 

 

 

 

 

 

 

 

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Guest kawikaho

Well, Dengyu said this before and I agree: you need to see the macroeconomics to help govern your investment stance.  I pay attention to Paul Kasriel's economic advice, and it has paid off well.  We'll see how he does in 2010.  He's predicting a recovery in GDP by late 2009, early 2010, and then another recession a year or two after.  His thinking is with all of this massive federal stimulus and spending, we'll see a real uptick in growth by next year.  By then, they will need to raise interest rates to reign in the loose spending and engineer another recession.  He predicts a W like recovery.

 

Damn, where's Dengyu lately??  Most of the old board seems to have dropped off for good!

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