Wednesday, November 11, 2009

US economy

Here's a snippet from my favourite US economic commentator, James Meyer:
"So far, the government has effectively gained control of two banks (Citigroup and Bank of America), two car companies (GM and Chrysler), one auto finance company (GMAC), an insurance company (AIG) and two mortgage intermediaries (Fannie Mae and Freddie Mac). While it is too early to judge whether these companies are better or worse off as a result of the government’s active intervention, the scorecard to date isn’t very good. Citigroup is still a cluttered mess trying to find a way to separate its good assets from its bad ones. Bank of America is searching for a new CEO. So far, it has gotten a few rejections. GM has emerged from bankruptcy and has an experienced non-executive CEO. But it can’t find a new CFO because of pay constraints. Chrysler is a complete mess that might not survive. AIG finally got a good CEO but he now threatens to leave due to overbearing constraints. Fannie Mae and Freddie Mac executive suites have become revolving doors and both have needed more money and continue to do so. They currently operate with completely broken models. Now the government wants to expand further. A 2,100 page health care bill and a 1,100 page financial reform package promise to become regulatory quagmires...The bottom line is that I believe stocks will move higher at least through year end. But every day we get closer to rising interest rates, rising taxes, plus to ongoing headwinds of a weak dollar and huge deficits. I suspect that it will be harder to stocks to achieve above average gains in 2010 than it was in 2009. "


Blogger kinglear said...

Yes we are well and truly up the proverbial - the goats are doing well though...

8:40 am  

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