sundrenched

Jim Rogers on the Economy - Bearish on Stocks and Government

I completely agree. As a European (living in Asia) I am a befuddled at the knee-jerk resistance to nationalization, even when I discuss this with solidly Democrat American friends. "That's socialism!" they say. Yeah, right, and what we're now having is what, "looting"? I was surprised that in the video even Jim Rogers states he prefers nationalization over what's happening now. My fear is that because of dogma and self-imposed constraints the government will forever stay behind the curve.

As for the issue of solving a debt problem with more debt, I don't think it's necessarily an absurdity. Yes, it's absurd if you think of the US as one entity, but the truth is there's many individuals and companies who are perfectly solvent and who may need loans. Who here on this board has never applied for a loan? Not everyone who likes a drink is an alcoholic.

> I am not sure that that nationalizing the insolvent banks is not
> the answer. Yes, the shareholders are wiped out, but the shares are
> already down to very low dollars. Furthermore, shareholders will
> learn a huge lesson about corporate oversight through their board
> of directors. Once nationalized, the government does not have to
> value the toxic assets, but simply write-off the loans that do not
> perform (mark to market will not matter to the government). In 2-3
> years, the government will privatize approporiately sized institutions.
> In the meantime it can act as it wants as the nation's bank. Private
> capital will operate in a twilight zone with the government there,
> ut they will figure it out. This would be a new chapter in America's
> tradition (unwelcome by our ideals), but it might be the best plan.
> I hope Geitner and the POTUS are bold enough to do it if best.<br/>

Forget GE, These Are the Industrials Investors Should Consider Owning

Nice article and I'll heed your warnings. I'm more of a top-down investor myself, but if I look at individual stocks, first thing I check is whether current assets exceed total liabilities -- after that I look at ROA, ROE, revenue growth, cash flows, etc. and of course qualitative factors. I'm sure this causes me to miss some good stocks, but I hope it'll keep me out of trouble.