Crew Capital Management Thoughts on Investment

Welcome to the Crew Capital Management Thoughts on Investment blog. At Crew Capital, investment education is key to how we work with our clients. We hope our conversation and analysis entice you to think further on your investment strategies and planning. For further discussion, please contact us at rjung@crewcapital.com

Thank you!
Robert F. Jung, CFA CPA*

*CPA inactve

Tuesday, March 25, 2008

Putting the Sub-Prime Crisis in Perspective and the Risks that Remain

Below is a link to an interview with Carmen Reinhart, a Professor of Economics at the University of Maryland. The interview touches on the following important points:

  1. Sub-Prime Financial Crisis Recovery - A historical perspective.
  2. The US dollar decline - Is it really all that bad for us?
  3. Inflation and Commodity prices - Are they the next bubble?
On the historical perspective: Professor Reinhart points out that the recovery period for the current crisis will take two to three years, with the good news being that we are already six months into the recovery. Unlike past financial crises, we are addressing the problem aggressively though without a full understanding of the magnitude of the problem.

For the falling US dollar: She notes that the US dollar decline is required and "the best thing that could happen." It will correct our current account deficit and ignite growth of exports.

Commodity prices the next bubble: Professor Reinhart states that commodity prices are in a secular (long-term) downtrend but cyclically (short-term) have done well. She noted that the commodity prices will come down as Asian markets slow down. This slow down will have its biggest negative impact on emerging markets.

Her final words regarding investing: " I have a long term outlook, and we will ride this (crisis) out."

http://www.advisorperspectives.com/pdfs/newsltr08-2-13-3.pdf
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