BRICs & Sachs
Research for Online Investors

7/18/12

Lloyd Blankfein, CEO of Goldman Sachs (GS) appeared at the Economic Club in Washington.  Bloomberg conducted the questioning.  He covered a wide range of topics.  It was interesting to hear his views.  One comment he made was concerning emerging markets vs. developed markets for long term investors.  His observation was the growth story was intact for emerging markets, specifically mentioning the BRIC countries.  These are Brazil, Russia, India and China.

There can be difficulties on the short term, but China is still growing 7% this year.  The citizens of these countries have experienced some success as investors and seen the fruits of capitalism.  In his view this is where the opportunity lies for long term investors.

We have invested in Chinese companies in the Long-Term portfolio, but closed all over a year ago.  How do you trust their numbers?  We presently trading a European bank and utility company in SwingTrader, but investments need to be transparent.  The BRIC markets have a long way to go before an investor could feel comfortable all information was accurate and available on a timely basis.

The Bernank is back for a redo on yesterday, this time in front of the House Financial Services Committee.  Yesterday’s session with the Senate left traders feeling warm and fuzzy.  He didn’t promise more QE, but referred to the “tools” available the Fed could utilize if needed.

This morning’s comedy routine was almost provided by Maxine Waters, representative from California.  The C-Span video feed was lost just as she wondered into the California idea of taking foreclosed houses from banks through immanent domain.  This was like taking a cool drink of water away from a desert wonderer.  I always enjoy the penetrating financial analysis of Rep. Waters.

Syrian rebels launched a “terrorist” attack on Assad’s regime this morning.  They blew up a bomb in the National Security building in Damascus.  The bomb was evidently planted which means they were able to circumvent security.  Four members of Assad’s inner circle were killed.  His defense minister, brother-in-law, assistant vice-president and interior minister were killed during a cabinet meeting of ministers and security officials.

Leon Panetta, U.S. Defense Secretary, said the situation in Syria is “rapidly spinning out of control.”  Television reports that President Obama called Russian President Putin concerning the escalating violence in Syria.  The Syrian government has vowed to ‘wipe out those responsible for the blast.’  The Guardian has details on the individuals killed in an updating feed you can read for the latest information.

The market is up strongly today.  MBA mortgage applications were up 16.9%, last month applications fell 2.1%.   Building Permits were a little softer than expected but Housing Starts were slightly higher than expected.  The Bernank didn’t say anything to kill the buzz and we don’t have “bad” headlines out of the eurozone.

The Mailbag:
They (government) should tax the richest more if we are to continue taxing people at all.  Do what’s best for America not best for a very small percentage of its people.---subscriber P.P.

John’s reply: You ignore the facts available in the article.  When you raise taxes on the richest people, they leave.  Then you don't collect anything.  Like Margaret Thatcher said, "Pretty soon you run out of other people's money."  Your "opinion" of engaging in class warfare does not accomplish anything but destroying the tax base of the country, and leave the most impoverished even worse off because there is less capital available to pay for "limited" entitlements.  The end result is even higher taxes on the middle class to replace the taxes that are lost because the very wealthy leave for lower tax domiciles.  I wish you the best but please consider the results of the path you advocate.

P.P.—Those guys aren’t going anywhere.  End the Bush tax cuts and they will stay put.

John: I would go along with ending all the Bush tax cuts that were enacted after 911 to rejuvenate the economy if they all ended and we rolled back all government budgets and cut entitlements across the board to 2001 levels.  That would put our federal government back in balance.  Elegant

Editor’s note:  According to the Federal Register, as reported in the Wall Street Journal, expatriations were up six-fold in 2011 over 2008 (the year Obama was elected).

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