The other day a listener asked me where do we find reliable information. The answer is to listen to those who will tell you what you don’t want to hear. Here is something I consider as reliable.
Sri Kumar of TCW Inc. “QE2 is just I consider it alchemy.. trying to base metal into gold.” He also says that there is only so much a monetary policy can do. He says, more eloquently than I ever can, that without a major structural reform the markets are going to go down much further from here. For those of you who are looking for what to do in the investing world, he offers some suggestions. Please watch.
It is all fine to make structural adjustment, tax breaks and productivity improvements, but who is going to buy all those efficiently made products? Can US export those to compete in other countries? I don’t think so. Many countries wouldn’t allow that much of free trade unless US companies invest there also, which is again a drain on the capital here.
As long as US doesn’t find a way to strengthen middle class, I don’t see how any of the markets are going to grow here. They say now 20% of GDP is held by 1% of population and I say how much can they spend to boost the economy. It is a simple math and if anyone can’t get this math, that evidently shows how poor he/she is in math!