Banking & Finance
Sign Up for free News Alerts
Meredith Whitney says bank stocks coming down again on muni bond crisis
Posted on 31 December 2010 with 3 comments from readers
Interesting interview with the first lady of Wall Street, banking analyst Meredith Whitney. She sees a crisis in municipal bonds in 2011. And Whitney reckons the government is right to be dumping Citi stock now as bank shares are coming down again.
The big banks remain under pressure from housing issues while banks in some states will come under enormous pressure depending on the condition of local finances. You do have to wonder why bank stocks are so high going into 2011, and this interview is as relevant now as when it was first shot.
Posted on 31 December 2010
Categories: Banking & Finance, Bond Markets, Investment Gurus, US Stocks, Video Channel
3 Comments posted by readers:
Ahh, yes, the bank stocks . . .
I’ve been shorting them over the past six month, convinced that after the “smoke and mirrors” sideshows are over, they will collapse.
Like other good investments, sometimes it just requires a little patience.
No doubt she has crunched a lot of numbers, but her outlook is a bit too dire. You can’t just look at numbers. Emotion plays a large part in financial affairs. Finance isn’t chemistry. The top 3% of Americans are very, very rich. They have trillions of dollars of assets that can be taxed in a severe crisis. If States need crisis money, they, along with the rest of us, will find our taxes going up a lot. Bankruptcy judges may order taxes raised. Having been through Hurricane Katrina, you would be surprised what the government can do to you during a ’state of emergency’. At the same time, the budgets will be cut. All State budgets have a huge amount of fat that can be cut. Public employee unions can be crushed in bankruptcy proceedings. The system WILL find a way to survive. After all, the Army isn’t unionized.
I am not an optimistic person by nature, but I think 2011 will be a positive year for the US economy. I see a 3% growth rate. Ben’s money printing will not have had time to destroy the dollar. And the euro is a total mess. Gold will probably end the year between $1,500 & $1,600. If China doesn’t crash, oil will end 2011 near $120 a barrel. If oil gets above $140 and stays there, expect a new recession within about 6 months of it hitting that price. With no giant black swans, I can see Dow near 13,000 at the end of 2011. Unemployment will fall to 8.6% by year end.
A lot of what happens in 2011 will depend on what the US Congress does. If they insist on large spending cuts, and State & local governments are forced to fire a lot of people, expect another recession in the second half of 2012.
There you have it. Do I get on TV now? You might want to save these predictions for a good laugh. HAPPY NEW YEAR !
@ Bill Simpson:
I believe your 2011 predictions are overly optimistic, considering how fragile and how screwed up the US economy really is. So I’ll take the other side of your predictions, with a few of my own (in the order that you presented yours):
US Growth Rate: No better than 2% (this is bad news for unemployment)
The Gold Spot Price: Between $ 1,700 to $ 1,800
The Euro: Down 20%
The Dow: Under 12,500
Unemployment Rate: At or above 10% (unless they fudge the data again)
The Congress: Not capable of making the tough decisions needed
State Governments: Will get a big handout from federal government (but that doesn’t solve anything; it just postpones the real problems)
Except for the gold price, here’s hoping that I’m dead wrong on these predictions!