View Full Version : Barrons roundtable - predictions for 2009
Each year, Barrons picks some of the top investment people and interviews them for their perceptions and ideas. Some are interesting, others perhaps less so.
What I found particularly interesting in the attached PDF was the discussion of food prices (double!) and China's economy on the lower part of page 13 and continuing on page 14.
So then....the timing of my restaurant auction this tuesday is not a minute to late. Double food cost...be prepared....
It is definitely a time to be prepared - both in business and personally.
I noticed this item ( LINK (http://news.yahoo.com/s/afp/20090107/ts_afp/financeeconomychinariotmedia_newsmlmmd) ). It seems that China's official media said:
"Due to deepening economic difficulties and social security problems since the second half of 2008, enterprise closedowns, layoffs and labour disputes have significantly increased, triggering a rise in mass incidents," it said.
"Economic pressures affect the sentiment of various social strata, and disadvantaged groups in particular are seeing their livelihood threatened. Their pent-up discontent could easily burst out... and spark mass conflicts."
Of course, if China were to face both economic distress and food shortages, matters might become more problematic.
I look at this whole mess and kinda' see it like the 100,000 cops on the street.
Remember when they came up with that program? To get the cops on the street the Feds came up with grants for a fixed time to give to cities. Kinda' like what the government has planned for the next few years.
The smart cities realized the money would come to an end in a few years and added temp jobs - little related to street cops. The dumb cities used it to put cops on the street. When the money ended they had to raise taxes to cover the cops or fire them. There were some POed cities.
In a similar play - the goverment is going to give out money for jobs that is based on it paying. When the government stops paying the jobs end.
I just don't see private sector jobs being created - just maintained on the government dole.
I look at this whole mess and kinda' see it like the 100,000 cops on the street.
Remember when they came up with that program? To get the cops on the street the Feds came up with grants for a fixed time to give to cities. Kinda' like what the government has planned for the next few years.
The smart cities realized the money would come to an end in a few years and added temp jobs - little related to street cops. The dumb cities used it to put cops on the street. When the money ended they had to raise taxes to cover the cops or fire them. There were some POed cities.
In a similar play - the goverment is going to give out money for jobs that is based on it paying. When the government stops paying the jobs end.
I just don't see private sector jobs being created - just maintained on the government dole.
I would agree with you. Everyone I talk to says their Business is down 40 to 50 percent.
At present a 3k tax incentive isn't worth the additional expense in Workmans Comp, Unemployment Tax and Accounting hassles.....IMO.
GratefulCitizen
01-11-2009, 15:41
A few things in this article piqued my interest.
On page 2, Black said this: "Now that the federal-funds rate has been slashed just about to zero, you're not getting anything for your money when you deposit it in the banking system and buy Treasury bills. There is no such thing as investment; everybody becomes a trader."
Later, on page 6:
Cohen: I agree generally, but our work indicates some unusual things occurred in 2008. We put together a basket of securities heavily owned by hedge funds, and another of securities that weren't. The stocks owned by hedge funds went down 20 to 25 percentage points more than the others.
Schafer: Goldman Sachs did a great disservice to the hedge-fund business. People were shorting the basket of hedge-fund stocks. This caused heavily owned hedge-fund stocks to go down, creating bad performance for the funds, leading to redemptions and forced selling, a vicious cycle.
The market at large, and hedge funds in particular, have exploited the benefits of computing power and the massive data sets created by the information age.
This enables them to develop and implement trading strategies which can outperform humans.
The problem is when "everybody becomes a trader."
This reduces the market to a zero-sum game.
The technology-assisted decision making speeds up the inevitable result of zero-sum games: a Nash equilibrium.
Low interest rates won't necessarily work.
There were also many references to inflation and gold.
Then, on page 13,
Hickey: Gold could go to $2,000 an ounce this year...there is a tremendous shortage of physical gold. In times of turmoil it is a classic
hedge against inflation.
Gabelli: People withdraw their cash from banks and buy safes and guns and gold...
Zuluaf: ... There is a limited amount of gold in the earth's crust, and most of it
is in politically unstable places.
I can already hear it now: PEAK GOLD!!! :D
The problem is when "everybody becomes a trader."
This reduces the market to a zero-sum game.
True - and it also means that capital formation, the fundamental purpose of the markets, will be deemphasized. Funding the companies that produce private-sector jobs and profits may become more difficult.
There were also many references to inflation and gold.
Then, on page 13,
I can already hear it now: PEAK GOLD!!! :D
Shhh! Don't let everyone know yet! ;)