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As if there had been any doubt, Fed Chief Ben Bernanke was nominated for a second term. This is a good move in my opinion. Especially now, switching horses midstream would seem like a dangerous move. Plus, my biggest gripes about the various stimulus plans and bailouts are with Congress, not the Fed.
Congress is responsible for turning the bailouts into a cash-grab for their favorite constituents. Of course, some programs were necessary, like the efforts to modify mortgages to keep people in their homes. Even the Cash for Clunkers program helped automakers and dealers.
There’s been some criticism that much of the rebate money in the Cash for Clunkers ended up going to foreign car makers. But Toyota, Honda and all the rest hire American workers to work in their U.S. based factories. And if Cash for Clunkers helps these companies keep workers on the payroll and off unemployment benefits, them it’s a good thing.
*****You gotta give economist Nouriel Roubini, aka Dr. Doom, credit for his consistency. Now that growth for the global economy is widely expected by economists, and home values are improving slightly, Roubini is now warning about the potential for another round of recession.
To be fair, Roubini called the depths of the recession pretty accurately. And even his double-dip recession scenario makes sense. He believes that food and energy prices are rising faster than demand should warrant. At some point, like oil at $100 a barrel, prices will further depress demand.
Not only that, loose monetary policy will have to be tightened at some point. And it’s likely that growth in the U.S. will only be in the 2% GDP growth range when the Fed is forced to raise rates.
And, on top of that, unemployment is likely to remain high for a few years. That’s a natural cap on demand and a big reason why GDP growth in the U.S. is expected to top out around 2%.
Come to think of it, Roubini expectations sound a lot like mine. I call this situation "Managed America." And I’m currently focused on buying the companies that can grow in an environment of slow growth and weak demand. For more about Managed America and how you can profit form it, click HERE.
*****If you’re on the Preferred List, you love Goldman Sachs. But as an ordinary individual investor, you probably feel like Goldman represents all that’s wrong with Wall Street.
Regulators are investigating Goldman’s practice of sharing short-term trading ideas with top clients that sometimes differ from the firm’s stated fundamental stance.
In other words, Goldman’s analysts might tell top clients to short oil, even while Goldman is publicly bullish on prices.
We all know that Wall Street’s interests are rarely aligned with that of individual investors. This is just one more example of why it’s critical that investors be careful out there.
Until tomorrow,
Ian Wyatt
Editor
Daily Profit
P.S. Speaking of Wall Street not looking out for your interests, yesterday I mentioned my Recovery Portfolioadvisory service where I share with you what I’m investing in. I’ve put $100,000 of my own money on the line and share all my trades with readers. A bunch of you signed up yesterday to start profiting alongside me. If you missed yesterday’s Daily Profit or just want to learn more, CLICK HERE.