VINDICATED!By Bert Dohmen
Sunday, September 25th, 2011
On August 25 I wrote a comment on the Warren Buffett’s $5 billion investment in Bank of America. My article on www.Forbes.com was headlined:
Warning: Why You Shouldn’t Follow Buffett Into BofA’s Stock!
There were some posts of disagreement to my article. I pointed out that the average investor could never get the deal Buffett got and should therefore not be sucked into the stock by the public relations move.
My viewpoint was vindicated as Moody’s downgraded the ratings of several large banks, including Bank of America Corporation’s (BAC) holding company.
Moody’s statement included that the government is “more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute.”
Incidentally, I have written for the past 4 months that the US is already in a recession. It doesn’t show up in some of the statistics because they are adjusted for inflation, and the Washington’s inflation measures are totally wrong. Over the years they have been “adjusted” to show a much lower inflation rate.
The Federal Reserve got more gloomy in the statement after its two day meeting. To explain the reason for its new “operation twist” the statement said in part:
“…significant downside risks to the economic outlook, including strains in global financial markets.”
For the benefit of the readers I repeat my view: the US economy is now in a recession. The US stock market is in a bear market. Europe is in the first phase of a significant credit crisis, and Asia will follow.
Bert Dohmen, editor of the award-winning WELLINGTON LETTER