Why Obama Must Take On Wall Street

Wednesday, January 13, 2010. Robert Reich’s Blog:

It has been more than a year since all hell broke loose on Wall Street and, remarkably, almost nothing has been done to prevent all hell from breaking loose again.

In fact, close your eyes and you could be back in the wilds of 2007. Bankers are still making wild bets, still devising new derivatives, still piling on debt. The big banks have access to money almost as cheaply as in 2007, courtesy of the Fed, so bank profits are up and bonuses as generous as at the height of the boom.

Foreign Direct Investment Strengthens in China

In December 2009, foreign direct investment increased 103% to US$12.1 billion in December, up from around US$7 billion in both October and November 2009.  This marks the fifth consecutive month of y/y increases after 11 months of declines. (Bloomberg, 01/15/10) FDI was US$90 billion, only about 3% or US$2 billion lower than in 2008. FDI usually accelerates in December.

2010 Investment Strategies: Six Areas To Buy, 11 Areas To Sell

(excerpted from the January 2010 edition of A. Gary Shilling’s INSIGHT)

Our investment strategies for 2010 follow from our forecast of continued economic weakness and deflation, as discussed earlier in this report and in previous Insights, especially our Dec. 2009 edition. We see the 2010 investment climate dominated by weak economic growth here and abroad, led by U.S. consumer retrenchment. More government fiscal stimulus and continuing Fed policy ease are likely in this setting. So is low inflation or deflation.

INVESTMENTS TO BUY

1. Buy Treasury Bonds. Long-term Insight readers know we started recommending long Treasury bonds back in 1981 when we forecast secular and huge declines in inflation and interest rates. So we declared back then that „we’re entering the bond rally of a lifetime.“ The yield on 30-year Treasurys was 14.7% and our eventual target was 3%. Last year, yields blew through 3% to reach 2.6% at year’s end, so in our Jan. 2009 Insight we declared „mission accomplished“ and removed Treasury bonds from our recommended list.